Pakistan needs to speed up regional initiatives not only for economic and social progress, but also for the sake of peace
By Sibtain Raza Khan
Globalisation has increasingly made trade diplomacy a significant feature in bilateral, regional and multilateral economic relations. Pakistan's present economic situation requires economic leadership to take the initiatives to accelerate bilateral as well as regional trade diplomacy which has not only the potential to bring economic prosperity but also peace in the region.
Bilateralism and regionalism got currency in trade relations after the deadlock between developed North and developing South over a number of issues under the World Trade Organisation (WTO) regime. Subsequently, State actors got busy in inking bilateral as well as regional Free Trade Agreements (FTAs) which have given desired results as the world has witnessed an upward graph in bilateral along with regional trade among trading partners, whereas Pakistan has been facing a mounting trade deficit for many years. For instance, during the first eight months (July-February) of the current fiscal year (2008-09), exports are $12.1 billion, whereas imports are $23.7 billion. Such a huge trade deficit is forcing Pakistan to re-invent its trade policy.
Without a doubt, the European Union (EU), the US and Gulf Cooperation Council (GCC) states are the major trading partners of Pakistan, however, South Asian, and Economic Cooperation Organisation (ECO) countries have immense potential for regional trade cooperation which needs to be channelised. The leadership of these regions should try to find common grounds in regional trade cooperation and diversify their economic relations in goods, services, labour and investment. They need to follow the suit of the EU and Association of Southeast Asian Nations (ASEAN) regional economic integration model for progress and prosperity of their people.
South Asian states, nonetheless, have a regional free trade agreement of South Asian Association for Regional Cooperation (SAFTA) and the trade in goods is underway since Jan 2006, yet the member states need to cut down their respective sensitive lists and broaden their horizons in services and investment too. In this regard, the World Bank report has rightly pointed out, "to maintain huge sensitive lists mean actually denying required market access to members. Reduction or elimination of sensitive lists under SAFTA would give boost to bilateral along with regional trade in South Asia."
Similarly, the ECO member states signed the Economic Cooperation Organisation Trade Agreement (ECOTA) to enhance trade and investment in the ECO region and agreed to bring down tariff and non tariff barriers to encourage regional trade. However, American involvement in the region and the war on terror have eclipsed the immense potential of regional economic cooperation. However, in the recent tenth summit meeting of ECO in Tehran, the leaders of ECO reaffirmed their determination to establish free trade area in ECO region by 2015 as a priority task.
Indeed, there are some pre-requisite steps like political will, market access, liberal policies and improvement in infrastructure that need to be taken by regional state actors to accelerate regional economic cooperation. Economist Dr. Tahir A. Loqman stressed that the government requires stimulating economic diplomacy to come out from this economic crisis and that focus should be on regional cooperation.
While talking on regional trade diplomacy, Haroon Ahmed Khan, a political analyst, is of the view that Pakistan needs to speed up regional economic initiatives with South Asian and ECO countries, as this cooperation is essential not only for economic and social progress, but also development and stability in the region. Economist Dr. Jameel S. Peimani said that in economic diplomacy, the private sector must also be engaged in the decision-making process as the people in this sector know where to invest and when to sell their goods and services.
Nasir Janjua, a textile importer, maintained that Pakistan has all the ingredients like material resources, a large population, a strategic location and access to regional market via land and open sea but the issue is the government needs to launch an effective trade diplomacy campaign along with the private sector as economic issues are complex and it needs skilled personal. Kamal Nadeem, a rice exporter, said that like India and China, Pakistan should also provide tax relief and recompense its exporters in different ways to make this sector competitive.
Apart from this, the representatives of exporter associations are of the view that load shedding, inflationary cost of input, cross subsidies, protective duties, costly bank credit at home along with tariff and non tariff barriers abroad are the main stumbling blocks in exports. They stressed that the government should provide them with a safety net of facilities like availability of raw material, uninterrupted electricity supply and credit facility at minimum interest rate.
It is the need of the hour that the government should re-invent its ministry of commerce and export-friendly trade policies need to be adopted. Though institutional infrastructure is present under the umbrella of ministry of commerce, yet sincere and coordinated efforts are required for productive trade diplomacy. The issues of tariff as well as non-tariff barriers have to be addressed promptly in order to seek better market access. Moreover, corrupt trade officials at home and abroad must be brought to justice.
Certainly, the government of Pakistan while addressing the issues at home is required to launch proactive trade diplomacy at regional level. Pakistani embassies abroad should be equipped with necessary statistics, publicity material and skilled and resourceful staff. Exhibition of Pakistani goods need to be arranged in the big cities of regional trade partners in order to improve the country's business image abroad as well as to draw the attention of foreign buyers. Efficient and competent trade envoys need to be deputed who have the capability to handle trade related issues like tariff and non-tariff barrier, quality standards, intellectual property rights and resolve dispute settlements amicably in the best national interests.
In this regard, "trade not aid" approach should be adopted and our envoys need to fight for market access for Pakistani goods. Our top leadership needs to develop close interpersonal contacts with their counterparts like the ASEAN leadership who usually manage economic diplomacy through close interpersonal contacts. Furthermore, ASEAN model's Track I and Track II initiatives should also be employed for successful regional trade diplomacy.
Apart from this, a successful mechanism for inter-ministerial coordination is also required for effective economic diplomacy. Along with government channels, private sector should also be engaged in trade diplomacy at different levels especially at agenda setting. Actually, trade diplomacy requires all domestic and international stakeholders to be taken on board for achievements of objectives. The solution of Pakistan's economic problems lies in successful regional trade diplomacy not in aid and allied politics.