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World integration and Pakistan trade

  1. Wheat: New support price
  2. APTMA's role in textile and exports
  3. Poultry farming in Pakistan
  4. World integration and Pakistan trade
  5. Manufacturing Resource Planning

Exports from Pakistan had virtually remained stagnant during the last few years

By Syed Furqan Haider Shamsi
Aug 07 - 13, 2000

Rising customer expectations around the world and increasing competition are setting a new benchmarks for quality in every sector. All industrial and commercial enterprises are finding that their principal market place competitors include multinational companies.

At the same time, the developed world, which once prided itself on its apparent economic self sufficiency, has come to realize that in the age of increasingly scarce natural and mineral resources, global environmental threats, accelerated international illegal migration and burgeoning world trade, it too is becoming ever more economically dependent on the developing world. For third world countries experiencing severe liquidity problems that constrain investment, limit the imputations of inputs and replacement parts and raise the level of risks associated with trade contracts could greatly improve prospects for economic flexibility and growth.

Recent discussions of economic policy making of less developed countries (LDCs) has been a greater concern for problems of industrialization efficiency. Developing nation's industrialists with large excess capacity of inefficient plant and management who were previously protected by prohibitive import duties will have to face prices as well as quality competitiveness.

The third world countries are caught in their own peculiar circumstances. The rising cost of the debts, the demographic pressures, an unskilled population, a weak economic infrastructure on the ongoing brain drain, the flight of native investment to safer places are factors that they kept entangled in their own problems without realizing what forces are at work and what representatives it will have on them. They simply gave on in to pressures and became more and more dependent on organizations like the World Bank and International Monetary Fund. The fact of the matter is that third world economies posses only one productive asset that is also their comparative advantage, ample supply of manpower that is ready to wok at lower wages. Since free trade in all other factors of production is likely to depress economic and living standards in the third world, the indefinite continuation of the paradigm of free trade and globalization and certainly their intensification will impoverish them much more. They need to demand two things, firstly, the present level of the free trade(less restrictions and low tariffs) and globalization can be expected only if the free trade includes free movements of labour. Secondly, free trade and globalization have to provide credible guarantees that living standards in the third world will improve much more than has been the case including higher employment levels.

Exports from Pakistan had virtually remained stagnant during the last few years. On the other hand, import has substantial effects on the trade balance. Pakistan is competing in the same item as it was doing some ten years ago. The typical situation faced by Pakistan-like many other developing countries that what commercial policies should follow that if a country produces and exports an intermediate good or raw material that is used by foreign firms to produce commodities in which the country wishes to compete. This all should be carefully observed keeping in view the watch dog on international trade i.e. WTO having 134 states as its members and finally the breaking of China's bamboo curtain. Imposing restrictions on imports under anti-dumping law or in the good name of humane cause—discouraging child labour, the obvious purpose, in either case, being to stop inflow of cheaper goods from developing countries and thereby save the local farm sector and indigenous industries from the fallout of open market. China has been an important trade partner to Pakistan and it has given financial and technical assistance for some of the major projects in Pakistan. Albeit of this fact, certain other facts have to be catered. The most glaring weakness of the Pakistani industrialization has been its inability to diversify its structure of manufacturers. Although the share has risen but the base is too narrow. While comparing with other Asian economies specially with those of East Asians showed that their industrial policies was aimed at productivity based growth through a combination of learning technological innovation and catching up international best practices.

The signing of the accord under Uruguay could result in the closing up of the thousands of factories across the country because of accusation of environmental pollution. With such international agreements like GATT and WTO, the tariffs expected to be reduced by 40% making the consumer happy that imported goods are cheaper. Pakistan industrial sector has numerous inefficient and obsolete factories. The tariff reductions that will come into effect will result in a shake out and inefficient producers will have to shape up or close down.

The new liberated world of trade emphasizing more and more on the quality. When quotas on our textile exports are removed, the world will have another instrument to restrict our exports i.e. Quality. An important corollary benefit for any organization is reduction of cost of multiple assessments by multiple trading partners.

The objective of WTO is to gradually reduce these import duties and finally remove the duties and paving way for free trade.

Globalization has become a present reality in the few years. All commercial and industrial enterprises are facing that their principal market-place competitors include multinational companies. Consequently product development and marketing strategy must be done globally to reckon with global competition. Quality continues to grow in importance as a factor in market place success.