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Pak-US Free Trade Agreement A Tough Proposition, Exporters Say
Analysts say a free trade agreement may seem tantalising to many an exporter, but not all about the current US economic conditions is worth the envy. The US government’s recent run in with the EU ending in stronger tariffs on steel imports is one example
KARACHI: While a Free Trade Agreement (FTA) with the US shimmers like a mirage on the horizon for Pakistan, exporters say perhaps the government should concentrate its efforts in the first instance on cajoling the US government to slash tariffs on exports and increase the import quota on fast-moving items, before pushing for a full-fledged free trade agreement.
Even Finance Minister, Shaukat Aziz, had said while on his visit to Washington last month, “clearly the pact is a long drawn out process…its not just opening trade to both the countries.” And while he was cautiously optimistic that a long-term goal of sealing a trade pact was attainable, he declined to put a time-frame on when talks might begin or how they would take to conclude.
What the economy really needs, says Asad Sayeed, an economist, is a proper initialisation policy and consistent 10 to 16 percent export growth. This can be achieved if Pakistan turns the heat up on China and Bangkok in value-added textile exports by competing with quality. “FTA’s are fine,” Mr Sayeed says, “but they can only provide marginal support.” He recommends the authorities divert industrial growth to the other sectors of the economy and also focus on the export of non-traditional items. Quality will be the proof of the pudding when it comes snapping up competition in international markets.
Analysts say a free trade agreement may seem tantalising to many an exporter, but not all about the current US economic conditions are worth the envy. The US government’s recent run in with the EU ending in stronger tariffs on steel imports is one example. Ideally, a free trade pact could boost some sectors in Pakistan and above all textiles, which play a pivotal part in national exports, said one analyst, who wished to remain anonymous. The biggest pay off would be for free trade of textile sector goods. But it would be folly to think that Pakistan’s value-added products would rake in the cash under a free trade agreement, he said. Their quality leaves a lot to be desired primarily because the staple fibre length does not meet international standards. Egypt, on the other hand, produces what many consider the best cotton in international markets. The quality of Pakistan’s textiles is far lower on the ladder even though textile export is a main foreign exchange earner.
Pakistan has also set its sights on a free trade agreement with other countries. Razzak Dawood, Federal Commerce Minister, is schedulaed to sign an agreement with Sri Lanka on October 24. This interest in FTAs has strengthened on the back of a reversal in the trade deficit trend. A trade surplus was achieved according to the economic survey report 2001-02. The US formed the largest chunk of trade volume as imports from the US reached Rs 31.36 billion and exports came out at Rs 99.08 billion. Sri Lanka, on the other hand imported more from Pakistan compared to its exports to Pakistan. Around Rs 3.33 billion was exported to Sri Lanka and around Rs 1.35 billion was imported during the previous fiscal year. Mr Dawood said exports in the first quarter of the current fiscal year were five percent higher than the target the government had set for this period.
A summary of the exports of the previous 12 months shows that they stand at $9.4 billion, the highest level since May 1997, including August 2002, according to a research report prepared by AKD Securities, a local brokerage house. Not only have total exports been performing better than expected but this has been reflected in the bottom line figures of some of companies that focus on the export market.
Pakistan would only emerge a winner if a FTA with the US comes hand in hand with quota removals. “The FTA would be fine if they removed the quota only,” said Saleem Kabadiya, senior vice chairman, Pakistan Federation of Commerce and Industry (FPCCI) and a garment exporter to the US and Europe. “I shifted my exports to Europe from the US since the European buyers are more stable,” he said. But Mr Kabadiya said there is a very slim chance such an agreement will materialise. And is certainly seems like Pakistan is a long way off from sinking its teeth into a slice of the pie.
Pakistan, Ireland To Boost Trade
ISLAMABAD: Minister for Commerce, Industries and Production Abdul Razak Dawood said on Monday Pakistan and Ireland are jointly working to boost the volume of trade between the two countries through products diversification.
The minister expressed these views in a meeting with Ireland delegation and discussed with them matters pertaining to bilateral trade. Dawood also sought Ireland’s collaboration in textile sector. “Textile is a large industry in Pakistan and we look for ways for our textile machinery manufacturers to collaboration,” he said.
The minister further added that Ireland was a major trading partner of Pakistani exports and collaboration in industry can be mutually beneficial for the two countries.
He also talked about holding of single country exhibition for introducing Pakistan’s products in that country, establishment of export houses or warehouses, regular shipping, Pakistan’s participation in international fairs in Dublin, Travel & Tourism Exhibition, Furniture Fair, ICT Expo etc.
The Ireland delegation expressed full support in countering the international efforts in terrorism. Dawood said that he was hopeful about the Ireland government stance for greater trade access to Pakistan.
Possibilities for joint ventures in rice, chemicals, elements compounds and pharmaceutical products and machinery and its part were also discussed. Head of the delegation of Ireland, Thomas O. Bolster assured the minister that Ireland government will undertake all possible steps to further boost the trade relations and facilitate the Pakistani exporters in areas of textile, leather, fruits and sports goods.
He also stressed the need to evolve technical mechanism and exchange of know-how to meet trade requirements. The head of delegation identified the investment and trade collaboration areas as automobile industry, construction machinery, software, pesticides, cement, textiles, chemicals, railways etc.