Diplomacy and perseverance pay off

Courtesy :- MA Malik

In view of the fact that 30 percent of Pakistan's exports, worth £3 billion, land in the European Union (EU) countries, the five years waiver granted by the World Trade Organisation Council (WTOC) for Trade in Goods for duty-free access of Pakistani goods to EU countries is decidedly a very significant and unprecedented step in the history of the world body, which will go a long way in reviving the sagging economy of Pakistan. It is estimated that this particular decision will fetch Pakistan additional earnings of 990 million euros. This unprecedented favour conferred on Pakistan at the request of EU itself, represents a rewarding success for the diplomatic efforts and perseverance of the present government in convincing the EU countries that instead of aid, what Pakistan required was enhancement in its trade and preferential treatment to its exports to EU. The initiative for ‘Trade not Aid’ was launched in the backdrop of the devastating deluge of July 2010, which had a debilitating impact on the economy of Pakistan besides incalculable damage to the infrastructure and loss of thousands of lives. 

The success of this endeavour is also significant from the aspect that 70 percent of our total exports to EU consist of textile goods. The textile industry is the mainstay of our economy and ever since the inception of Pakistan, has been the biggest source of foreign exchange earnings. More than 50 percent of our export earnings come from this sector. This industry accounts for 40 percent of the industrial employment and provides livelihood to more than 10 million farming families. This step, in addition to enhancing our export earning, will also generate myriad of employment opportunities within the country. The EU High Representative Catheirne Ashton described this development in these words, "The five-year plan is an expression of EU's determination to support Pakistan's institutions and civil society. The EU will continue to work closely with Pakistan as it seeks to address its economic and developmental challenges and provide security for its people.” The government of Pakistan has reciprocated by appreciating the EU and its member states for their commitment to help Pakistan revive and stabilise its economy through trade. The All Pakistan Textile Mills Association has also expressed its appreciation and gratitude to the government of Pakistan for pulling off this unrivalled success.

The fact is that the present government has accorded top priority to enhancing exports. Its major focus has been to prop up the textile industry in line with the emerging trade realities on the global level with due emphasis on the internal dimensions. In this regard, the government has taken two very significant steps. First of all, issues like falling competitiveness, lack of sophistication and diversification of products stemming from weaknesses inherent in the economy, have to be addressed through a medium-term plan called ‘Strategic Trade Policy Framework 2009-12 (STPF)’. It provides assurances for continuation of trade policy for three years and the businesses can plan their production and export orders accordingly. As part of this initiative the Commerce Ministry has provided Rs 27.3 million from Export Development Fund for opening FPCCI offices in China and Brussels for ensuring export marketing. Similarly, the ministry has also made available Rs 9.380 million for installation of videoconferencing facility at FPCCI offices at Karachi, Lahore, Quetta and Peshawar.

The second and the most radical policy initiative with regards to tackling the problems of the textile industry and enhancing exports has been the announcement of the first-ever textile policy. This is for the first time in the history of Pakistan that the textile industry has received the priority it deserved. The policy spanning 2009-14 aims at reviving the textile sector through Textile Investment Support Fund (TISF) of Rs 40 billion. It envisages developing international and domestic demand-driven capabilities, infrastructure improvement, skill development, standards for international compliance, increasing productivity, improving quality and ensuring optimum utilisation of resources. It aims to achieve an export target of $25 billion in five years and increasing employment in the industry by 100 percent. It also focuses on investment of $8 billion by the private sector towards increasing capacities. The policy also stipulates sub-sector initiatives on public-private cooperation basis. In this regard, the policy purports to improve and revitalise ginning, spinning, knitting, processing, fashion designs, handlooms and handicrafts, carpets and technical textiles.

The textile industry has grown as the single largest manufacturing sector in Pakistan. However, support industries like textile machinery manufacturing, textile dyes and chemicals and accessories have not developed proportionately. Most of the demand is met through imports. To reverse the trend the policy prescribes promotion of joint ventures with leading international brands by providing appropriate incentives for such undertakings. To encourage women’s participation in the industry, the government will pick two regulatory costs on social security and EOBI.

Another salient feature of the policy is that the government will be extending support to ensure access of Pakistani textiles in some of the key destinations of our textile exports particularly USA and EU. Preferential access as well as FTAs in such markets will be the focus of such efforts. The WTO decision is undoubtedly a sequel to the successful lobbying by the government in line with its stated objectives of the textile policy and deserves unqualified accolades of all stakeholders.


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