TRADE DEVELOPMENT AUTHORITY OF PAKISTAN

S.KAMAL HAYDER KAZMI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
June 25 - July 1, 2012

The world economy is expected to slow down during 2012 as the risks of contagion from the euro crisis, the impact of natural disasters during 2011, and the sluggish growth in developed economies persist. The Trade Forecast suggests that between 2012 and 2014, world trade will continue to grow, but at a slower rate before then accelerating after the middle of 2014 leading to improved economic performance globally-a trend which will continue to 2020.

BALANCE OF TRADE (US$ MILLION)

PERIOD EXPORTS IMPORTS BALANCE OF TRADE
2006-07 17,278 26,989 -9,711
2007-08 20,427 35,397 -14,970
2008-09 19,121 31,747 -12,627
2009-10 19,673 31,209 -11,536
2010-11 25,355 35,872 -10,517

From 2021 on, it is predicted that growth in world trade will decelerate as international trade stabilizes around the world. The Trade Forecast predicts over the whole period that world trade will grow due to stronger growth after 2014 and robust emerging economies. Emerging economy trade growth, especially in Latin America and Asia will be stronger than developed world trade growth. For example, it says that trade growth in the Asia Pacific region will be 6.50 per cent annualized over the next five years and in Latin America will be 6.70 per cent. This compares to the 3.78 per cent forecast for the world as a whole. It is also explained by data revealing a move up the 'value chain' in emerging economies as consumers become more sophisticated and the skills and innovation base allows higher end production in emerging economies particularly India, Indonesia, Vietnam and Malaysia. Yet in China or Brazil, there is a much smaller skills and innovation effect on trade, suggesting that these countries are not using trade in the same way to fuel their economic development.

According to the Trade Forecast, the acceleration in trade growth is driven by two key trends: trade fuelling trade and corridor creators. It is expected to see trade expansion in trade fuelling trade. World infrastructure trade will increase by 110 per cent and oil and gas by 103 per cent to 2026. This is supported by growth in sectors such as rolled iron and steel bars where annualized increases in trade of 7.40 per cent are forecast over the next five years. Companies across the world are expected to increase trade activity by 4.70 per cent, fuelling the trade uplift being outlined.

With demand flat in many domestic markets, for example Europe and North America, corridor creators will come to the fore: businesses that seek out the best trade partners to drive competitive advantage, regardless of location, and exploring key sectoral opportunities. The Trade Forecast predicts that the fastest emerging trade sector is electrical energy, where annualized growth will be 9.14 per cent over the next five years. This sector encompasses all energy generated from non-fossil fuel sources, representing a clear shift in the balance of world trade towards newer energy sources such as nuclear, wind and solar.

Furthermore, the unfavorable global environment has slowed down the world output and trade volume, which was calculated 3.9 percent during 2011. This slowdown of the global economic activity has caused a sharp decline in the growth of Pakistan's trade.

The Trade Development Authority of Pakistan (TDAP) is the successor organization to the export promotion bureau (EPB) and mandated to have a holistic view of global trade development rather than only the 'export promotion' perspective of its predecessor. EPB was set up in 1963 as an attached department of the ministry of commerce. More than 20,000 exporters were facilitated and part-funded to exhibit their goods abroad and grow their exports. Over 2,000 trade delegations were sent abroad or hosted in Pakistan in the 43 years of EPB. EPB thus contributed in a significant manner, as country's exports - reported at just under quarter of a billion dollars in 1963 - increased by over 70 times to touch nearly $16.5 billion in 2005/06.

In TDAP, the facilitation division is primarily responsible for trade policy implementation, with specific emphasis on simplification and harmonization of procedures with the objective of achieving a competitive edge in the context of emerging business realities. This division is devoted towards helping exporters in availing the opportunities as well as in the removal of obstacles in expansion of Pakistan's export. The division is responsible for organizing expo Pakistan, the mega event to showcase Pakistani products to foreign buyers, held annually at Karachi expo center.

While the trade policy is deputed to formulate and implement various trade policy initiatives announced annually by the ministry of commerce. Proposals are developed after consultation with various stakeholders for consideration by ministry of commerce. The initiatives announced in the trade policy are then implemented and business procedures of schemes are worked out.

TDAP in collaboration with export development fund (EDF) has taken up the initiative to set up the marble and granite technology institute to produce trained work force to assist the industry in exporting the high value marble and granite products. If subsidized land is granted by the provincial government, an estimated amount of Rs50 million will be required to start the institute.

On completion of the project, the skilled work force will be regularly available to cater to the growing need of the industry. In Pakistan, most important marbles are of white color found in Peshawar division and green marble found in Chaghai district.

TDAP announced the country's first mega lifestyle exhibition, Lifestyle Pakistan in New Delhi, India. More than 100 renowned lifestyle brands (set up by fashion designers, furniture makers and arts and craftsman) participated in the Lifestyle Exhibition held in April. Pakistan's top companies belonging to the fields of lawn and fashion apparel, home textiles, furniture, leather goods, Sindhi crafts and even Pakistani food got a chance to explore the Indian lifestyle market.