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BR Research

Exercises in futility

TDAP’s website lists more than 50 trade missions sent abroad to countries that range from all of Pakistan’s neighbou
Published July 25, 2017

TDAP’s website lists more than 50 trade missions sent abroad to countries that range from all of Pakistan’s neighbours to African countries such as Kenya, Morocco and Nigeria. Senegal recently joined these ranks with the Inaugural Session of the Joint Commission between Pakistan and Senegal, held on July 20-21, in Senegal’s capital Dakar.

Among other topics of cooperation was the expansion of trade between the two countries. Trade partnership with the Economic Community of West African States (ECOWAS), an African regional trading block, was also discussed.

Admittedly, TDAP’s mission for such trade delegations is sound, especially with the aim of increasing Pakistan’s exports’ geographical spread. However, the fruits, or in most cases the futility of these trade delegations must be scrutinized.

Pakistan’s current bilateral trade with Senegal stands at $26 million. Pakistan’s bilateral trade with the ECOWAS region (which consists of 15 member states) comprised of less than 1 percent of Pakistan’s total bilateral trade with the world.

Though it can be argued that such low volumes of trade speak volumes for Pakistan’s scope of exports to an under explored region, it must be borne in mind that Senegal is 8,610 km away from Pakistan by air. Transporting goods by sea could easily take up to 71 days.

Cultural and linguistic barriers aside, the costs of transit itself would be prohibitive, especially given the nature of Pakistan’s low value exports that do not allow for much room for higher margins to cover costs. China is known for flooding international markets with its exports, yet even China’s bilateral trade with ECOWAS is less than 1 percent. Similarly, India’s trade with ECOWAS was less than 3 percent in 2016.

Yet cash-strapped Pakistan is eager to invest in trade delegations to countries that are not likely to bear significant fruits in the near future. On the other hand, the importance of regional connectivity and potential for trade with neighbours with which we share cultural similarities and historical ties is often overlooked.

Unlike regional trading blocs like North America’s NAFTA, South East Asia’s ASEAN and Latin America’s Mercos, SAFTA remains underutilized and ignored. Mired in politics and cross-border bloodshed, Pakistan seems to have forgotten that the most potential for trade is across the border. Rather than exercises in futility, such as trade delegations with little or no potential, investments need to be made to increase Pakistan’s exports to neighbours.

Copyright Business Recorder, 2017

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