trade and manufacturing data une-2013

The Pakistan Business CouncilThe Pakistan Business CouncilThe Pakistan Business CouncilThe Pakistan Business CouncilM-02 Mezzanine Floor, Beaumont Plaza, 10 Beaumont Road, KarachiTel: (021) 35630528-9Fax: (021) 35630530Website: www.pbc.org.pk

Selected Trade and Manufacturing Data for Pakistan

A Brief AnalysisJune 2013

Disclaimer:Disclaimer:Disclaimer:Disclaimer:The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Board of Directors and Members of the Pakistan Business Council or the companies they represent.Any conclusions or analyses based on IDB, CTS, UNCTSD and WEO data are the responsibility of the author(s) and do not necessarily represent the opinion of the WTO, IMF or UNAlthough every effort has been made to cross check and verify the authenticity of the data used, the Pakistan Business Council does not guarantee the data included in this work.

IntroductionIntroductionIntroductionIntroduction

Each year the Research Unit of the Pakistan Business Council (PBC) publishes selected trade

figures of Pakistan and briefly analysis the likely impact of a liberalized trade regime on

domestic manufacturing. The PBC supports free trade and strongly believes that trade as opposed

to protectionism leads to domestic industry becoming competitive and able not only to defend its

domestic market share but also to compete in regional and global markets. However for this

competitiveness to develop, domestic industry needs a level playing field in its own markets. In

Pakistan, domestic manufacturers have to contend with massive under-invoicing & mis-

declarations in imports and outright smuggling in the garb of transit trade. A simple example of

prevailing unfair practices is reflected in the US$2.6 billion difference in the reported figures of

actual Chinese exports to Pakistan as reported by China and the figures reported by Pakistan

Customs of the value of Chinese imports into Pakistan in 2012. Similar is the case of transit trade

where large quantities of basic raw material are being imported by Afghanistan for which there

is no industry in that Country.

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The Pakistan Business CouncilThe Pakistan Business CouncilThe Pakistan Business CouncilThe Pakistan Business Council

The Pakistan Business Council (PBC) is a business policy advocacy platform setup in 2005 by 14

of Pakistan’s (now 42) largest private-sector businesses including multinationals. The PBC board

is elected by its members for a three year term and is headed by a non executive Chairman. The

current Chairman is Mr. Sikander Mustafa Khan. The PBC secretariat is professionally managed

by a fulltime paid CEO who at present is Mr. Kamran Y. Mirza, who brings with him more than

36 years of corporate experience in the Pakistani environment.

The PBC is a not-for-profit entity registered under Section 42 of the Companies Ordinance

1984. Though it is not required under the Law to do so, it follows to the extent possible the Code

of Corporate Governance as applicable to listed companies.

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Objectives of the PBC:Objectives of the PBC:Objectives of the PBC:Objectives of the PBC:The major objectives of the PBC as stated in its founding documents are:

� To provide for the formation and exchange of views on any question connected with the conduct of businesses in and from Pakistan.

� To conduct, organize, set up, administer and manage campaigns, surveys, focus groups, workshops, seminars and field works for carrying out research and raising awareness in regard to matters affecting businesses in Pakistan.

� To acquire, collect, compile, analyze, publish and provide statistics, data analysis and other information relating to businesses of any kind, nature or description and on opportunities for such businesses within and outside Pakistan.

� To promote and facilitate the integration of businesses in Pakistan into the World economy and to encourage the development and growth of Pakistani multinationals.

� To interact with Governments in the economic development of Pakistan and to facilitate, foster and further the economic, social and human resource development of Pakistan

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The PBC’s Position on Trade with India:The PBC’s Position on Trade with India:The PBC’s Position on Trade with India:The PBC’s Position on Trade with India:

The Pakistan Business Council supports trade with India as it believes that regional trade is the

next growth opportunity for Pakistan. The PBC however would like the Government of Pakistan

to ensure that Pakistani businesses have a level playing field in India especially in areas where

Pakistan has a competitive advantage e.g. cement, textiles and some agricultural products. PBC

has been officially nominated as the Secretariat for Pakistan India Joint Business Forum (PIJBF)

in June 2013. The PIJBF setup by the governments of Pakistan and India comprises of 15

prominent businessmen from each country. PBC is playing a vital role in Pakistan-India Trade

Normalization and is in favor of giving MFN status to India. PBC will create and monitor task

forces for major sectors for trade negotiation with India.

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PBC Members PBC Members PBC Members PBC Members ---- 42424242

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Table of ContentsBackground … 1Background … 1Background … 1Background … 1

Trade and Manufacturing Data for Selected Commodities … 7

Television Sets … 8

Paper and Paperboard … 9

Electric Motors … 10

Tea … 11

Ceramics … 12

Footwear … 13

Textiles – Synthetic Fabrics, Ready Made Garments … 14

Pakistan’s Free Trade Agreements … 15Pakistan’s Free Trade Agreements … 15Pakistan’s Free Trade Agreements … 15Pakistan’s Free Trade Agreements … 15

Pakistan – Sri Lanka FTA … 17

Pakistan – China FTA … 23

Pakistan – Malaysia FTA … 29

Export Potential with Selected Partners … 35Export Potential with Selected Partners … 35Export Potential with Selected Partners … 35Export Potential with Selected Partners … 35

European Union (GSP+) … 37

Total EU Imports from Bangladesh, Pakistan, Sri Lanka and Vietnam and India… 39

Share of EU’s Trade with the World … 40

GSP+ and its Workings … 41

Benefits of GSP+ to Pakistan … 42

Conditions to Attain GSP+ Status … 43

Regional Trade and Trade with India … 45Regional Trade and Trade with India … 45Regional Trade and Trade with India … 45Regional Trade and Trade with India … 45

Trade Prospects within the Region … 46

SAFTA is heavily under-utilized … 47

Pakistan-India Trade as Percentage of their Inter-SAARC Trade … 48

Pakistan-India Trade as Percentage of their World Trade … 49

Pakistan-India Bilateral Trade in 2012 … 50

Pakistan’s Top 5 Imports from India … 51

Pakistan’s Top 5 Exports to India … 52

Potential of Exports … 53

Sampling of Potential Export Items … 54

Problems of Under Invoicing and Misreporting … 55Problems of Under Invoicing and Misreporting … 55Problems of Under Invoicing and Misreporting … 55Problems of Under Invoicing and Misreporting … 55

Comparison of Official 2012 data From Top 10 Import Partners … 56

Pakistan – India: Difference in Reported Import/Export Figures … 57

Pakistan – China: Difference in Reported Import/Export Figures … 58

Pakistan – China: Discrepancy in Import Figures for Selected Commodities - 2011 … 59

Top 10 Imported Commodities under the ATTA by Afghanistan … 60

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BackgroundBackgroundBackgroundBackground

• Government & Industry urgently need to develop a strategy to reduce the trade gap and to bring about higher levels of economic growth

• It is critical to revive the manufacturing sector as this will lead to:– Creation of jobs

– Reduction in imports as domestic manufacturing regains domestic market share

– Increased competitiveness in export markets

Page 1


The current Foreign Exchange situation is grave. The trade deficit of $19.2 B is very high and not sustainable. Current Account Balance took a dive.

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Source: United Nations Commodity Trade Statistics Database and CalculationsWorld Economic Outlook Database, IMF

BackgroundBackgroundBackgroundBackgroundReducing our import bill looks difficult due to the highly inelastic composition of our imports.

Source: United Nations Commodity Trade Statistics Database

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The top 10 items accounted for 72%, 71% ,73% and 74% of our imports in2009, 2010, 2011 and 2012 respectively.


Majority of Pakistan’s exports are still based around a single crop (Cotton)/manufacturing sector (Textiles). Export diversification, though necessary, looks difficult in the near term

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As a result, Pakistan’s export performance in the world has declined with competitors starting to either catch up or outstrip Pakistan

Source: WTO and Calculations

Trade and Manufacturing Data for Trade and Manufacturing Data for Trade and Manufacturing Data for Trade and Manufacturing Data for Selected CommoditiesSelected CommoditiesSelected CommoditiesSelected Commodities

Page 7

Television SetsTelevision SetsTelevision SetsTelevision Sets

Source: Trade Data: United Nations Commodity Trade Statistics Database (HS 02 code: 8528)Manufacturing Data: Pakistan Statistical Year Book, Pakistan Bureau of StatisticsTariff Data: World Trade Organization

Televisions were removed from the Televisions were removed from the Televisions were removed from the Televisions were removed from the ATTAATTAATTAATTA†††† negative list in 2005 negative list in 2005 negative list in 2005 negative list in 2005 corresponding with the decline in corresponding with the decline in corresponding with the decline in corresponding with the decline in domestic manufacture and legal domestic manufacture and legal domestic manufacture and legal domestic manufacture and legal imports. Post signing of the new imports. Post signing of the new imports. Post signing of the new imports. Post signing of the new APTTAAPTTAAPTTAAPTTA ††††††††, domestic manufactures and , domestic manufactures and , domestic manufactures and , domestic manufactures and import quantities have both import quantities have both import quantities have both import quantities have both diminished. Smuggling has led to both diminished. Smuggling has led to both diminished. Smuggling has led to both diminished. Smuggling has led to both low manufacture and legal importslow manufacture and legal importslow manufacture and legal importslow manufacture and legal imports

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† Afghan Transit Trade Agreement††Afghanistan Pakistan Transit Trade Agreement

Paper and PaperboardPaper and PaperboardPaper and PaperboardPaper and Paperboard

Source: Trade Data: United Nations Commodity Trade Statistics Database (Product HS 02 code: 48)Manufacturing Data: Pakistan Statistical Year Book, Pakistan Bureau of StatisticsTariff Data: Pakistan Country Profile, World Trade Organization

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Market share of domestic Market share of domestic Market share of domestic Market share of domestic manufacturers has manufacturers has manufacturers has manufacturers has gradually increased due gradually increased due gradually increased due gradually increased due to alternate energy to alternate energy to alternate energy to alternate energy arrangements. arrangements. arrangements. arrangements. Imports Imports Imports Imports slightly fell. Tariff at its slightly fell. Tariff at its slightly fell. Tariff at its slightly fell. Tariff at its highest levelhighest levelhighest levelhighest level

Electric MotorsElectric MotorsElectric MotorsElectric Motors

Source: Trade Data: United Nations Commodity Trade Statistics Database (Product HS 02 code: 850140, 850151-850153)Manufacturing Data: Pakistan Statistical Year Book, Pakistan Bureau of StatisticsTariff Data: Pakistan Country Profile, World Trade Organization

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Starting 2004, import Starting 2004, import Starting 2004, import Starting 2004, import quantities started quantities started quantities started quantities started outstripping domestic outstripping domestic outstripping domestic outstripping domestic manufacturing. The manufacturing. The manufacturing. The manufacturing. The subsequent lack of domestic subsequent lack of domestic subsequent lack of domestic subsequent lack of domestic production, even with production, even with production, even with production, even with increased imports, suggests increased imports, suggests increased imports, suggests increased imports, suggests capacity/competitive capacity/competitive capacity/competitive capacity/competitive constraintsconstraintsconstraintsconstraints

TeaTeaTeaTea

Source: Trade Data: United Nations Commodity Trade Statistics Database (Product HS 02 code: 090230, 090240)Manufacturing Data: Pakistan Statistical Year Book, Pakistan Bureau of StatisticsTariff Data: Pakistan Country Profile, World Trade Organization

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Domestic Blended quantities have Domestic Blended quantities have Domestic Blended quantities have Domestic Blended quantities have increased. Legal import quantities increased. Legal import quantities increased. Legal import quantities increased. Legal import quantities declined during the previous ATTAdeclined during the previous ATTAdeclined during the previous ATTAdeclined during the previous ATTA†††† but but but but picked up since the signing of the new picked up since the signing of the new picked up since the signing of the new picked up since the signing of the new APTTAAPTTAAPTTAAPTTA †† †† †† †† in in in in 2010. Reduction in sales tax 2010. Reduction in sales tax 2010. Reduction in sales tax 2010. Reduction in sales tax on tea from 16%on tea from 16%on tea from 16%on tea from 16% to 5% to 5% to 5% to 5% in 2012, to in 2012, to in 2012, to in 2012, to discourage smuggling, also increased discourage smuggling, also increased discourage smuggling, also increased discourage smuggling, also increased imports from Indiaimports from Indiaimports from Indiaimports from India

† Afghan Transit Trade Agreement††Afghanistan Pakistan Transit Trade Agreement

CeramicsCeramicsCeramicsCeramics

**Manufacturing data was not available for Ceramics

Source: Trade Data: United Nations Commodity Trade Statistics Database (Product HS 02 code: 6901, 6904-6911)Tariff Data: Pakistan Country Profile, World Trade Organization

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Building boom in Pakistan and the Building boom in Pakistan and the Building boom in Pakistan and the Building boom in Pakistan and the subsequent decline of the housing subsequent decline of the housing subsequent decline of the housing subsequent decline of the housing market between 2003market between 2003market between 2003market between 2003----2011. 2011. 2011. 2011.

A sudden rise in import quantities is A sudden rise in import quantities is A sudden rise in import quantities is A sudden rise in import quantities is apparently due apparently due apparently due apparently due to to to to cheap imports from cheap imports from cheap imports from cheap imports from China . Another reason could be duty China . Another reason could be duty China . Another reason could be duty China . Another reason could be duty evasion and high imports through evasion and high imports through evasion and high imports through evasion and high imports through Afghan Transit Trade. Afghan Transit Trade. Afghan Transit Trade. Afghan Transit Trade.

FootwearFootwearFootwearFootwear

Source: Trade Data: United Nations Commodity Trade Statistics Database (Product HS 02 code: 6401-6405)Tariff Data: Pakistan Country Profile, World Trade Organization

*Manufacturing data was not available for Footwear

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Both export and import Both export and import Both export and import Both export and import quantities of footwear quantities of footwear quantities of footwear quantities of footwear witnessed a sharp increase in witnessed a sharp increase in witnessed a sharp increase in witnessed a sharp increase in 2012 as compared to 2011. 2012 as compared to 2011. 2012 as compared to 2011. 2012 as compared to 2011. Imports quadrupled after Imports quadrupled after Imports quadrupled after Imports quadrupled after hitting lowest in 2011hitting lowest in 2011hitting lowest in 2011hitting lowest in 2011

Textiles Textiles Textiles Textiles –––– Synthetic Fabrics, Ready MadeSynthetic Fabrics, Ready MadeSynthetic Fabrics, Ready MadeSynthetic Fabrics, Ready MadeGarmentsGarmentsGarmentsGarments

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Cause for concern is that Cause for concern is that Cause for concern is that Cause for concern is that imports under ATTA as well imports under ATTA as well imports under ATTA as well imports under ATTA as well as exports of synthetic fabrics as exports of synthetic fabrics as exports of synthetic fabrics as exports of synthetic fabrics to Pakistan (reported by to Pakistan (reported by to Pakistan (reported by to Pakistan (reported by China) are greater than the China) are greater than the China) are greater than the China) are greater than the total legal imports reported total legal imports reported total legal imports reported total legal imports reported by Pakistanby Pakistanby Pakistanby Pakistan

Source: Trade Data: United Nations Commodity Trade Statistics Database (Product HS 02 code: 5407, 5408, 5512-5516)Tariff Data: Pakistan Country Profile, World Trade Organization

Source: Trade Data: United Nations Commodity Trade Statistics Database (Product HS 02 code: 61 ,62)Tariff Data: Pakistan Country Profile, World Trade Organization

Pakistan’s exports Pakistan’s exports Pakistan’s exports Pakistan’s exports under this under this under this under this heading in heading in heading in heading in 2012 were $2012 were $2012 were $2012 were $3.7B.3.7B.3.7B.3.7B.Total imports reported by Total imports reported by Total imports reported by Total imports reported by Pakistan are less than the Pakistan are less than the Pakistan are less than the Pakistan are less than the exports to Pakistan reported by exports to Pakistan reported by exports to Pakistan reported by exports to Pakistan reported by just China. just China. just China. just China.

Pakistan’s Free Trade Pakistan’s Free Trade Pakistan’s Free Trade Pakistan’s Free Trade AgreementsAgreementsAgreementsAgreements

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Free Trade Agreements (FTA)Free Trade Agreements (FTA)Free Trade Agreements (FTA)Free Trade Agreements (FTA)

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• An FTA is an agreement between two or more countries to eliminate tariffs, quotas and preferences on most (if not all) goods and services traded between them. An FTA generally starts off with a reduction in tariffs before eventually leading to elimination of tariffs in 5-10 years.

• With WTO talks stalled, more and more countries are resorting to signing FTAs with their preferred trading partners. This could create problems of market access. For example, the EU is planning on signing an FTA with India but an EU FTA with Pakistan is not on the horizon. This will have an effect on Pakistan’s textile exports.

• Pakistan has signed 3 major FTAs (with about 10 more in the works)

Pakistan Pakistan Pakistan Pakistan –––– Sri Lanka FTASri Lanka FTASri Lanka FTASri Lanka FTA

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• Pakistan’s first FTA. Operational from June 2005

• Total trade in 2012 was $384.3 Million

• Pakistan got market access at zero duty for 102 products including agricultural goods, rice (with quantity restrictions) and engineering goods

• Sri Lanka was given duty free market access on 206 products including tea (with quantity restrictions), rubber and coconut

Pakistan Sri Lanka FTAPakistan Sri Lanka FTAPakistan Sri Lanka FTAPakistan Sri Lanka FTA

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GDPGDPGDPGDP1111:::: $211 B $232 B $59.1 B $59.4 B

GDP GrowthGDP GrowthGDP GrowthGDP Growth1111:::: 3.0% 3.7% 8.2% 6.4%

GDP per CapitaGDP per CapitaGDP per CapitaGDP per Capita1111:::: $1,202 $1,296 $2,877 $2,872

PopulationPopulationPopulationPopulation1111: 175 M 179 M 20.5 M 20.7 M

TradeTradeTradeTrade Surplus/(Deficit)Surplus/(Deficit)Surplus/(Deficit)Surplus/(Deficit)2222: ($18.3) B ($19.2) B ($9.7) B ($8.5) B

Govt. Surplus/(Deficit)Govt. Surplus/(Deficit)Govt. Surplus/(Deficit)Govt. Surplus/(Deficit)1,+1,+1,+1,+: (6.9) % (8.1) % (6.9) % (6.5) %

Current Account BalanceCurrent Account BalanceCurrent Account BalanceCurrent Account Balance1111:::: $0.21 B $(4.6) B ($4.6) B ($3.6) B

FDI, net inflowFDI, net inflowFDI, net inflowFDI, net inflow3333: $2.0 B $1.3 B $478 M $956 M

Tariff Rate, MFNTariff Rate, MFNTariff Rate, MFNTariff Rate, MFN3,*3,*3,*3,*: 12.3 % 12.3 % 6.5% 6.4 %

Comparison of Key Economic IndicatorsComparison of Key Economic IndicatorsComparison of Key Economic IndicatorsComparison of Key Economic IndicatorsPAKISTANPAKISTANPAKISTANPAKISTAN SRI LANKASRI LANKASRI LANKASRI LANKA

1. World Economic Outlook, IMF +(% of GDP)2. UNCTSD and calculations3. World Bank (data for 2009, 2010, and 2011)) *weighted mean of manufactured products

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2011201120112011 2012201220122012 2011201120112011 2012201220122012

Trends in Pakistan Trends in Pakistan Trends in Pakistan Trends in Pakistan ---- Sri Lanka TradeSri Lanka TradeSri Lanka TradeSri Lanka Trade

Source: United Nations Commodity Trade Statistics Database and Calculations

------------ FTA operationalFTA operationalFTA operationalFTA operational

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$218m$218m$218m$218m

Pakistan’s Trade Pakistan’s Trade Pakistan’s Trade Pakistan’s Trade Surplus with Sri Surplus with Sri Surplus with Sri Surplus with Sri Lanka reduced by Lanka reduced by Lanka reduced by Lanka reduced by $69m in 2012$69m in 2012$69m in 2012$69m in 2012

Comparison of Pre and Post FTA Import Comparison of Pre and Post FTA Import Comparison of Pre and Post FTA Import Comparison of Pre and Post FTA Import figuresfiguresfiguresfigures


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Import growth: Primarily in coffee, tea, mate and spices; vegetable plaiting materials and wood articles. Rubber imports declined

Comparison of Pre and Post FTAComparison of Pre and Post FTAComparison of Pre and Post FTAComparison of Pre and Post FTAExport figuresExport figuresExport figuresExport figures


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Export growth: Main export is cotton and its derivatives (yarn & fabrics). Export growth has occurred in salt, sulphur, earth stone, plaster, lime and cement

Pakistan Pakistan Pakistan Pakistan –––– China FTAChina FTAChina FTAChina FTA

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• Early Harvest Program (EHP) operational from Jan 2006. FTA operational from Nov 2006

• Total trade in 2012 was $9.31 Billion

• Pakistan got market access at zero duty for: Cotton fabrics, bed-linen and other home textiles, marble and other tiles, leather articles, sports goods, iron & steel products and engineering goods, industrial alcohol

• China was given market access mostly on commodities required for industrial growth: Industrial machinery, organic and inorganic chemicals, raw material for various industries including engineering sector, intermediary goods for engineering sector

Pakistan China FTAPakistan China FTAPakistan China FTAPakistan China FTA

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GDPGDPGDPGDP1111:::: $211 B $232 B $7,322 B $8,227 B

GDP GrowthGDP GrowthGDP GrowthGDP Growth1111:::: 3.0% 3.7% 9.2% 7.8%

GDP per CapitaGDP per CapitaGDP per CapitaGDP per Capita1111:::: $1,202 $1,296 $5,434 $6,076

PopulationPopulationPopulationPopulation1111: 175 M 179 M 1,348 M 1,354 M

TradeTradeTradeTrade Surplus/(Deficit)Surplus/(Deficit)Surplus/(Deficit)Surplus/(Deficit)2222: ($18.3) B ($19.2) B $155.0 B $296 B

Govt. Surplus/(Deficit)Govt. Surplus/(Deficit)Govt. Surplus/(Deficit)Govt. Surplus/(Deficit)1,+1,+1,+1,+: (6.9) % (8.1) % (1.3) % (2.2) %

Current Account BalanceCurrent Account BalanceCurrent Account BalanceCurrent Account Balance1111:::: $0.21 B $(4.6) B $201 B $214 B

FDI, net inflowFDI, net inflowFDI, net inflowFDI, net inflow3333: $2.0 B $1.3 B $244 B $220 B

Tariff Rate, MFNTariff Rate, MFNTariff Rate, MFNTariff Rate, MFN3,*3,*3,*3,*: 12.3 % 12.3 % 6.6 % 6.8 %

Comparison of Key Economic IndicatorsComparison of Key Economic IndicatorsComparison of Key Economic IndicatorsComparison of Key Economic IndicatorsPAKISTANPAKISTANPAKISTANPAKISTAN CHINACHINACHINACHINA

1. World Economic Outlook, IMF +(% of GDP)2. UNCTSD and calculations3. World Bank (data for 2009, 2010 and 2011) *weighted mean of manufactured products

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2011201120112011 2012201220122012 2011201120112011 2012201220122012

Net Exports Net Exports Net Exports Net Exports Improved by Improved by Improved by Improved by $0.72 B from last $0.72 B from last $0.72 B from last $0.72 B from last yearyearyearyear

Trends in Pakistan Trends in Pakistan Trends in Pakistan Trends in Pakistan ---- China TradeChina TradeChina TradeChina Trade

$4.07B$4.07B$4.07B$4.07B

------------ EHP operationalEHP operationalEHP operationalEHP operational

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Comparison of Pre and Post FTA ImportComparison of Pre and Post FTA ImportComparison of Pre and Post FTA ImportComparison of Pre and Post FTA Importfiguresfiguresfiguresfigures


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Import growth: Imports have grown for all top 5 items except manmade filaments and organic chemicals. For the domestic textile industry it is good that the import of manmade filaments has fallen



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Export growth: High Growth has primarily been in Cotton and its derivatives (yarn and fabrics) and raw materials. Cereals exports also saw multiple export growth in2012. All others except Ores, slag and ash had also grown

Pakistan Pakistan Pakistan Pakistan –––– Malaysia FTAMalaysia FTAMalaysia FTAMalaysia FTA

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• Early Harvest Program (EHP) operational from Jan 2006. FTA operational from Aug 2007

• Total trade in 2012 was $2.365 Billion• Pakistan has duty free market access for: cotton yarn &

fabrics, fruits and jewellery. However, textile made-ups are excluded.

• Malaysia was given preferential market access on palm oil, industrial machinery, organic and inorganic chemicals, raw material for various industries including engineering sector and intermediary goods for engineering sector

• Has received criticism for being a ‘Palm Oil’ FTA

Pakistan Malaysia FTAPakistan Malaysia FTAPakistan Malaysia FTAPakistan Malaysia FTA

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GDP1: $211 B $232 B $288 B $304 B

GDP Growth1: 3.0% 3.7% 5.1% 5.7%

GDP per Capita1: $1,202 $1,296 $9,941 $10,304

Population1: 175 M 179 M 29.0 M 29.5 M

Trade Surplus/(Deficit)2: ($18.3) B ($19.2) B $39.4 B $31 B

Govt. Surplus/(Deficit)1,+

: (6.9) % (8.1) % (3.7) % (4.3) %

Current Account Balance1: $0.21 B $(4.6) B $31.7 B $19.4 B

FDI, net inflow3: $2.0 B $1.3 B $9.2 B $12.0 B

Tariff Rate, MFN3,*

: 12.3 % 12.3 % 5.6 % 5.7 %

Comparison of Key Economic IndicatorsComparison of Key Economic IndicatorsComparison of Key Economic IndicatorsComparison of Key Economic IndicatorsPAKISTANPAKISTANPAKISTANPAKISTAN MALAYSIAMALAYSIAMALAYSIAMALAYSIA

1. World Economic Outlook, IMF +(% of GDP)2. UNCTSD and calculations3. World Bank (data for 2009, 2010 and 2011) *weighted mean of manufactured products

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2011201120112011 2012201220122012 2011 20122011 20122011 20122011 2012

Trends in Pakistan Trends in Pakistan Trends in Pakistan Trends in Pakistan –––– Malaysia TradeMalaysia TradeMalaysia TradeMalaysia Trade

$1.9 B$1.9 B$1.9 B$1.9 B

------------ EHP EHP EHP EHP

operationaloperationaloperationaloperational

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Net Exports Net Exports Net Exports Net Exports Improved by Improved by Improved by Improved by $0.58 B from $0.58 B from $0.58 B from $0.58 B from last yearlast yearlast yearlast year

Comparison of Pre and Post FTA Import Comparison of Pre and Post FTA Import Comparison of Pre and Post FTA Import Comparison of Pre and Post FTA Import figuresfiguresfiguresfigures


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Import growth: Import growth has only been in Mineral Fuels. Little to no increase in

imports of other commodities. Drastic fall in imports of Palm Oil; mostly due to a drop in

Palm Oil prices



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Export growth: Very little growth in exports of Fish, other textiles and Sugars. Exports of Cereals and Cotton had decreased as compared to 2011

Export Potential with Export Potential with Export Potential with Export Potential with Selected PartnersSelected PartnersSelected PartnersSelected Partners

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European UnionEuropean UnionEuropean UnionEuropean Union(GSP+)(GSP+)(GSP+)(GSP+)

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• Total imports of the European Union (27 countries) in 2012 was $5.7 trillion

• Of this, the total Pakistani exports to the European Union in 2012 were $5.3 billion

• If taken as one entity, the European Union is Pakistan’s most important market comprising of 21.5% of Pakistan’s exports in 2012 (24% in 2011).

• Pakistan has been unable to improve its penetration of European markets with other competitors (low-income, developing countries) increasing their share in European Union trade

• Applying for and receiving GSP+ status therefore attains a lot of significance if Pakistan wants to continue to compete in this market

European Union MarketEuropean Union MarketEuropean Union MarketEuropean Union Market

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Total EU Imports from Bangladesh,Total EU Imports from Bangladesh,Total EU Imports from Bangladesh,Total EU Imports from Bangladesh,Pakistan, Sri Lanka, Vietnam and IndiaPakistan, Sri Lanka, Vietnam and IndiaPakistan, Sri Lanka, Vietnam and IndiaPakistan, Sri Lanka, Vietnam and India

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Pakistani exports to the EU have been outstripped by competitors many of whom started from a comparable base to Pakistan


Share of Selected Countries in EU’s TradeShare of Selected Countries in EU’s TradeShare of Selected Countries in EU’s TradeShare of Selected Countries in EU’s Tradewith the Worldwith the Worldwith the Worldwith the World

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Competitor countries are fast becoming more important trade partners for the EU than Pakistan


GSP+ and its WorkingsGSP+ and its WorkingsGSP+ and its WorkingsGSP+ and its Workings• GSP stands for Generalized Scheme of Tariff Preferences. It is a commitment

by all rich world developed countries to the WTO to provide preferential market access to developing countries

• In the EU, the GSP allows for significant preferences covering 6,200 tariff lines out of approximately 7100 non-zero tariff lines

• The GSP+ is a special incentive arrangement for sustainable development and good governance. It offers enhanced preferences for countries eligible for GSP that ratify and effectively implement 27 specified international conventions in the fields of core human and labour rights, the environment and good governance

• The main advantage of GSP+ over GSP is that it offers additional tariff preference, including duty-free preferences, for the same products plus 70 additional tariff lines

• According to the most recent proposal, GSP+ status will be awarded for a period of 10 years

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Benefits of GSP+ to PakistanBenefits of GSP+ to PakistanBenefits of GSP+ to PakistanBenefits of GSP+ to Pakistan

• The Common Customs Tariff ad valorem duties on majority of products exported by Pakistan shall be suspended or reduced

• In the textiles sector, the major export sector of Pakistan, GSP+ status would result in preferential margin b/w GSP and GSP+ of 5% for cotton and fabrics, and 9% for apparel and made-up textiles.

Example:

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CommodityEU-27

TariffGSP Tariff GSP+ Tariff

Everything But

Arms (LDC

Countries) Tariff

630210 – Bed Linen, Knitted or

Crocheted

(Designated ‘Sensitive Item’ by EU)

12%

9.6%

(reduction

of 20%)

0% 0%

Conditions to Attain GSP+ StatusConditions to Attain GSP+ StatusConditions to Attain GSP+ StatusConditions to Attain GSP+ Status

• Ratification of the 27 international conventions with a binding undertaking to maintain ratification, accepts reporting requirements and cooperate with monitoring procedure

• The country has to be considered vulnerable due to a lack of diversification and insufficient integration within the international trading system. According to the proposed criteria, Pakistan qualifies

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2010201020102010 2011201120112011 2012201220122012

Percentage of 5 largest GSP sections of imports

from Pakistan* into the EU of listed products in

total imports from Pakistan of listed products

85.7% 85.7% 86.5%

Percentage of imports from Pakistan into the EU

of listed products in total imports into the EU of

listed products originating in GSP beneficiary

countries

0.10% 0.11% 0.10%

Should Should Should Should be be be be greater greater greater greater than 75%than 75%than 75%than 75%

Should Should Should Should be less be less be less be less than 1%than 1%than 1%than 1%


* Section 8, 11, 12, 18 and 20* Section 8, 11, 12, 18 and 20* Section 8, 11, 12, 18 and 20* Section 8, 11, 12, 18 and 20

Regional Trade and Trade with IndiaRegional Trade and Trade with IndiaRegional Trade and Trade with IndiaRegional Trade and Trade with India

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• The SAARC region as a whole conducted world trade of $938 billion in 2012

• Despite this, inter region trade consisted of only 3.5% of that total – much below other economic regions such as ASEAN, EU and MERCOSUR

• The primary reason for this is the political hurdles to trade between the two biggest economies of the region, India and Pakistan

• If trade between the two countries is liberalized in a proper and equitable manner, it would result in a significant increase in trade volumes accompanied by economic and consumer benefits for both countries

Trade Prospects within the RegionTrade Prospects within the RegionTrade Prospects within the RegionTrade Prospects within the Region

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SAFTA is heavily underSAFTA is heavily underSAFTA is heavily underSAFTA is heavily under----utilizedutilizedutilizedutilized

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Source: United Nations Commodity Trade Statistics Database and calculations

In 2012 total world trade by SAARC countries was nearly $938 billion of which Inter-SAARC trade was only $33 billion

PakistanPakistanPakistanPakistan----India Trade as a Percentage ofIndia Trade as a Percentage ofIndia Trade as a Percentage ofIndia Trade as a Percentage oftheir Intertheir Intertheir Intertheir Inter----SAARC TradeSAARC TradeSAARC TradeSAARC Trade

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As the two dominant economies in the SAARC region, trade between Pakistan and India constitutes a significant amount of their SAARC trade

PakistanPakistanPakistanPakistan----India Trade as a Percentage ofIndia Trade as a Percentage ofIndia Trade as a Percentage ofIndia Trade as a Percentage oftheir World Tradetheir World Tradetheir World Tradetheir World Trade

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Taken on a global stage though, Pakistan-India trade contributes a negligible amount to each countries total trade

PakistanPakistanPakistanPakistan----India India India India Bilateral Trade in 2012Bilateral Trade in 2012Bilateral Trade in 2012Bilateral Trade in 2012

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In 2012, bilateral trade between India and Pakistan was $1.9 billion. This is less than 10% of the potential bilateral trade between the two countries, $29 billion.


Pakistan’s Top 5 Imports from IndiaPakistan’s Top 5 Imports from IndiaPakistan’s Top 5 Imports from IndiaPakistan’s Top 5 Imports from India

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Total Imports from India in 2012 declined. Imports for Cotton and Organic Chemicals declined while import for residues & wastes of food, edible vegetables and plastics increased

Pakistan’s Top 5 Exports to IndiaPakistan’s Top 5 Exports to IndiaPakistan’s Top 5 Exports to IndiaPakistan’s Top 5 Exports to India

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Export Growth: Exports for Cotton have sharply increased in 2012. Exports also increased for Edible fruits & nuts, limestone & cement and copper.

Potential of ExportsPotential of ExportsPotential of ExportsPotential of Exports

• Conservative export potential of India for Pakistan is between $4-5 billion. This is based on calculations assuming no Tariff & Non-Tariff Barriers (NTBs)

• Methodology used in simple terms is substitution of all Indian imports from the World at the 6 digit HS level by Pakistani exports of commodities where Pakistan is a net exporter to the World

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Sampling of Potential Export Items Sampling of Potential Export Items Sampling of Potential Export Items Sampling of Potential Export Items –––– 2012201220122012

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Source: United Nations Commodity Trade Statistics Database and CalculationsData used for 2012

HSHSHSHS CCCCodeodeodeode Product labelProduct labelProduct labelProduct labelPotential Potential Potential Potential ($million)($million)($million)($million)

711319 Articles of jewellry &pt therof of/o prec met w/n platd/clad w prec met 1,522.7

271019 Other petroleum oils and preparations 326.6

520100 Cotton, not carded or combed 309.4

999999 Commodities not elsewhere specified 298.3

901890 Instruments and appliances used in medical or veterinary sciences, nes 283.9

740400 Waste and scrap, copper or copper alloy 135.6

390760 Polyethylene terephthalate 99.3

730690 Tubes, pipe & hollow profiles, iron or steel, welded, nes 94.4

730890 Structures & parts of structures,i/s (ex prefab bldgs of headg no.9406) 65.4

Problems of UnderProblems of UnderProblems of UnderProblems of Under----Invoicing Invoicing Invoicing Invoicing and Misreportingand Misreportingand Misreportingand Misreporting

Variance in data as reported by the Governments’ of Pakistan and its trading

partners for imports and exports of Pakistan as well as misuse of Afghan Transit Trade

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Comparison of Official 2012 data FromComparison of Official 2012 data FromComparison of Official 2012 data FromComparison of Official 2012 data FromTop 10 Import PartnersTop 10 Import PartnersTop 10 Import PartnersTop 10 Import Partners

Note: The figure reported by the importing country should be slightly higher because of the difference between CIF and FOB valuation


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The high variance in reported figures occurs mainly for China. The imports reported by Pakistan are much less than the exports reported by China.

Pakistan Pakistan Pakistan Pakistan –––– India: India: India: India: Difference in ReportedDifference in ReportedDifference in ReportedDifference in ReportedImport/Export FiguresImport/Export FiguresImport/Export FiguresImport/Export Figures

Difference in reporting has decreased for Pakistan Imports. $61 million in 2012. Difference in reporting for Pakistan Exports to India has risen to $152million



$152m$152m$152m$152m

$61m$61m$61m$61m

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Pakistan Pakistan Pakistan Pakistan –––– China: Difference in ReportedChina: Difference in ReportedChina: Difference in ReportedChina: Difference in ReportedImport/Export FiguresImport/Export FiguresImport/Export FiguresImport/Export Figures


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$2.6B$2.6B$2.6B$2.6B

$0.5B$0.5B$0.5B$0.5B


There has been a constant difference of $1.5+ B between the reported figures of China and Pakistan for the past many years. Highest Highest Highest Highest in 2012in 2012in 2012in 2012

Pakistan Pakistan Pakistan Pakistan –––– China: Discrepancy in ImportChina: Discrepancy in ImportChina: Discrepancy in ImportChina: Discrepancy in ImportFigures for Selected Commodities Figures for Selected Commodities Figures for Selected Commodities Figures for Selected Commodities ---- 2012201220122012


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The large amounts of under declared imports of textiles, machinery and rubber has hurt the domestic industry

Top 10 Imported Commodities under theTop 10 Imported Commodities under theTop 10 Imported Commodities under theTop 10 Imported Commodities under theATTA by AfghanistanATTA by AfghanistanATTA by AfghanistanATTA by Afghanistan

Keeping in mind the limited resources of Afghanistan, the large amounts of imports of the highlighted items suggests misuse of ATTA

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Source: Pakistan Customs

trade and manufacturing data une-2013

Documents

pakistan customs

pbc board

pbc secretariat

free trade

domestic industry

domestic manufacturing

case of transit trade

garb of transit trade