PAKISTAN imported a little more from India than from the US in nine months of the last fiscal year. And it got higher export earnings from Bangladesh than it got from Italy or Belgium or Netherlands.

This tilt in our external trade is not just accidental or specific to FY12 only. Gravity of trade, economic woes of the Western world and our deeper understanding of regional markets have brought about this shift in direction of trade quite gradually.

The process had started at the beginning of this century, it received momentum owing to US recession of 2008-09 and its global impacts and it became evident in FY11 when China replaced US as our biggest trade partner. Also in FY11, the UAE had become our second largest trading partner leaving US in the third position and Germany and UK had slipped to eighth and 10th slots—Germany behind Afghanistan and UK one notch below India.

Pakistan is now getting around 40 per cent of its exports earnings from Asian countries—a big 18 per cent coming in from China and Afghanistan. Similarly the price advantage and ease in trading with geographically closer nations has altered direction of imports. More than 70 per cent of our import bill now originate from Asian countries—33 per cent from China and the UAE.

“Different constraints including cost and culture has left globalisation incompatible for many countries while regionalism is growing globally,” says Mr Tariq Mahmood, Director Pak-UK Business Council of the Federation of Pakistan Chambers of Commerce and Industry. Pakistan has caught up with the new wave of regionalism in trade. China UAE, Saudi Arabia, Kuwait, Malaysia, Afghanistan, and India are now among its top ten trading partners—the other three being USA, Germany and UK.

One of the reasons for Pakistan’s growing trade with Asian countries is fast-paced economic growth in this region supported by a large middle class. Another reason is diversification in our exports base in recent years. When exporters came up with new products they did not merely rely on traditional markets to buy their products. A search began for new markets. And during this process exporters got deeper understanding of newly-explored trade destinations. That helped them sell in those markets not only new but traditional products as well.

“What is equally important is that trade being a two-way process takes its course. We sell something to new markets and we also buy from there. Finally, you see new trade partners emerging,” says a senior official of Pakistan Trade Development Authority (TDAP).

China has emerged as our major trading partner because of it is rising as an economic giant with more goods to sell at competitive rates and with fatter purse of its neo-rich people to buy more from other countries.

Our exports to landlocked Afghanistan have multiplied several times in recent years since the initiation of armed conflict on Afghan soil. An amazing growth in Pakistan’s bilateral trade with the Middle Eastern nations is rooted, in addition to their decent economic growth, in pricier imports of fuel oil and increased purchases of fertilisers, second-hand industrial machinery and ability of our exporters to find new buyers there for our cereals and food items (including dairy, meat and fish products) gold jewellery, cement and tailor-made textile products.

Measures to liberalise trade with India look set to bear fruits and India is likely to move a few notches up as our major source of imports in coming years. But how quickly we can accelerate our exports to India depends on how fast New Delhi removes non-tariff barriers and how effectively our exporters remain competitive. Currently only 1.5 per cent of our export earnings come from India.

Bangladesh competes with us in exports to India and at times elbows us out due to its trade advantage as a least developed country, but it has itself become one of our major export markets and ranks seventh on the list of the top ten.

High economic growth and exportable surplus in Far Eastern countries like Malaysia and Indonesia have brought these countries also on the list of our major sources of imports. Pakistan’s main import from Malaysia is palm oil though lately some electrical and electronic household items are also being imported from there. We also import palm oil, plastic-made household items and electronics from Indonesia. The signing of Pak-Indonesia preferential trade agreement in February this year is expected to boost bilateral trade in coming years.

TDAP officials say that after the arrival of a leading Chinese bank in Pakistan and due to some measures taken by Federal Board of Revenue, a part of the bilateral trade with China that earlier used to go unreported is being documented now.

“That’s why we’ve seen a surge in monthly export proceeds from China in the third and fourth quarters of the last fiscal year. I’m sure export earnings for full fiscal year 2012 from China would outsize those from UAE,” said one official. In nine months of FY12 exports to China were slightly lower than to the UAE.

Officials also say that phenomenal growth in exports earnings from Bangladesh seen in FY11 has somewhat “bounced back to average growth rate of last few years”. In FY12 exports to Bangladesh are estimated to have reached past $650 million—down substantially from $1 billion in FY11 but fairly larger than $483 million in FY10.

In FY11 exports to Bangladesh had doubled from the FY10 levels mainly owing to large shipments of wheat and rice. “In the last fiscal year no wheat was exported to Dhaka and rice exports also remained negligible,” said one official.