Speakers at a one-day conference on Pakistan’s trade issues, held in Washington on June 15, 2007, said Pakistan needed to step up trade with its neighbours, particularly India, and provide less protection to some of its industries.

The annual conference was organised by the Woodrow Wilson Centre in association with the Fellowship Fund for Pakistan, a financial initiative set up by a number of Pakistan-based businessmen to fund a Pakistani scholar’s research at Woodrow Wilson every year. 

Shahid Javed Burki, finance minister in the Moeen Qureshi interim government, who presented a paper, said that to sustain the growth of the last five years, Pakistan must make some structural changes in its economy. 

Given the size of the Indian economy and its proximity to Pakistan, India should have been a major trading partner as was the case in the late 1940s, Burki said. Bad relations between the two countries have seen a falling off of trade. The slow start to a regional trading arrangement approved by the seven countries of the South Asian Association for Regional Cooperation (SAARC) in January 2004 is also a consequence of the suspicion that continues to exist between the two countries.

Burki favoured Regional Trade Agreements (RTAs) as the way forward for Pakistan, especially with the two growing Asian economies of China and India, neither of which are currently a destination for Pakistan’s exports. Some of the energy expended on the WTO’s multilateral trade talks would be better diverted to RTAs, he said.

Burki also pointed to the lack of diversity in Pakistan’s trade. In 2006-07, five exports -- cotton manufacture, leather and leather products, rice, synthetic textiles and sports goods -- accounted for three-fourths of the value. Cotton-based products constituted close to 60% of total exports. Burki argued that for more than four decades, Pakistan had followed the import substitution strategy for economic growth. It was only in the early 1990s that South Asian countries began to adopt more open policies towards trade and capital flows.

Pervez Hasan, formerly of the World Bank, argued for less protection for certain industries and restructuring of exports. “We are where we are because we succumbed to the textile industry’s pressures, but without major investments in plant and machinery plus human development, led by women’s participation, it will not be possible to make further progress.”

Abid Farooq, unofficially representing Pakistan’s textile industry, complained that the US had not provided Pakistan with a level playing field when it came to textiles. What Pakistan wants is equitable market access that the US has provided to certain African and Middle Eastern countries, he said.

June 21, 2007