Pakistan Business Council (PBC), a private sector non-profit advocacy platform, has observed that Pakistan's penetration in the European market is less as compared to its competitors despite attaining GSP plus status. According to analysis of PBC based on selected trade and manufacturing data for Pakistan, total imports of the EU (28 countries bloc) was around $6 trillion in 2014.
Pakistan's seven largest sectors of product make up 94.6 percent of its exports to the EU which implies that seven sectors contribute more than 75 percent of its exports to EU criteria. However, Pakistan may find it difficult to maintain GSP plus status due to not successfully meeting all the criteria in the long run. Commenting on trade prospects with the region, PBC said Saarc region as a whole conducted world trade of more than $965 billion in 2014 and $970 billion in 2013. Despite this, 2013's inter region trade consisted of only three percent of $970 billion 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.
BPC argued that if trade between India and Pakistan was liberalised 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. Conservative export potential of Pakistan to India in 2013 was between $2-3 billion. This is based on calculations assuming no non-tariff barriers. Export potential for Pakistan and India is calculated along items at six-digit HS code.
According to the analysis, Pakistani manufacturers have to contend with massive amounts of under-invoicing, misreporting and outright smuggling. Two such examples are explored in the study. First, a comparison shows discrepancy in the reporting of trade data by Pakistan's major trading partner namely China versus that reported by Pakistan. In the case of imports in 2014, from China, there was a $4.393 billion difference in the value of goods exported to Pakistan as reported by China versus the figures reported by Pakistan Customs of imports from China.
Second, smuggling appears prevalent under the guise of Afghan Transit Trade (ATT). Large quantities of commodities are being imported by Afghanistan for which there is limited demand by industry or limited domestic consumption in that country. For example, $500 million worth of special woven and tufted product, lace and tapestry was imported by the war-torn country in 2014. Similarly 48 percent of the tea imported via ATT, worth $42.7 million, was black tea in 2014, even though the prevalent favourite in Afghanistan is green tea.
Commenting on trade with Central Asian Republics, the report says that trade with CAR is faced with numerous impediments that include but are not limited to regional insecurity, terrorism, narcotics trafficking and production, infrastructure costs, and costs resulting from the lack of proper legal and regulatory systems, restrictive trade policies, poor border management, and the absence of effective transport facilitation.
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