Unseen barriers to trade

EDITORIAL: Just days after Pakistan impressed everybody by recording a 5.8 percent year-on-year rise in exports in dollar terms in July 2020, the International Trade Centre's (ITC's) latest export potential assessment for Pakistan called Invisible Barriers to Trade - Pakistan 2020: Business Perspectives has pointed out that more than half of the country's exporters struggle to no end with internal as well as external regulatory barriers. It turns out that simply by taking care of all these inefficiencies Pakistan could add $12 billion to its export proceeds, even after taking into account the disruptions caused by the coronavirus, by the year 2024. The report goes onto say that issues such as regulatory obstacles and lack of information transparency compromises as much as $7 billion of this untapped potential, especially for small and medium sized businesses trying to trade across borders. Surely, at a time when the government is trying different ways to address a severe financial crunch, it should do everything in its power to overcome all possible hurdles to enhanced trade, especially when Pakistan is one of a handful of countries that have not only successfully reopened their economies but also witnessed their trade earnings suddenly grow.

The report, which is based on a survey of 1,152 importers and exporters, also says that almost half the hurdles are homegrown, which means that the government is in a position to easily identify all the bottlenecks and then take corrective measures. That is why even ITC's acting executive director, Dorothy Tembo, was forced to note that, "There is great scope for the government of Pakistan to streamline processes, improve quality management and work with exporters to provide consistent, transparent and timely information." The most challenging non-tariff measures that Pakistani businesses face include complying with technological requirements, lack of trade-related information, and inadequate domestic infrastructure. According to the data compiled, exporters find regulations to be overly strict or compliance difficult in only about 12 percent of the cases, while local procedures are the main problem in 70 percent of the cases. Clearly, something needs to be done to relieve businesses and the export sector of all the pressure they are under. We do not want to be forced into a situation where businesses are discouraged to the extent that production and exports stagnate and the Balance of Payments (BoP) suffers just because the government didn't have the time or the will to put things right once and for all.

This should be an eye opener at a time when the finance ministry was thinking of broadening its horizon in terms of export destinations. You could sign up with just about every other country in the world for more trade, but all that would fetch only so much if everybody who wants to set up a business to export something to one of the new markets just gets tied up in a lot of unnecessary red tape. The government has very little elbow room as it is when it comes to the revenue it is able to collect, or is going to be able to collect going forward now that the coronavirus pandemic has pushed the world into a deep recession. Everybody knows it is going to fall short of the ambitious tax collection target that it has set for itself in this fiscal year. And the International Monetary Fund (IMF) and World Bank have recently warned that countries just like Pakistan are going to feel a bit of a pinch when it comes to remittances because of all the jobs lost in countries where most Pakistanis live and earn. And now whatever optimism last month's jump in trade earning was able to inspire has been somewhat swept away by this report, which has so nicely exposed all the invisible barriers to setting up businesses and trading that cripple our export machinery.

Since protecting exports is important, especially in such times when the kitty is always almost empty, and the fact that the government should do everything it can to get the extra $12 billion from exports by the next four years, it must immediately launch a two-point programme. One, it should set up a special body to identify and correct all problems that hinder exports in any way at the local level, and continue doing it till the mess is completely cleared no matter how long it takes. And two, it must start a programme that educates small and medium business owners about compliance with rules of countries they intend to trade with while it puts its own house in order. Everybody must also realise that time is of the essence in exercises such as these. Therefore the sooner the government gets off the mark, the better for everybody concerned.

Copyright Business Recorder, 2020