Timely reality check
The finance ministry must have had its own reasons to expect a trade agreement with American, but visiting US Commerce Secretary Penny Pritzker brought a made-in-Washington reality check instead. She is, of course, right that the Obama administration simply does not have the kind of congressional leverage anymore that would muscle through such proposals. But there is also more. Despite repeated assurances to our friends in the Fund, we have been utterly unable, and incapable, of diversifying the export basket. And with a very limited, no value-add mix – comprising mostly textile products – Pakistan simply does not bring much competition to their import market, to say the least.
The focus, instead, will be on the business-to-business model, that brings together private sectors instead of government departments. And she was difficult to fault – especially considering the Pak-US equation – that ‘relationships between states based solely on interactions between governments are susceptible to instability, disruption and being defined by the crisis of the moment’. It is indeed far better to bind nations together in long term economic/financial/trade partnerships, so there is added incentive for politicians to iron out differences whenever they occur.
Significantly, she was very straight forward in discussing the new arrangement, and chances of its success. Simply put, it is not going to be viable in the present setup. Pakistan’s tax regime is ‘inconsistent and unfair’, the security situation remains compromised, and the power crisis is still unmanageable. Furthermore, there is an urgent need to streamline the bureaucracy. There are complaints from US businesses, apparently, of the bureaucratic procedure being ‘complex, arbitrary and unpredictable’. So not only is there no trade deal in the offing, there’s also little chance of any private sector initiatives. Finance Minister Ishaq Dar did not appear his usual self when he admitted how “inconsistency, rapid changes and abrupt negativities in the taxation regime does not work”, because his briefs to the local press are usually very different. Tax collection, energy, security, trade, inflation, etc, are all on the mend, and the economy’s never been better, is Dar sb’s usual line. It’s about time the finance ministry pulled up its socks. The nod from the States usually prompts the Fund to engage or disengage. If we are not fertile ground for western businesses, our future will be darker than the present.