Pakistan’s trade balance has improved by 19%, as the deficit declined from $37.6 billion to $30.6 billion during the last fiscal year.
According to the one-year performance, the export remained stable at around $23 billion. Pakistani exports were not affected by regional geopolitical uncertainty in the wake of Pulwama incident, depreciation of major currencies such as Euro and British Pound due to Brexit and trade war the United States and China.
The report states that the stability in exports was due to various policy changes, the extension of PM’s Export Enhancement Package for three years, relief to five major export sectors in terms of energy prices, rationalization of the exchange rate and import tariff concession on 422 raw materials of export-oriented industries.
The country’s imports reduced from $60.8 billion to $53.8 billion (12pc) during the last fiscal year (FY19).
Prudent steps were taken to manage the outflow of imports. These included imposition of regulatory duty on non-essential imported items, sanitary and phytosanitary restrictions imposed on imported food items, labeling conditions and mandatory halal certification imposed on imported edible products, reforms in import policy for used cars, etc.
The government also successfully got market access in different potential markets, including China and the Middle East.
In the second phase of Pakistan China Free Trade Agreement (PCFTA-II) concluded in May, Pakistan had received immediate market access on 313 items, which covered over $8.7 billion of Pakistan’s global exports and $64 billion worth of Chinese imports.
China allowed duty-free market access to Pakistani textiles and food items, including yarn, sugar, and rice, worth $1 billion. As an appendage to Pakistan-Indonesia Preferential Trade Agreement (PTA), Pakistan also managed to get unilateral market access from Indonesia on 20 products.
According to the report, following Prime Minister Imran Khan’s visit to Qatar in January 2019, the eight-year-old ban on Pakistani basmati rice was lifted and a tender for procurement of 4,000 tonnes of Pakistani basmati rice was issued in July 2019.
Pakistan had also received a 500,000MT rice export order from Iran. In addition, the government revived technical level talks with South Korea to negotiate on a Free Trade Agreement (FTA), which had been stalled since 2017.
Legal and Policy Reforms
The government initiated legal and policy reforms in the Ministry of Commerce in order to increase the country’s exports. A National Tariff Policy was prepared as part of the government’s 100-day agenda to transform import tariffs from being a revenue generation tool to a trade policy instrument.
The report further stated that import tariffs on 1,635 raw materials were removed in budget 2019-20.
Exporters were provided with liquidity relief through simplification of procedures regarding sales tax refunds’ disbursement under the PM’s Export Package. They also remained insulated from the increase in gas and electricity prices despite a hike in the international market.
Pakistan’s first-ever Geographical Indications Law (GIL) has been submitted to the cabinet for further approval from the parliament.
An integrated anti-smuggling strategy has been developed by the Commerce Division on the prime minister’s directions for “collaborating efforts of civilian and security agencies to protect domestic industry, trade and revenues”.