The policy offers targeted support to certain segments of the export sector. The cost of subsidies is not expected to exceed Rs35 billion. The orientation of the policy, however weak, seems to be towards diversification and making the economy competitive to claim a higher share in the international trade.

Amin Faheem, federal commerce minister announced the medium-term strategic trade policy framework on July 20. The three-year policy covers the remaining period of the PPP- led coalition government till June 2012. Next general elections are due before February 2013.

Exports are targeted to increase by six per cent over the last year to $18.8 billion in 2009-10, ten per cent in 2011-11 and 13 per cent in 2011-12. The policy does not project the import targets over the medium-term policy period.

The trade policy seems optimistic. A trade policy cannot achieve targets unless implemented fully by the co-ordinated efforts of all the government institutions which is unlikely to happen.. Much will also depend on the behaviour of key actors in industry and agriculture who seem to be apprehensive so far.

“Under the best of arrangements, trade performance will not improve if the economy fails to produce exportable surpluses and if the imports continue to erode more than they complement the local industry”, an expert commented.

Suleman Ghani, federal secretary, ministry of commerce, when contacted, sounded confident. “I find targets realistic. We have suggested solutions for three most frequently mentioned problems perceived to be impacting on trade. They are energy deficit, high cost of credit and alarming security situation leading to shyness of trade partners to strike deals with Pakistani suppliers because of high risk factors”, he said.

“For energy we have introduced the concept of compulsory contractual agreement between industrial clusters and energy distribution companies to ensure uninterrupted supply of power. To rationalise the cost of credit and make it predictable, a new concept of hedge fund has been incorporated in the policy to cushion the shock of sudden change in credit cost over a specified period. To minimise risk of trade in the current environment, the government has introduced insurance cover for overseas trade partners”, the commerce secretary told Dawn over telephone from Islamabad.

Most businessmen contacted for their comments, however, did not share the government's optimism over the policy.

They termed the trade policy a non-starter from the word 'go', as it fails to address problems threatening the very survival of the narrow industrial base. What, they said, disturbed them most, was the government's attitude towards issues stifling the growth of the manufacturing sector.

The economic policy, they felt, was not focused on economic revival. It was oriented towards generation of resources from both internal and external sources. Further, the monies so raised at a huge cost to the economy, they feared, might not be put to productive use. In short, the wary private sector sees the economic environment not congenial for business activity.

Some pro-government experts defended the policy. “Give credit where it is due. The policy has been well received by the business community. Only textile lobby is unhappy but the government has indicated that it would announce textile policy shortly. I find pursuance of liberalisation policy highly encouraging,” says an economist.

It is true that many countries who preached non-interference in the market, doled out hefty rescue packages as soon as their own industry came under pressure because of global financial crisis. The protectionism was the next logical direction that rich free trade champion nations might turn to.

Like many other developing countries, Pakistan has put up with a heavy price for opening up its markets at an early stage. But its industry has now sort of adjusted to liberal tariff environment. Besides, liberalisation did introduce more competition and forced locals to focus on modernisation in management and processes.

People benefited from increasing depth in local consumer market. Today, the range of variety in consumer items has increased to a level, where households from lowest to upper most income groups, have choice within their own budgets. The competition has also brought prices down in certain categories of goods and services.

These must be factors that helped in warding off temptation to revert to protective tariff regime in the current trade policy.

“Who says the world is fair? US announced a bailout package of over $700 billion for economic revival. Pakistan, a country paying through its nose, because of follies of others, has been driven to wall by the IMF for subsidising power to make it affordable for its teeming millions,” said a businessman from Punjab critical of the government for not extending enough support to industry.

“Pakistan seems to be heading towards deeper economic crisis which may lead it to a widespread social unrest and culminate in a political crisis. The prospects of improving the productive capacity in the short-run look dismal. The trade policy looks irrelevant under the circumstances”, said another leading industrial tycoon.

“Everyone seems looking inwards. We still opt to focus outwards amidst shrinking global demand and the very challenging trade environment. Would it not be better to focus on domestic trade with incentive for potential sectors to achieve economies of scales? Why not suggest ways to perk up local demand to the benefit of local industry?” asked a business leader with interest in diversified fields.

“Why there is no mention of the Afghan transit trade in the policy that has developed into a major bane for the local trade and industry? A cursory look at the profile of goods imported under the scheme indicates massive abuse of the facility. It is seriously hurting interests of local industry and legal trade”, Chaudhry Mohammad Saeed, an ex-president Federation of Pakistan Chamber of Commerce and Industry commented. Sultan Chawla, the current FCCI head was not available as he was visiting Tajikistan with an official delegation.

For sustainable development and achieving millennium development goals the government needs to be vigilant and discreet utilising all available options to expand economic activity by restoring confidence of the industrial community.