A probable Pak-Korea FTA initiative is just the blueprint trade authorities need to work on to squeeze fiscal leverage in an election season marked by bloating deficits and pressure on the BoP. Korea’s proactive shift, too, highlights posturing typical of the post-recession scenario, as the slowdown in western economies is hastening regional alliances. That Islamabad is seriously considering establishing a special economic zone for Korea is even better. It shows seriousness in official circles just when analysts had written off increased exports to offset the dangerously weakening rupee.
Yet such efforts are just breathers till the export act is got together. The FTA is designed to increase Pak-Korea trade from present $1.36 billion to $2-3 odd billion. The increase and intent, though appreciated, will need to be replicated far and wide to fill our current fiscal gap. In terms of trade outlook, relevant authorities must look for ways to incorporate value addition in the export mix. Pakistan’s basic sellers continue to revolve around agri and textile products, not market winners in today’s environment.
If the government has seriously decided to turn its attention to enhancing trade, we should see manufacturing and industry facilitated in ways not seen before. As things stand, official apathy combines with crippling energy shortage to limit output to well below optimal production. Meanwhile, FTAs will bring spill-over benefits as well, like FDI. Already, Seoul is considering taking up Islamabad’s offer of joint ventures in energy and engineering.
While the commerce ministry considers potential capitals for similar enterprises, it is advised to make visible arrangements to facilitate improved intra-saarc trade. It’s unfortunate that trade among the bloc amounts to an unimpressive seven per cent. With Asia beginning to follow cross-Atlantic slowdown currents, all economies will need improved financial interaction to stay afloat.
