STRENGTHENING TRADE TIES WITH NEIGHBORING COUNTRIES
Jan 9 - 15, 2012
In the era of liberalization of trade regime, Pakistan needs to strengthen its trade ties with its neighboring countries including India, China, Iran, and Afghanistan.
A paradigm shift is required to enable country's entrepreneurs to become internationally competitive and export high-value added products in the world markets.
In this perspective, it is essential for Pakistan to align itself with other developing economies by establishing bilateral and regional trading agreements in order to maintain its international trade at the present level and attain its due market share by securing a higher percentage of the total global trade.
Pakistan needs to enhance its relations and trade cooperation with neighboring countries to bolster its economy and mitigate sufferings of its people hit by poverty. Similarly, it is also imperative for India to promote relations with Pakistan to take advantage of benefits it could have from developing such contacts.
India and Pakistan are moving forward for materializing bilateral relations. At domestic level, the liberalization of trade regime with India would boost economic growth in Pakistan, enhance economic activities and help job creation. There is no fear in liberalizing bilateral trade with India.
The recent negotiations between the commerce secretaries of the two countries have virtually introduced a new era of liberalization of trade to take advantage of the existing potential, on win-win level.
The trade policy aims to revive domestic commerce and international trade in Pakistan, which could become a major contributor to the reduction of poverty and promotion of peace in the region. The government by promoting trade aims to provide relief to the common persons by provision of jobs and services focusing strongly on development and facilitation.
Pakistan wants to move towards a comprehensive and broad-ranging engagement with India on the basis of equality, mutual trust, interest and respect.
Pakistan recognized that grant of most favored nation (MFN) status to India would help in expanding the bilateral trade relations whereas both the countries agreed to remove the non-tariff barriers and all other restrictive practices, which hamper bilateral trade.
A fresh round of talks with Indian custom authorities over the issue of cement export to India by trucks is going to be held in the mid of January this year and hopefully the issue would be resolved.
After granting the MFN status to India, the volume of trade between the India and Pakistan would jump manifold and the Wagah would be the largest port in the country five years down the line. Therefore, the private sector needs to initiate consultation with the national logistic cell (NLC) that is presently handling all the infrastructure related issues at Wahga.
According to the Lahore chamber of commerce industry (LCCI) president, Irfan Qaiser Sheikh, India is constructing a large warehouse facility spanning over an area of 120 acres near Wahga check post at the Pakistani border. This warehouse will facilitate the Indian businessmen in their business with their counterparts.
But, on Pakistani side there are no matching facilities for facilitation of local exporters. Moreover, presently there is no facility to handle shipments in liquid form, at Wahga border.
During the period July-November 2011-12, exports from Pakistan to the United Kingdom were highest when compared to other European countries, which amounted to $0.56 million showing a growth of 10 per cent.
As per the data, exports to Germany was second highest with $0.53 million followed by Italy ($0.33 million), Spain ($0.24 million), France (0.23 million), Belgium ($0.21 million), Netherlands (0.18 million), Russia (0.072 million), Portugal ($0.68 million) and Switzerland ($0.65 million). The major increase was seen in apparels (men shirts, knitted garments) and home textiles (bed linen).
Pakistan is the second largest trading partner of Sri Lanka in the SAARC region. The total trade between the two countries increased 24 per cent from $273 million in 2009 to $337 million in 2010. In the same period, Pakistan's export to Sri Lanka grew 31 per cent reaching to $284 million from $217 million.
In contrast to growth in our exports, there has been sliding trend in imports from Sri Lanka, which fell from $66 million to $53 million in between 2008 and 2010. Pakistan exports cotton, cereals, vegetables, salt, sulphur, stone, lime and cement, articles of iron or steel, pharmaceutical products and etc. to Sri Lanka.
On the other hand, Pakistan targets to set the trade volume between the two friendly countries at $15 billion by 2012. Under the five-year development program launched in 2006 for strengthening of economic relations, the existing trade is to be enhanced to $15 billion by 2012. More than 62 different projects have been identified under this program for investment in various economic fields and are at different stages of completion. In the last few years, investment of more than $1.3 billion was made by China in Pakistan . Over 120 Chinese companies have invested in oil, gas, IT and telecom, power generation, engineering, automobiles, infrastructure and mining sectors.
The companies included ZTE, Huawei Technologies Co Ltd, China National Machinery Imp/Exp Corporation, Metallurgical Construction Corporation of China, China International Water and Electric Corporation, China Mobile, China Petroleum, Sino hydro. TBEA, Dong Fang. China Roads and Bridge Corporation, China Harbor Engineering, Changhong and Haier etc.
Important projects which had been completed with Chinese assistance included construction of large number of hydropower stations.
China being the second biggest economy of the world finds immense business opportunities in Pakistan as bilateral trade between the two countries had crossed the figure of $7 billion.
Sino-Pak mutual experience of growth in trade is positive due to convenient trade flows and openness measures.
China has become one of the top five import sources of Pakistan.
Major imports from China are machinery, chemicals, garments and other textile products, stationery, construction materials like tiles, sanitary and crockery, etc.
Machinery and electrical appliances are the major parts of overall exports while Pakistan exports are dominated by fisheries, minerals, stones, textile products and cotton yarn etc.
Pakistan enjoys huge export potential due to advantages in agriculture, mineral, chemical, textile, fisheries and leather products. Besides, it has comparative advantage in oil seeds, fruits, base metals, plastic goods and perfumery etc.
China has static advantage over Pakistan in machinery, transport equipments, chemical products, precious instruments, stone and plastic articles, home appliances, pearls, precious/semi-precious stones etc. Man-made filaments, space crafts and aircrafts provide dynamic comparative advantage to China.
Chinese enterprises are availing the liberal 'Going Abroad' policy and Pakistan could be one of the attractive destinations for various reasons for investment out of dedicated funds for adjoining markets.
A few most ambitious projects for the future are the establishment of a railway link, development of a energy corridor, establishment of transit/trade corridor, and collaboration in major infrastructure projects like development/processing of coal on a large-scale and construction of big dams etc.
On account of the mutual understandings developed over a long period of economic cooperation, China and Pakistan have signed many bilateral agreements, like free trade agreement, bilateral investment treaty, double taxation agreements, customs related agreements/procedures, establishment of Pak-China joint investment company, bilateral contracts, 5-Year Framework, MoUs in various fields and between various ministries/divisions of two countries and the agreement on trade in services. This involves a wider impact than the other trade and investment agreements. The trade and investment volume is going to increase after the implementation of this agreement, particularly in financial and technical services.
Many public/private enterprise have signed agreements and MoUs worth billions of dollars to cooperate and undertake joint ventures in various sectors such as infrastructure, mass transit, communication network, finance, science and technology, chemicals, fertilizer, automobile, energy, and development of water resources and agriculture etc. With focus on neighboring countries, Pakistan can avail maximum benefits from trade prospectus available there.