Effect of Trade Policy on Trade Performance

Economic Analysis

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ACKNOWLEDGMENT

Pakistan Trade Policy

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INDEX

Pakistan Trade Policy

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Introduction:
What is Trade Policy
Trade policy is a collection of rules and regulations which pertain to trade. Every nation has some form of trade policy in place, with public officials formulating the policy which they think would be most appropriate for their country.

Purpose of Trade Policy

The purpose of trade policy is to help a nation's international trade run more smoothly, by setting clear standards and goals which can be understood by potential trading partners. In many regions, groups of nations work together to create mutually beneficial trade policies. Things like import and export taxes, tariffs, inspection regulations, and quotas can all be part of a nation's trade policy. Some nations attempt to protect their local industries with trade policies which place a heavy burden on importers, allowing domestic producers of goods and services to get ahead in the market with lower prices or more availability. Others eschew trade barriers, promoting free trade, in which domestic producers are given no special treatment, and international producers are free to bring in their products. When nations trade with each other regularly, they often establish trade agreements. Trade agreements smooth the way for trading, spelling out the desires of both sides to create a stronger, more effective trading relationship. Many trade agreements are designed to accommodate a desire for free trade, with signatories to such agreements making certain concessions to each other to establish a good trading relationship. Regular meetings may also be held to discuss changes in the financial climate, and to make adjustments to trade policy accordingly.

Formulation of Trade Policy in Pakistan

Ministry of Commerce is responsible for formation of the annual Trade Policy, which is announced in July/August every year, closely following the announcement of the Federal Budget in June. Ministry of Commerce does not have a specific cell or commission exclusively Pakistan Trade Policy
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in charge of formulation of the Trade Policy. Through long-established practice, various wings of MOC work together, from the embryonic stages of formulation through to the final draft of the Trade Policy. The Federal Secretary and the Minister of Commerce oversee the procedure at various stages. Within MOC, Section Officers in the Trade Policy Wing, the Joint Secretary (JS) Imports, the JS Exports, the JS World Trade Organization Wing, the Secretary and the Minister of Commerce all play a role in the Trade Policy formulation and consultative mechanisms. The informal review of the previous years Trade Policy commences some three months after the announcement of the policy, in around November/December of the same year. The Secretary of Commerce holds monthly reviews of the current Trade Policy and the Minister of Commerce holds quarterly reviews of it. Any gaps, successes and failures in the Trade Policy are identified for consideration in the next years Trade Policy. From December/January, MOC issues a letter inviting proposals and comments for the formulation of the next Trade Policy. This standard letter, issued by a Section Officer in the Trade Policy Wing of MOC, is widely circulated to selected government agencies and to most business and industry associations, who may make direct written or face-to-face submissions to MOC officials in response to the invitation. Some stakeholders also make representations to officials or the Minister during the year, in addition to their response to the letter of invitation. The letter is not published in newspapers or advertised on the Internet. Furthermore, it is not sent to all relevant stakeholders: indeed academia and NGOs/NPOs report they have never received an invitation from MOC inviting their input into the Trade Policy

Historical Review of Pakistan Trade Policy,

Trade Policy in Pakistan has been influenced broadly by the political backdrop

1947
When Pakistan came into existence in 1947, it was considered the economic backwater of the Indian sub-continent and its industrial base was nonexistent. All industry-based entities, by stroke of fortune, fell within the new Indian boundary. Indeed, TIME magazine in 1947 described Pakistan as an economic wreck.

1947-1958:
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While finding its feet, the Governments direction on the Trade Policy formulation was underpinned by Import Substitution industrialization. High tariff protection, strict Import Licensing and Foreign Exchange controls defined the Trade Policy at the time.

1958-1968:
Often referred to as the golden eraof Pakistans development. Pakistans economy grew at phenomenal rates, earning accolades internationally. There was a re-ordering of the Trade Policy and more liberal policies were pursued, away from direct control to indirect control and massive support was given to encourage industrialization.

1968-1977:
It is an era of nationalization of all basic industry and financial institutions. It is considered one of the worst phases of Pakistans economic history. The Trade Policy was underpinned by nationalization and government controls.

1977-1988:
This phase again witnessed economic growth. The Trade Policy focused on encouragement of industrial enterprise, some industry was denationalized, economic regulations were eased, and export rebates were introduced.

1988-1995
The Trade Policy took a definite shift towards liberalizing the economy, reducing regulatory restrictions, creating an environment for Foreign Direct Investment, easing restrictions on imports and liberalizing Foreign Exchange regulations. The World Bank and IMF took a major role in Pakistans economic affairs and the Trade Policy. With its entry into the WTO in 1995, Pakistans Trade Policy entered a period of establishing a liberal, export focused economy

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Analysis:
Trade policies and practices reform can substantially strengthen the overall trade environment and reduce the costs associated with exporting and importing goods. A sound public policy edifice is a necessary pre-requisite for good governance. The quality of policy, in all its aspects, from formulation to decision-making, is a vital determinant of a Governments ability to deliver. While the policy decision process in Pakistan is well understood, and adequately backed with the required statutory provisions, the policy-making process is less so. Equally hazy is the post-decision process: implementation, evaluation, and review of policy.

ANNUAL TRADE POLICY 1. The Process

The Annual Trade Policy (ATP) is the successor to the annual Import Policy that was a major policy instrument at a time when imports were strictly controlled. Once imports started to get liberalized (with the switch from the positive list what could be imported and under what conditionsto the negative list everything importable except prohibited or regulated) the annual. Import Policy lost its rationale and the Ministry of Commerce (MOC) chose to substitute it with the ATP1 to reflect the shift in focus from import substitution to export enhancement. (In the early years the ATP used to consist of two partsthe import policy and the export policy.

2. Scope and Coverage

While its thrust and style varies from Secretary to Secretary, the ATP generally consists of three parts: (a) Review of the preceding years import/export performance. (b) Changes in trade regime warranted by bilateral/multilateral obligations, or for purposes of trade facilitation, or for removal of anomalies. (c) Export enhancement measures Pakistan Trade Policy
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The overall objective of this study is to consider the impact of trade policies, and notably on Pakistans overall trade performance. Pakistans main trading partners are the EU, NAFTA and the GCC which occupy over 50% of imports and exports. Pakistani trade with other SAARC countries remains relatively low but is growing driven by an increase in imports from India. The share of the EU in both the imports and exports of Pakistan appears to be declining over time. Before discussing Trade Performance of Pakistan of last decade first we discuss the features of the new announced Trade Policy.

Strategic Trade Policy Framework 2012-2015:

The ministry of commerce will unveil the three-year strategic trade policy framework 20122015 next month with a string of development initiatives to boost exports above $30 billion. Normally, the trade policy is unveiled in mid-July but this year it has been delayed till August. Pakistans first ever three-year trade policy framework (STPF) 2009-12 came to an end on June 30, 2012. The policy was in place since July 2009. The ministry is working on the new trade policy to give the countrys exports a boost, the newly-appointed Secretary Commerce, Munir Qureshi, told Micro-level issues need to be given more weight aged in the upcoming Strategic Trade Policy Framework (STPF) 2012-2015 as these would yield better results not only for trade but also for national economy. This was emphasized by Chairman of the Towel Manufacturers' Association of Pakistan (TMA) Feroze Alam Lari in response to a ministry of textile industry's letter, seeking TMA's proposals for the STPF 2012-2015. He pointed out that in STPF 2009-2012 only macro-level issues had been dealt, when in fact, emphasis should have been given on micro-level issues in the present scenario. Reducing anti-export bias in tariff policy is one of the major amendments proposed by TMA. The textile sector of the country is expected to grow at higher pace during the year 2012-13 mainly due to concessions given by the World Trade Organization (WTO) to Pakistani textile products."It is hoped that textile products would be exported in huge quantity to European Union after approval of concessions by WTO to Pakistani textile products in February 2012", said official sources. Our exporters are expected to comply with different international

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obligations, like ISO Certifications, produce and export quality product and ensure timely exports, the sources added. With all these strategies we are hopeful for the betterment.

PAST PERFORMANCE OF PAKISTAN TRADE Balance of Trade:

The balance of trade is the difference between the monetary value of exports and imports in an economy over a certain period of time. A positive balance of trade is known as a trade surplus and consists of exporting more than is imported; a negative balance of trade is known as a trade deficit or, informally, a trade gap. The balance of trade forms part of the current account, which also includes other transactions such as income from the international investment position as well as international aid. If the current account is in surplus, the country's net international asset position increases correspondingly. Equally, a deficit decreases the net international asset position. The Balance of Trade is identical to the difference between a country's output and its domestic demand - the difference between what goods a country produces and how many goods it buys from abroad; this does not include money repent on foreign stocks, nor does it factor the concept of importing goods to produce for the domestic market.

Pakistan Balance of Trade The highlights of Trade Policy 2009-12

Trade Policy 2009-12 aims was to set the country on the path of sustainable high economic growth through exports. The trade policy aims to create a special fund of Rs 2.5 billion for product development and marketing in order to increase the sophistication level of the sector and realize true potential of this sector. The policy is set in a three years Strategic Trade Policy Framework (STPF) for the next 3 years. This will be a medium term road-map in order to ensure certainty of policies which in turn will

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act as a catalyst in the revival of domestic commerce and international trade in Pakistan, with the precise objective of bringing about a structural transformation in Pakistans exports.

Trade performance:
Pakistans first ever three-year trade policy framework (STPF) 2009-12 came to an end on June 30, 2012. The policy was in place since July 2009. Normally, the trade policy is unveiled in mid-July but this year it has been delayed till August.

The first STPF largely remained unimplemented during the last three years because of lack of availability of funds. The ministry has projected Rs35 billion for the implementation of all initiatives announced in the policy document but in reality Rs2 to 3 billion were released by the finance ministry, an official source said. Increase in cost of production, worsening law and order situation and continuous power and gas load shedding drag down share of local apparel sector to $9.24 billion in FY 2011-12 from $10.5bn in 2010-11 From this graph we can see Pakistan trade deficit is increasing throughout 2009-12

July 2009- June 2012

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The highlights of Trade Policy 2008-2009

The trade policy for the financial year 2008-09 with the projected export target of US $ 22.1 billion, reflecting a clear-cut policy tilt towards India, allowing imports of various items, from books to fuel. The government could not give an import projection for this year to avoid embarrassment, showing its inability to cope with the widening gap between exports and imports. The trade deficit had soared to US $ 20.7 billion in the fiscal year ended on June 30, which was much higher than the government projection of US $ 13 billion Though the government did not formally announced any import target but the Commerce Ministry officials were talking about around US $ 37 billion that could result in US $ 15 billion trade deficit by June 2009.

Trade performance:
Coming to the trade performance of Pakistan, the year 2008-09 witnessed unprecedented economic downturn especially in our major markets of export i.e. USA & EU. Consumption decreased in the developed world and the global trade shrank by 9%. Global recession adversely affected exporting countries and Pakistan is no exception to it. Exports from Pakistan declined to US$ 17.8 billion as compared to previous years exports of US$ 19.1 billion. Imports also witnessed a relative decline and fell by 13% as Pakistans imports during 2008-09 stood at US $ 34.9 billion as compared to US $ 40.4 billion in 2007-08.

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July 2008- June 2009

Pakistan Balance of Trade:

Pakistan reported a trade deficit equivalent to 1517 Million USD in April of 2012. Historically, from 2003 until 2012, Pakistan Balance of Trade averaged -818.6000 Million USD reaching an all time high of 9.6000 Million USD in August of 2003 and a record low of -1878.0000 Million USD in October of 2008. Pakistan exports rice, furniture, cotton fiber, cement, tiles, marble, textiles, clothing, leather goods, carpets and rugs and food products. Pakistan imports mainly petroleum, petroleum products, machinery, plastics, transportation equipment, edible oils, paper and paperboard, iron and steel and tea. Its main trading partners are: European Union, China, The United Arab Emirates and The United States.

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July 2003- June 2012 During the last few decades, the global trade has undergone a major structural change as far as the product composition and geography of trade is concerned. There has been an explosion of non textile manufactured exports at the global level. Whereas, the share of non-textile manufactured in Pakistans exports has gone down from an already low figure of US $ 5.83 billion (25.08%) in 2007-08 to US $ 3.12 billion in 2008-09 (17.32 %). At the same time, our competitor economies, particularly in Asia, have significantly enhanced their share in nontextile manufactured.

Export:
Exports measure the amount of goods or services that domestic producers provide to foreign consumers by. It is a good that is sent to another country for sale. In the past, export of commercial quantities of goods normally required involvement of the customs authorities in both the country of export and the country of import. More recently, with the advent of small trades over the internet such as through Amazon and e-Bay, exports have largely bypassed the involvement of Customs in many countries due to the low individual values of these trades. Nonetheless, these small exports are still subject to legal restrictions applied by the country of export.

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Pakistan Exports:
According to the annual plan 2012-13, the government has projected an export target of $25.812 billion for the year 2012-13 as against $23.641 billion, showing an increase of only nine per cent. For the year 2012-13, the export proceeds remained behind the target of $25 billion projected for the same year by almost $1.4 billion by end June 2012. Our exporters are expected to comply with different international obligations, like ISO Certifications, produce and export quality product and ensure timely exports, the sources added The textile sector of the country is expected to grow at higher pace during the year 2012-13 mainly due to concessions given by the World Trade Organization (WTO) to Pakistani textile products.

Export Competitiveness
First, overcome the most pressing supply-side constraints such as the shortage of energy, cost of capital and difficulties linked with adverse travel advisories. Second, enhance competitiveness of textile and clothing, with the help of Textile Policy due to be announced shortly which focuses on new investments, modernization of machinery and increasing total factor productivity.
Third, deepen and diversify export markets particularly our major trading partners US and EU as well as countries with which Pakistan has singed a free agreement such as China, Malaysia and Sri Lanka.

Export Targets
Year 2009-10 2010-11 2011-12

Export

$18.8 billions

$20.7 billions

$23.4 billions

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The trade policy envisaged an export growth of 6 per cent (18.8 billion dollars) for 2009-10, 10 per cent (20.7 billion dollars) for 2010-11 and 13 per cent (23.4 billion dollars) for 2011-12.

Export Performance:
Share of non-textile manufactured in Pakistans exports has gone down from an already low figure of US $ 5.83 billion (25.08%) in 2007-08 to US $ 3.12 billion in 2008-09. (In Billions) 2008-09 17.80 0.8 9.60

Export declined Export of leather decline Textile export decline

2007-08 19.10 1.10 10.60

Table 01

Change (1.30) (0.30) (1.00)

In the above mentioned table 01 we can see export that was 19.10 billion in FY 2007-08 declined to 17.80 shows the percentage change in negative that is 6.81%.

Break up of Textile sector (%) readymade garments decline Cotton Yarn decline Bed linen decline Art Silk & Synthetic Textiles decline Cotton Fabric decline Table 02

21.70% 15% 10% 22% 4%

Year 2008-9 witnessed unprecedented downturn _ Major Market export i.e. USA & EU _ Export shrank to US$17.8 B from US$ 19.1B _ Textile exports that are 54% of total export are dropped to US$ 9.6B from US$ 10.6B _ Major losers were the ready made garments dropped by 21.7%

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_ Cotton Yarn dropped by 10.2% _ Art Silk & Synthetic Textile dropped by 22.1% TRADE PERFORMANCE-THE GAINERS _ Rice export registered a growth from US$ 1.84B to US$ 1.99B _ Engineering Goods increase recorded 26.1% from US$ 211.3M to US$ 266.4M _ Export of Jewelry recorded a 35% increase from US$ 213.4 M to USD$ 288.4M 2007-08 rice export increase Engineering goods increase export of Jewelry increase Table 03 Increase 8% 26% 35%

July 2008- June 2009

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JANURARY 2011- JUNE 2012

Taking a long term view of Pakistans export performance over the last ten years, Pakistans share in the global market, according to WTO data, has declined by more than 1/3 to 0.13% in 2009 from 0.21 % in 1999.

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SUMMARY

Table 1(a) : Monthly Export of Goods & Services (Million US $) May Items I. Export Receipts (Banks) II. Freight on Export III. Other Export Unaccounted by Banks Land borne Export 2012 2,195 38 -6 79 1 0 -85 0 0 2,152 22 2,174 339 2,513 2011 2,289 55 -20 0 1 0 -20 -1 0 2,214 22 2,236 411 2,648

Export of Samples EPZ Outstanding Export Bills Refund & Rebate

Exports in Accounts Abroad (A) Export General Merchandise (I-II+III) (B) Other Exports Under BPM5 (C) Export of Goods (A+B) (D) Export of Services (E) Export of Goods & Services (C+D)

Table 1(b) : Key Indicators of Export of Goods and Services May, 2012 Apr, 2012 % Change during May 2012 over Apr 2012 May, 2011 % Change during May 2012 over May 2011 Jul-May 2011-12 Jul-May 2010-11 % Change during Jul-May 2011-12 over JulMay 2010-11 Monthly average during Jul-May 2011-12

(Million US $) 2,513 2,565 -2.0 2,648 -5.1 27,168 28,024 -3.1

2,470

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Monthly average during Jul-May 2010-11 FY11 FY10 % Change during FY11 over FY10 Monthly average during FY11 Monthly average during FY10

2,548 31,123 24,902 25.0 2,594 2,075

Export of Good & Services (Volume)

YEAR 2003 2004 2005 2006 2007 2008 2009 2010

Goods Services 10,889 2,797 12,396 2,644 14,482 3,319 16,553 3,769 17,278 4,140 20,427 3,589 19,121 4,106 19,673 5,229

25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 2003 2004 2005 2006 2007 2008 2009 2010 Goods Services

YEAR Goods Services 19.1 46 2003 13.8 -5.5 2004 16.8 25.5 2005 14.3 13.6 2006 4.4 9.8 2007 18.2 -13.3 2008 -6.4 14.4 2009 2.9 27.3 2010

50 40 30 20 10 0 -10 -20 2003 2004 2005 2006 2007 2008 2009 Goods Services Linear (Services) 2010

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Goods
2003 2004 2005 2006 2007 2008

Services
2003 2004 2005 2006 2007 2008

Pakistan Exports:
Pakistan exports were worth 2240 Million USD in April of 2012. Historically, from 2003 until 2012, Pakistan Exports averaged 1529.7400 Million USD reaching an all time high of 2660.0000 Million USD in June of 2011 and a record low of 776.4000 Million USD in February of 2003. Pakistan exports rice, furniture, cotton fiber, cement, tiles, marble, textiles, clothing, leather goods, sports goods, surgical instruments, electrical appliances, software, carpets and rugs and food products. Pakistan now is being very well recognized for producing and exporting cements in Asia and Mid-East. Main exports partners are European Union (UK), United States, UAE, and Afghanistan. This page includes a chart with historical data for Pakistan Exports

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EXPORT FROM PAKISTAN

VALU E IN MILLION $ MONTH 2008-09 2009-10 2010-11 2011-12 CHAN GE OVER T ARGET N GE OV ER EX PORT CHA % 24.96 11.90 14.97 (2.99) (11.08) (11.46) (16.95) (6.14) (19.90) (5.29) (5.99) (11.60) (4.71)

EX PORT T ARGET EX PORT VALU E % ACHIEVED VALU E JULY AUGUST OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH APRIL MAY JUNE 1,879 1,564 1,475 1,527 1,257 1,346 1,250 1,312 1,322 1,463 1,522 1,468 1,462 1,508 1,577 1,518 1,566 1,685 1,519 1,770 1,701 1,736 1,781 19,290 19,290 19,290 1,726 1,738 1,593 1,938 1,725 2,094 2,307 2,141 2,463 2,365 2,296 2,422 24,810 24,810 24,810 1,864 1,818 1,675 2,048 1,849 2,183 2,360 2,186 2,622 2,440 2,420 2,536 26,000 26,000 26,000 2,157 1,945 1,832 1,880 1,534 1,854 1,916 2,010 1,973 2,240 2,159 2,141 23,641 293 127 157 (168) (315) (329) (444) (176) (649) (200) (261) (395) (2,359) 115.74 106.99 109.36 91.79 82.95 84.94 81.20 91.96 75.25 91.81 89.23 84.42 90.93 431 207 238 (58) (191) (240) (391) (131) (490) (125) (137) (281) (1,169)

SEPTEMBER 1,772

JU LY -JU N E 17,688 17,688 JU LY -JU N E 17,688

JU LY-JU N E 2011-12 E XP OR T S 23,641 IMP OR T S 44,912 BALAN CE (21,271) 2010-11 24,810 40,414 (15,604)

CHAN GE VALU E (1,169) 4,498 (5,667)

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July 2009- June 2012

Import

An import is any good or service brought into one country from another country in a legitimate fashion, typically for use in trade. Import goods or services are provided to domestic consumers by foreign producers. An import in the receiving country is an export to the sending country. Imports, along with exports, form the basis of international trade. Import of goods normally requires involvement of the Customs authorities in both the country of import and the country of export and is often subject to import quotas, tariffs and trade agreements. When the "imports" are the set of goods and services imported, "Imports" also means the economic value of all goods and services that are imported. The macroeconomic variable I usually stand for the value of these imports over a given period of time, usually one year.

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Pakistan Exports:
The ministry is working on the new trade policy to give the countrys exports a boost, Secretary Commerce said the new policy will mostly focus on export promotion. He said there was no restriction on the import side except the negative list with India. Pakistans import regime is more liberal in the region, he said, adding, The ministry will still work on customs tariff side to further facilitate the import regime. Pakistans imports are more dispersed, as is typical in most countries although inputs for the textile and apparel sectors (machinery, fibers, dyes and chemicals, etc.) and petroleum products make up sizeable shares of total imports.
Sector A. Food Group B. Machinery Group All Others 2008-09 3,586,061 4,922,514 2,832,535 2009-2010 3,079,209 4,132,520 2,595,345 Change -506,852 -789,994 -237,190 % Change -16.4605 -19.1165 -9.13906

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Import of Goods & Services (Volume)

YEAR 2003 2004 2005 2006 2007 2008 2009 2010

Good Services s
11333 13604 18996 24994 26989 35397 31747 31209 2714 3961 6612 8199 8310 10046 7487 6919

40000 35000 30000 25000 20000 15000 10000 5000 0 2003 2004 2005 2006 2007 2008 2009 2010

Goods Services

Import of Goods & Services Growth (%)

YEAR Goods services 20.1 23.7 2003 20 45.9 2004 39.6 66.9 2005 31.6 24 2006 8 1.4 2007 31.2 20.9 2008 -10.3 -25.5 2009 -1.7 -7.6 2010

80 60 40 20 0 2003 -20 -40 2004 2005 2006 2007 2008 2009 2010 goods services

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SUMMMARY Table of Goods and Services Items 2012

I. Import Payments(Banks) II. Freight & Insurance III. Other Import unaccounted by Banks Unclassified Imports Imports NRI, Sale of Duty Free Shops Imports under Foreign Economic Assistance Land borne Imports with Afghanistan PIA & PNSC Capital Equipment Cost of Imports (Ex. Cos.) Refund & Rebate Import from EPZ Imports from Accounts Abroad (A) Import General Merchandise (I+II+III) (B) Other Import under BPM5* (C) Import of Goods (A+B) (D) Import of Services (E) Import of Goods & Services (C+D) 3,393 204 104 0 33 58 13 11 0 0 -11 0 0 3,293 35 3,328 691 4,019

Million US$ May 2011

3,384 271 207 114 13 52 16 16 0 0 -6 0 2 3,320 39 3,359 751 4,110

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Table 1(b) : Key Indicators of Import of Goods and Services

(Million US$)
May 2012 April 2012 % Change during May 2012 over April 2012 May 2011 % Change during May 2012 over May 2011 July-May 2011-12 July-May 2010-11 % Change during July-May 2011-12 over July-May 2010-11 Monthly average during July-May 2011-12 Monthly average during July-May 2010-11 FY11 FY10 % Change during FY11 over FY10 Monthly average during FY11 Monthly average during FY10 4,019 3,800 5.7 4,110 -2.2 43,666 39,211 11.4 3,970 3,565 43,580 38,128 14.3 3,632 3,177

As discussed earlier this trade policy is aimed to achieve export led growth and we know the fact that the trade openness is the gateway to enhance exports as well as imports. There are several players act upon and interact with trade policy. The more salient of these influences are discussed below.

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IMPORTS OF GOODS & SERVICES

ITEM Goods : Imports fob
Of which General merchandise Imports FOB

Jul - Jun May Jul -May FY11* FY10* FY12* FY12* FY11*
35872 35517 7708 31209 30946 6919 3577 879 546 159 29 146 95 168 111 0 1103 129 19 634 38128 3328 3293 691 265 159 102 10 0 20 10 15 13 0 150 30 0 49 4019 36523 36150 7143 3167 1238 759 152 53 221 100 150 121 0 1202 235 2 737 43666 32318 32005 6893 3652 875 473 160 42 138 99 151 106 0 1099 150 10 561 39211

Imports of Services

Transportation 4072 Travel 972 Of which Exchange Cos. 546 Communication services 176 Construction services 83 Insurance services 148 Financial services 121 Computer & information services 177 Royalties and license fees 122 Of which: Exchange Cos. 0 Other business services 1193 Of which: Exchange Cos. 168 Personal & cultural & recreational services 10 Government services 634 IMPORTS OF GOODS & SERVICES
43580

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Conclusion:
This study finds more than a coincidental link between the role of multilateral agencies and the evolution of Pakistans trade policy. It is these agencies that have essentially guided the trade liberalization process in Pakistan. Further, it is more than the dictates of globalization that provided for such a pronounced role of external actors. It was in no small measure facilitated by the inherent weaknesses of Pakistans own policy making apparatus. The vacuum was too compelling for these agencies to ignore. Trade Policy, both institutionally and in terms of priorities, has not dominated Pakistans policy agenda. Those who do believe in trade reforms come across a severe lack of commitment on the part of the decision makers. It is questionable if the Ministry of Commerce, supposedly the lead agency, has the wherewithal, or, indeed, the responsibility for trade policy formulation. The annual trade policy ritual may serve some facilitation and export promotional purposes but it will be difficult for it to lay claim to the kind of institutional and wider policy reform that a genuine trade policy ought to seek. MOC seems to have problems enough to get its ATP proposals, barely touching the cusp of policy, fully and properly implemented. It faces the challenges of inter-ministerial power game as well as capacity. Capacity is not solely a Ministry of Commerce issue. It is quite endemic all through the policy spectrum. The study highlights the asymmetry of capacity between the domestic and the external actors that tends to breed suspicion and an aura of forced interventions. This raises questions of ownership of reforms and their sustainability. A definitive, evidence-based, linkage between trade liberalization and public welfare-growth, poverty reduction, income equalityis not easy to incontrovertibly establish in the case of Pakistan that is exposed to several simultaneous variables. This weakens the resolve. The prevalent street perception is that trade liberalization is inimical to national aspirations. It is viewed as a surrogate for globalization, which in turn is perceived as the new variant of imperialism. In any political setting the slogan of self-sufficiency and therefore import substitution and therefore protectionism is almost certain to attract more votaries. No serious effort has been made to educate public opinion. It is often forgotten that trade policy is much more than trade liberalization. If anything, a good trade policy can serve to check the costs of globalization while capitalizing on the opportunities. All these factors contribute to trade policy being relegated to a low position in the Governments policy making pantheon.

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The trade policy making and execution weaknesses are unlikely to be corrected without a realization of their virtuous effect on the other policies and strategies, and how, together, they can impact public welfare. The cause of trade policy will be better served by restoring it to the general policy matrix rather25 than letting it languish within the narrow confines of WTO compliance and export growth. Its importance is more likely to be accepted when it is seen as an agent of change, contributing to transparency, consistency and predictability of policies; as a powerful instrument of good governance.

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