Do we need an annual trade policy any longer? Many businessmen and academics don’t really see any sense in it. They argue that the government should rather spell out its long-term trade, industrial and investment vision, identifying trade opportunities in various sectors for a period of at least five years.

It should give a clear roadmap as to how it plans to secure greater market access, attract domestic and foreign investment in industries it wishes to encourage, lower cost of industry and exporters and improve their capacity to compete in the global markets.

“Trade policy is a relic of the past. Apart from Pakistan and a few other states, I’m not familiar with many countries that issue any annual trade policy,” says development economist Navaid Hamid, who teaches at the Lahore School of Economics.

“It doesn’t really make sense to have an annual trade policy. It was required when we (and other countries) could use high customs tariffs and duties as our main trade promotion tool as well as a major source of government revenues. Annual trade policy made a sense in those times, not now,” he maintains.

“Now you can make strategic changes whenever you want to. You don’t need a trade policy for that. Having trade policy as annual feature means we are offering bureaucracy an opportunity to favour some and discourage others. It creates more confusion. We need a more transparent and honest process for encouraging (international) trade and look at long-term economic and trade growth,” Navaid insists.

Leading businessman Akber Sheikh too wants the government to do away with trade policy as an annual feature. “It was okay to have annual trade policy when the economy was mostly controlled by the state. Now we don’t really want it because the nature of business has changed altogether and we have moved rapidly towards privatisation and a free market regime under the World Trade Organisation (WTO). Successive governments have pursued the same economic, industrial and trade policies over the last several years. We therefore don’t really need trade policy every year. We should have a long-term policy detailing a vision and roadmap for enhancing our capacity to participate in the international trade,” he says.

He says most changes in the trade regime – like liberalisation of import with India as announced in the latest trade policy – could actually be effected through SROs and did not require a lengthy trade policy. “This is not my opinion alone. Most businessmen think in these terms. Also we attach too much hopes on trade policy and when we don’t see any of those fulfilled we get disappointed,” Akber says.

Years back former Commerce Minister Razzak Dawood had also stated that many people don’t look at the annual trade policy favourably and want the government to discontinue this practice.

“What is the use of a long speech by the minister and piles of papers if the so-called policy does not to contain anything substantial?” wonders former Lahore Chamber of Commerce & Industry (LCCI) president Pervez Hanif. “The previous government made a number of promises and announced numerous initiatives – such as establishment of garment cities, industrial clusters, branding and marketing of Pakistani products, helping exporters open up offices in major markets – to boost exports from Pakistan. None of these promises were fulfilled nor any initiatives have materialised so far,” he laments. “Same goes for the incumbent government,” he says.

He maintains that no government has ever consulted private sector or exporters before formulating a trade policy. “It is a document prepared by the ‘babus’ of the commerce ministry without any input from the stakeholders,” he says.

“We just don’t have any permanent mechanism for ensuring regular dialogue between the government – which is essential for policy predictability – and the private sector. It is because of this gap that no trade policy has ever been able to lay out a long-term vision or roadmap or any initiatives ever implemented or materialised. At the end of each year, we find only parts of the policy executed. Therefore we have new initiatives and promises at the start of every year without any link to the past,” Pervez says.

The weak dialogue between the business community and the government means Pakistan continues to lag in export and market diversification.

The first trade policy of the incumbent coalition led by the Pakistan People’s Party (PPP) for the year 2008-09 is also being seen and judged in this context – lacking in long-term vision, clear-cut roadmap for product and market diversification and a consultative process with the stakeholders.

The focus of the new trade policy – which sets export target of $22.1 billion for the current fiscal, up by 15 per cent from what was achieved last year – seems to be helping the industry, particularly export-oriented sectors cut their production costs through cheaper imports of industrial and other raw materials and capital goods from India and widening the scope of the DTRE and Temporary Importation schemes for duty- free import of materials for exports.

Besides liberalisation of imports from India and encouragement of Indian investment in CNG bus making, it gives certain fiscal, tax and other incentives to the domestic pharmaceutical industry to boost its exports and attract fresh investment in this sector, increases export rebate by one per cent for 14 small and medium industrial sectors like surgical instruments, carpets, fans, furniture, auto parts, cutlery, sports goods, etc and establish industrial clusters in various cities in Punjab, Sindh and the NWFP.

It promises to zero rate exports by refunding indirect taxes on input costs of exporters and subsidised loans for meeting international environmental standards. Other salient features of the policy include upgrading horticulture as an industry and announcement to support setting up of cool chain for facilitating horticulture exports, incentives for rice export.

“There is no vision of future in the trade policy of the PPP. The measures announced in it – like an increase in rebate for some industries, liberalisation of import from India, developing clusters, etc – are not really the material that make up a vision, a policy,” former caretaker finance minister Salman Shah argues.

“The policy should have given the roadmap to increase exports to a certain level over a period of, say, five years, and decrease imports to narrow the trade deficit, which has grown to $21.5 billion last year. Also, we don’t find any mention of the measures that would be taken to boost exports and in which sectors. The government has liberalised imports from India, which is a positive step, but it has not said a word if and how it plans to boost exports to the large Indian market. It says nothing on how do we intend to take advantage of our Free Trade Agreement with China. I seen nothing substantive or exciting in the trade policy,” Salman says.

A Sialkot-based exporter, who does not want to be identified, says the new trade policy has borrowed most of its content as such from the previous government’s trade policies without adding its own input to it. “There is nothing new in it. All the measures are actually continuation of the previous policies except for liberalisation of imports from India, which is a good sign for peace and development in the region,” he says.

LCCI president Mohammad Ali Mian says policy lacks concrete measures for curtailing imports.

“It is a traditional, run-of-the-mill policy. It lacks cohesion with the overall economic objectives as laid down in the budget speech. No major steps have been announced to control the rising cost of doing business. It reflects the gap between the government and business and trade bodies.”

He insists that the government should have given a package for major export industry – textiles and clothing, which still forms 57 per cent of the total exports – to lower its cost of doing business. “It would have been much better if the government had announced certain concrete measures to boost investment, which is direly needed to boost industry and exports.”

Former Pakistan Readymade Garments Manufacturers & Exporters Association chairman Ijaz Khokhar is dismayed at the absence of any clear-cut roadmap for boosting textile and clothing and other exports.