Pakistan’s trade policy has generally followed the path of liberalisation since 1990, but relative to other fast developing countries, the process has been slow and significantly swung back and forth between import substitution and trade liberalisation. In early 90s, a major liberalisation programme was introduced by the then ruling party PML-N, focusing on reducing government intervention and promoting trade by bringing down tariffs and quantitative restrictions.

The process of liberalisation got interrupted in 1995 as regulatory duty of 10 percent was imposed on all imports. The reform process resumed in March 1997 as the new government reduced the maximum tariff rate to 45 percent and eliminated the 10 percent regulatory duty.

Despite some slowdown in 1998, following the sanctions due to nuclear detonations, the reform process picked up pace during 2001 and 2002. As a result of decade long reforms, overall average tariff rates were reduced from 47.1 percent in 1997-98 to 17.3 percent in 2002-03. These reforms converted Pakistan as one of the least protected market in the South Asian region, whose openness ratio rose from 25 per cent in 1999-00 to almost 30 per cent in 2004-05, and for the first time export growth rates reached double digit in 2004-06. While there was no significant liberalization between 2005 and 2007 but at least there was no reversal in policy process. In 2008, however, a number of regulatory duties were imposed and once again Pakistan leaned towards protectionism.