Pakistan’s trade policy review

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Some hits, many misses!

The Fourth Trade Policy Review (TPR) of Pakistan by the World Trade Organisation (WTO) turned out to be a mixed blessing, as the negative and positive features of the country’s economy were equally balanced at the end of the day.

The Trade Policy Review Mechanism (TPRM) is an integral part of the WTO System as Annex 3 of the Marrakesh Agreement. During the GATT (General Agreement on Tariffs and Trade) era, before the establishment of the WTO, trade policy reviews were restricted to trade in goods only.

But since January 1995, as per WTO Rules, reviews also started covering areas like trade in services and intellectual property rights. The frequency of the reviews of a WTO Member (160 in total) is related to its share of trade in goods and services in the multilateral trading system. So, members are reviewed under one of three different cycles: every two years for the four largest trading entities, counting the European Union as one; every four years for the next sixteen countries; and every six years for other members. For Least Developed Countries, the provision has an even longer interval.

Pakistan’s TPR takes place after every six years and the last was in 2007-08. It was a real learning experience to be a part of the delegation led by the federal commerce secretary. The atmosphere in the Room ‘W’ of the WTO Secretariat Building was quite electric, as all the representatives of the member countries present there were impatiently waiting for the chairperson to open the floor after the preliminaries, so that they could throw a barrage of questions and criticism on what has been stated in Pakistan’s Trade Policy Report about trade policy reforms during the period since last TPR (2007-08).

Pakistan’s TPR takes place after every six years and the last was in 2007-08. It was a real learning experience to be a part of the delegation led by the federal commerce secretary

The chair opened the floor and among others, Canadian representative was of the view that although economic profile of Pakistan was a story of healthy direction and healthy commitment, but it was also faced with many challenges, which were really worrisome for the world community in general and Canada in particular. He was of the view that on one hand Pakistan achieved some major macroeconomic gains, but she continued to work with the policies which kept the growth less than what it could have achieved otherwise.

He raised the issues of precarious security, chronic corruption, severe energy crisis and political interference in the affairs of foreign investors, especially in extractive industries. He also touched upon the issue of the ban imposed by Pakistan on livestock import from all over the world including Canada. Moreover, he said that while Pakistan is doing so many Free Trade Agreements, it should also give MFN status to India for the development of the region.

Colombia and United States raised the issues of fiscal gaps and tax evasion in Pakistan. The US Ambassador also urged Pakistan to phase out Statutory Regulatory Orders (SROs), which have resulted in Non-Tariff Barriers for almost 4000 product areas.

Pakistan’s agriculture trade with Australia showed positive growth and the latter received the first shipment of mangoes from the former; a fact which was notably mentioned by the Australian representative in the meeting. The representative of Mexico showed concern about the high MFN tariff in Pakistan which is around 15 percent. He also asserted that Pakistan should reduce the number of SROs.

The representative of Turkey was of the view that 98 percent tariff lines in Pakistan have a bound rate of 61 percent. He further expressed his concern about the 100 percent tariff protection available to the automotive sector in Pakistan.

Simplification of trade procedures and practices was also a target in 2001 and the TPR 2007 showed that measures have been taken to facilitate regional and global trade

A critical dissection of all the three trade policy reports submitted by the government of Pakistan to the WTO in 2001-02, 2007-08 and 2015 reveals that although Pakistan has been doing enough over time to improve its economic indicators and bringing its policies in line with its WTO commitments, it still needs to do more to be recognised as a worthwhile member of the international trading community.

In 2001 the European Union (EU) and United States were the biggest markets for Pakistani exports. It’s more or less the same even 14 years down the road in 2015; our exports didn’t show any significant signs of market diversification. Moreover, one of the salient features of the 2001 TPR was to go for export or product diversification and value addition in the export, and again there has not been any significant achievement in this regard.

Simplification of trade procedures and practices was also a target in 2001 and the TPR 2007 showed that measures have been taken to facilitate regional and global trade. Even after 2007 until 2015, significant steps have been taken to ease out trade and Integrated Check Post on Wagah-Attari Border between India and Pakistan is vital in this regard.

In 2015 TPR, Pakistan has vowed to work on a ‘4E’ development strategy i.e., Economy, Education, Energy and Elimination of extremism. The strategy sounds quite ideal and comprehensive, but it is to be seen now how effectively we will be able to give it a practical shape.