Illicit Trade in Pakistan: The Twin Task of Combating Illicit Trade and Boosting Economic Growth
GSP Plus & EU Market: Export Potential of Balochistan-Pakistan
GSP Plus & EU Market:
Export Potential of Balochistan-Pakistan
Authored by:
Jahangir Shah Kakar
Research Intern PRIME
Kakarat433@gmail.com
Supervised by:
Sarah Javaid
Research Economist Sarahkazmi1214@gmail.com
Supervised by:
Ali Salman
Executive Director PRIME
ali@primeinstitute.org
The study provides an overview of Pakistan's trade relations with EU countries as well as trade benefits for Balochistan-Pakistan's largest and least developed province. GSP+ status was granted by the EU to Pakistan in 2014 with the aim to promote human rights. sustainable development, and good governance through trade. After attaining the GSP+ status in 2014, the exports of Pakistan to the EU have augmented by more than 100% and have increased by 42.6% in 2022 as compared with 2021. Pakistan, along with other Asian countries like Bangladesh, Sri Lanka, and India, exports textiles and other goods to the EU markets while importing heavy machinery and other high-value items from the EU. Keeping Pakistan’s trade trends in view, unfortunately, little to no attention is given to other sectors including agriculture. This research study has attempted to identify the unrealized trade potential of Balochistan with respect to its trade with EU member states. Interestingly, Olives from Balochistan have great potential to be exported to the EU. Seafood from the country as well as the province is also being exported to Belgium, Spain, the Netherlands, and the UK. Balochistan, being one of the mineral-rich provinces with a vast track record of arable land, has the potential to benefit from the status with respect to agriculture goods, livestock products, and mineral resources to EU markets without any duties. This research suggests that Balochistan has not quite benefited from GSP+ status as compared with its existing potential in the fields of agriculture, livestock, and mining, and proposes a way forward. The government needs to work on devising policies in compliance with EU requirements to explore trade avenues with EU member states.
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PAKISTAN & EU:TRADE POTENTIAL The Bottlenecks and Roadmap for Reforms
PAKISTAN & EU:TRADE POTENTIAL
The Bottlenecks and Roadmap for Reforms
Trade plays a vital role in driving economic growth, but Pakistan’s trade performance has been volatile, with stagnant export growth and a rising trade deficit. The Generalized Scheme of Preferences (GSP) Plus is offered to a select group of exporters to the European Union (EU) based on a set of pre-defined criteria and the fulfillment of various conventions regarding human rights, labor rights, good governance, climate change and environment protection. Pakistan received the status on January 1, 2014. Pakistan currently is a signatory to all the 27 conventions and is also a signatory to the additional conventions proposed under a new revised scheme that is likely to replace the current one that is expiring at the end of this year. Although, Pakistan is not in imminent danger of losing the preferences awarded to its exporters, uncertainties loom as Pakistan faces challenges that can adversely impact its status. While Pakistan has experienced growth in trade with the EU during the GSP Plus period, it is imperative that the exporters continue to receive the preferences. To fully exploit trade potential and effectively compete with counterparts, it is essential to assess the trade patterns. This report undertakes a comprehensive exercise to not only determine the trading patterns with the EU but also bring forward recommendations that can help boost Pakistan’s exports to the EU and to the world.
This study outlines and evaluates the pattern of imports into the European Union (EU) from Pakistan, highlighting not only on the significance of the trading relationship between the EU and Pakistan but also emphasizing on the potential threats and risks if the preferences to Pakistani exporters offered through the GSP Plus Scheme are revoked. The main objective of this report is to identify the bottlenecks hindering trade growth between Pakistan and the EU and propose reforms to enhance bilateral trade relations such that Pakistan can benefit more from the GSP Plus scheme. The study undertakes a comparative analysis as it considers the trade patterns between the EU and Bangladesh, India and Vietnam. These three countries are major regional counterparts that are likely to influence the trading relationship between Pakistan and the EU.
Pakistan is the largest beneficiary of the GSP Plus scheme. The EU imported $9.1 billion from Pakistan in 2021, increasing from $5.4 billion in 2013. More than $6 billion of the imports in 2021 were under the GSP Plus preferences. The largest industry was the textile industry, accounting for approximately 80 percent of the imports. While imports into the EU from Pakistan in rice has increased significantly since 2017, the imports in leather have decreased. The share of leather products in imports decreased from 10 percent in 2013 to 5 percent in 2021. Further, the set of top market destinations in the EU for the four Asian countries is approximately the same, suggesting that import demand is likely to be generated from within these markets. This highlights the need to emphasize product diversification. Analysis on the patterns of imports in other non-traditional industries is crucial for policymakers seeking export diversification. This study further considers four major products from industries which are not traditionally export-oriented in Pakistan, namely denatured ethy-alcohol, medical instruments, inflatable balls, and footwear as products in which Pakistan has shown relatively higher potential in terms of trade with the EU.
This report presents various challenges with the help of different trade indicators. For instance, Pakistan reports higher values of revealed comparative advantage in the exports of textile products, leather products and rice, but Pakistan and Bangladesh report relatively lower unit values, particularly in the exports of textile products to the EU. Indian and Vietnamese exporters are less likely to compete against Pakistan in terms of the unit value of imports into the EU, while Pakistani exporters may face competitive pressures from Bangladeshi exporters. Further, this report considers the imposition of technical non-tariff measures and the degree of regulatory convergence achieved towards those imposed by the EU. Although the indicator on the adoption of NTMs scores high for the Asian counterparts of Pakistan, the indicator on regulatory convergence scores low for all countries. Pakistan with low frequency and coverage of technical NTMS, lacks technical NTMs on its imports. This suggests that Pakistan does not impose pre-defined measures to counter the imports of substandard and dangerous goods into the country as observed in its counterparts, which has implications on quality of goods imported and produced in Pakistan. Customs and transport-related firm-level obstacles are briefly discussed towards the end of the report. Pakistani firms are the most constrained in this aspect.
One of the more important findings highlighted in this report is that the revocation of the GSP Plus status will lead to a trade loss of more than $3 billion, with significant loss in exports of bed linen, and men’s and women’s trousers. The biggest market affected will be Germany. The loss of $3 billion is significant as Pakistan faces critical balance-of-payment related challenges. Hence, it is crucial that all efforts are made to ensure that Pakistan complies with all the requirements to continue with the status. The loss of status will have a profound impact on the economy.
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Pakistan-and-EU-trade-potential.pdf
For inquiries, please contact info@primeinstitute.org or call at 03330588885.
Trade liberalization and economic growth – A case study of selected SAARC Countries
Interest in the detection of determinants of economic growth and discovery of their nature of relationships with economic growth has been long standing. This is imperative that higher economic activity leads towards higher level of national output and improved living standards. But with the induction of new thoughts aged controversies went away, while indeed some new crept in. Topical research pinpoints the trade liberalization as a critical factor for economic well-being. What are the outcomes? Either positive or negative but accrual of trade obstructionis becoming a matter of concern with global implications. International trade has its unique importance, because protectionism and relaxation trade directly or indirectly affects the global economy and occasionally generates the world economic crisis. It is observed that trade problems are born before the universal crises struck, so one cannot deny the unmatchable significance of commercial policy for economic growth in any economy.
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Trade liberalization and economic growth – A case study of selected SAARC Countries
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Trade in Services
This study was carried out from the 3rd to 24th June 2016 by PRIME (Policy Research Institute of Market Economy), Islamabad as a part of a CUTS International and Australia Aid Project entitled “Geneva Trade and Business Connexion: South and South East Asia”. The main objective of the project is to improve the capacity of the small and medium enterprises (SMEs) to provide input into their government and their WTO delegations so as to make their negotiating positions more fully aligned with on the ground conditions faced by small scale enterprises.
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Trade Facilitation Agreement – Improving capacity of SMEs
This study was carried out from 4 to 25 May 2016 by PRIME (Policy Research Institute of Market Economy), Islamabad as a part of a CUTS International and Australia Aid Project entitled “Geneva Trade and Business Connexion: South and South East Asia”. The main objective of the project is to improve the capacity of the small and medium enterprises (SMEs) to provide input into their government and their WTO delegations so as to make their negotiating positions more fully aligned with on the ground conditions faced by small scale enterprises.
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For inquiries, please contact info@primeinstitute.org or call at 03330588885.
Technical Barriers to Trade
This study was carried out from the 17th August to 14 September 2016 by PRIME (Policy Research Institute of Market Economy), Islamabad, as part of a CUTS International and Australia Aid Project entitled “Geneva Trade and Business Connexion: South and South East Asia”. The main objective of the project is to enable the private sector in these countries to apprise the relevant governments and their WTO delegations of the ground conditions faced by exporters, and thus have more meaningful negotiation positions.
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Position Paper on Export Development Fund
Export Development Fund (EDF) was formally established through an Act namely ‘Export Development Fund Act 1999’ with the purpose to strengthen and develop infrastructure for promotion of exports through Export Development Surcharge (EDS). In 2005 an amendment came, which provides that Federal Government is required to collect 0.25 percent of export receipts and transfer to EDF maintained by Ministry of Commerce in the following year.
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Position Paper on Export Development Fund
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GSP Plus UNCAC Compliance
International compliance laws are becoming challenging for companies in supply chain including importers, exporters and indenters. Foreign companies are increasingly complying with international laws including Foreign Corrupt Practice Act (FCPA), UK Bribery Act, Brazilian Clean Company Act etc. and significantly penalising the counter-parts for non-compliance.
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Facilitation versus Intervention – An analysis of trade organizations act 2013
Pakistan is amongst one of the few countries where trade organisations are regulated by the government.
In order to regulate these organisations, Trade Organisation Act was introduced in 1961. This act was later amended in the shape of trade organisations act 2013, with the main objective to frame rules and regulations for trade organizations. One of the main purposes of this act is to ensure appropriate representation of all businesses at all levels in business organisations. The act also focuses on defining the purpose, role, responsibilities and appropriate framework including code of corporate governance for trade organisations. The Director General Trade Organisations (DGTO) was established in 2007 as a regulatory body to implement the provisions of the aforesaid ordinance.
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Facilitation versus Intervention – An analysis of trade organizations act 2013
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Champions and Under-Achievers An analysis of exports performance in Pak
Pakistan’s share in world exports has stayed stagnant at 0.14 percent from 2010 to 2014. In contrast, developing countries exports registered fastest growth of 5.9 percent for major commodity groups followed by 2.9 percent for developed countries in 2014. The share of Indian exports increased from 1.4 percent in 2010 to 1.7 percent in 2014.
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Champions and Under-Achievers An analysis of exports performance in Pak
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Case for more trade liberalization with China
One cannot doubt the emotional attachment of the majority of Pakistanis with China. Generations of Pakistanis are bred on the belief of all-weather friendship with China. And China did prove its worth over the decades of supporting Pakistan and standing by it in hours of trial. On the economic front, Pakistan is the second country, with whom China has entered into a Free Trade Agreement (FTA). Post-FTA, China has become the largest trading partner of Pakistan, with a caveat of persistent high trade deficit suffered by Pakistan. Even without statistical evidence, one can observe presence of Chinese products ranging from high-end electronics to toiletries in large swathes of Pakistan.
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Case for more Trade Liberalization with China (2014)
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