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TRADE POLICY REVIEWS: FIRST PRESS RELEASE, SECRETARIAT AND GOVERNMENT SUMMARIES
Pakistan : February 1995

Pakistan's economy has grown steadily over the past decades and, despite the constraint of a relatively weak infrastructure, the country has taken substantial steps to open its economy to the outside world.

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See also:

Second press release
Chairperson’s concluding remarks


PRESS RELEASE
PRESS/TPRB/1
8 February 1995

"Import liberalization is expected to increase competition between imports and domestic production and contribute to more efficient resource allocation and the development of a more efficient export sector,"Back to top

Pakistan's economy has grown steadily over the past decades and, despite the constraint of a relatively weak infrastructure, the country has taken substantial steps to open its economy to the outside world. Tariff levels and non-tariff protection measures have been reduced significantly as has state intervention in trade, according to a WTO Secretariat report on Pakistan's trade policies and practices.

Pakistan's medium-term trade policy programme includes further liberalization of the trade and exchange system and, during the period 1994-97, tariff rates and other taxes on international trade are to be cut substantially. "Import liberalization is expected to increase competition between imports and domestic production and contribute to more efficient resource allocation and the development of a more efficient export sector," says the report.

In spite of the recent tariff reductions, Pakistan is still a high-tariff economy. At present, says the report, "the simple average of statutory duty rates is 50 per cent, with the highest standard tariff rate of 70 per cent. Tariff escalation is substantial in areas such as food, textiles, leather, paper and petroleum." Pakistan actively participated in the Uruguay Round negotiations as a developing country with a very substantial interest in the textile and clothing sector. While the country had only a very small number of tariff bindings before the Uruguay Round, Pakistan is now to bind about 33 per cent of its tariff lines and 81 per cent of its tariffs for agricultural products. Most agricultural products will have ceiling rates of 100 per cent. In the industrial sector, Pakistan will bind 25 per cent of its tariffs, most at ceiling rates of 40 to 50 per cent. At the end of the implementation of the tariff reform programme scheduled for 1997, the tariff structure is expected to improve not only because the still high taxes on international trade will be reduced, but also because of further simplification of the tariff structure through the elimination of most tariff exemptions.

While Pakistan has made progress in eliminating or reducing non-tariff barriers to trade such as import licensing requirements, other non-tariff measures continue to apply to products whose import is banned for religious, health, safety, security or other reasons.

The scope of state trading has been reduced substantially. The report says that currently, the Trading Corporation of Pakistan does not seem to have any exclusive or special trade privileges but that the state-owned Rice Market Corporation and the Cotton Export Corporation "still enjoy some inherited advantages over their private competitors, despite the fact that they do not enjoy exclusive rights." Exports of raw cotton and rice are subject to export taxes, either for revenue reasons or to serve as a disincentive to exporting raw materials. The scope of such taxes, however, has been reduced in recent years.

In conclusion, the report says that Pakistan's economy is vulnerable to external trade barriers and that the textile and clothing sector, its main export, has been subject to a restrictive trade regime - in the form of the Multi-fibre Arrangement - for decades. "Pakistan has paid a high price in terms of export losses for this derogation from the GATT discipline. It is thus very important that Pakistan's trading partners assume their responsibilities" and implement the results of the Uruguay Round. The report says that by establishing a favourable trading environment, Pakistan will be further motivated to continue its trade reform and overall liberalization.

Notes to Editors

1. The WTO Secretariat's report, together with a report prepared by the Government of Pakistan will be discussed by the WTO Trade Policy Review Body (TPRB) on 15 and 16 February 1995. The review of Pakistan is carried over from the 1994 programme of trade policy reviews. The review will be a joint meeting of the TPRB and the GATT 1947 Council. This is the first review of Pakistan since the launching of the trade policy reviews in December 1989.

2. The WTO Trade Policy Review Body conducts a collective evaluation of the full range of trade policies and practices of each WTO member at regular periodic intervals and monitors significant trends and developments which may have an impact on the global trading system.

3. The two reports, together with a record of the TPRB's discussion and of the Chairman's summing up, will be published in due course as the complete trade policy review of Pakistan and will be available from the WTO Secretariat, Centre William, Rappard, 154 rue de Lausanne, 1211 Geneva 21.

4. The reports cover developments in all aspects of Pakistan's trade policies, including domestic laws and regulations, the institutional framework, trade-related developments in the monetary and financial sphere, trade practices by measure and trade policies by sector. Attached are the summary observations from the Secretariat's report. Full reports will be available for journalists from the WTO Secretariat on request.

5. Since December 1989, the following reports have been completed: Argentina (1992), Australia (1989 & 1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon (1995), Canada (1990, 1992 & 1994), Chile (1991), Colombia (1990), Egypt (1992), the European Communities (1991 & 1993), Finland (1992), Ghana (1992), Hong Kong (1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and 1994), Japan (1990 & 1992), Kenya (1993), Korea, Rep. of (1992), Macau (1994), Malaysia (1993), Mexico (1993), Morocco (1989), New Zealand (1990), Nigeria (1991), Norway (1991), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992), South Africa (1993), Sweden (1990 & 1994), Switzerland (1991), Thailand (1991), Tunisia (1994), Turkey (1994), the United States (1989, 1992 & 1994), Uruguay (1992) and Zimbabwe (1994).

The Secretariat’s report: summary Back to top

TRADE POLICY REVIEW BODY: PAKISTAN
Report by the Secretariat – Summary Observations

Pakistan's economy has grown steadily over the past decades, despite the constraint of a relatively weak infrastructure. Nevertheless, in the 1980s, a number of structural weaknesses undermined the sustainability of growth and heightened Pakistan's vulnerability to external shocks. To address these constraints and attain stable, sustained growth with financial stability, Pakistan initiated a comprehensive macroeconomic and structural reform programme, including measures to liberalize both domestic activity and the payments system.

Since the introduction of this programme, Pakistan has made substantial steps towards greater reliance on market forces and opening its economy to the outside world. The levels of tariff and non-tariff protection, and of state intervention in trade, have been reduced significantly. This new direction is in sharp contrast with Pakistan's previous economic policies, which were characterized by import-substitution and widespread state intervention in economic life.

The beginning of the reform process was accompanied by increasing domestic and external imbalances. The fiscal deficit widened and domestic liquidity expanded, contributing to higher inflation. The 1990-91 Middle East crisis put additional pressure on Pakistan's external current account position. In 1992/93, Pakistan was affected by widespread floods and plant diseases. The growth rate of GDP declined to 2.3 per cent, exports stagnated, the current account deficit widened to 7.1 per cent of GDP and gross official exchange reserves declined to a critically low level by mid-1993. In 1993/94, in response to continuing domestic and external imbalances, Pakistan intensified its medium term (1993/94-1996/97) adjustment and structural reforms. These are aimed at sustaining annual economic growth at about 7.0 per cent over the period 1993/94 to 1996/97; reducing inflation to 6 per cent by the end of the period; raising official reserves to over three months of imports; and reducing the burden of domestic and external debt.

Pakistan in World Trade

Largely as a consequence of the inward-looking trade policy that Pakistan followed until recently, the country's participation in world trade is very small (0.2 per cent in 1992). The share of merchandise exports in GDP was 13 per cent in 1992/93, while that of merchandise imports was 19 per cent. Intra-industry trade (IIT) rates calculated for the period 1990-92 indicate a low and even declining level of IIT, reflecting once again the isolated and protected nature of Pakistan's economy.

A particular feature of Pakistan's exports is the heavy dependence on products belonging to the cotton group. Cotton and cotton based manufactures account for about 60 per cent of merchandise exports. Other significant exports include leather products, rice, fish and carpets. The highly concentrated export structure has made the country's trade vulnerable to external distortions and restrictions, and in particular to restraints under the MFA. Machinery, chemicals, petroleum and petroleum products, transport equipment and edible oils are the major import items; since 1980, the share of machinery, automotive products, telecommunication apparatus and office machinery has increased rapidly.

Pakistan's largest trading partner in both exports and imports is the European Union, with a share of close to 30 per cent, followed by the United States, Japan and Hong Kong. The shares of North America and Asia in exports has increased in recent years, while those of eastern Europe, the republics of the former Soviet Union and the Middle East have declined. In the last few years, the shares of imports from Asia and the Middle East have increased, while those of North America have fallen.

Institutional Framework

The Islamic Republic of Pakistan has a federal structure composed of four provinces, the federal capital and the "tribal areas" under federal administration. Pakistan is a parliamentary democracy under its 1973 Constitution. The President, who must be a Muslim, is the head of State and represents the unity of the Republic; he or she is elected at a joint sitting of the Federal Legislature for a term of five years.

The Federal Legislature consists of a lower and upper house. The lower house, the National Assembly, contains 307 members elected directly plus ten members who represent minorities; the term of election is five years. The upper house, the Senate, has 87 members who serve for six years. Matters on the Federal Legislative List are under the exclusive authority of the Federal legislature. In respect of matters on Concurrent Legislative List, both the Federal Legislature and the provincial assemblies have the right to legislate. Matters not referred to in either list, may be subject to laws made by a provincial assembly; however, whenever any provision of an act of a provisional assembly contradicts an Act of Parliament, the corresponding provisions of the act of the provincial assembly are void. It is the understanding of the Secretariat that trade matters are under the legislative authority of the Federal Legislature. Money bills must originate in the National Assembly; other bills may originate in either house of the Federal Legislature. A bill must be passed by both houses and then be approved by the President. The Council of Common Interest, which is responsible to the Federal Legislature, provides a forum for decision on matters of mutual interest for both the provinces and the Federal authorities.

The Prime Minister, who is the head of the Federal Government, is elected by the National Assembly. The formulation of trade policy is under the exclusive jurisdiction of the Federal Government. Within the Government, the Ministry of Commerce is responsible for all trade policy matters. The implementation of trade policy, beyond the Ministry of Commerce, is the task of the Central Board of Revenue and Customs. Other agencies with trade-related powers include the Ministries of Finance and Economic Affairs; Food, Agriculture and Cooperatives; Industries; Petroleum and Natural Resources; Planning and Development; the State Bank of Pakistan; and the Pakistan Standards Institute.

The authorities enjoy wide discretionary powers, especially in tariff and tax-related matters, where a number of administrative decisions give exemptions and concessions from general rules in respect of a number of specific items or traders.

The National Economic Council (NEC), headed by the prime Minister, is the supreme economic policy making body. The NEC reviews overall economic conditions and approves all major economic and social plans. The Economic Coordination Committee of the Cabinet (ECC), headed by the Federal Minister of Finance, deals with day-to-day matters and coordinates the economic policies initiated by government agencies.

The National Tariff Commission advises the Government on tariff protection and other forms of assistance. To interact with other ministries and the private sector in trade policy matters, the Ministry of Commerce has set up an Advisory Council, in which the private sector is represented by the Federation of Pakistan Chambers of Commerce and Industry and Regional Chambers Associations. In Pakistan, all importers and exporters must be members of a professional trade, commercial or industrial association.

Trade Policy Features and Trends

Pakistan's economic and trade policies are established in its indicative five-year plans. The current Eighth Plan (1993-1998) projects annual, average real GDP growth at 7 per cent, with planned annual average increase in export volume of nearly 11 per cent, principally in higher value-added textile products, light and medium engineering goods and sport and surgical goods. Other objectives of the plan include limiting import growth to 5 per cent per annum in real terms and a consequent reduction of the current account deficit from 4.2 per cent of GDP in 1992/93 to 2.4 per cent in 1997/98. The authorities expect this to be achieved, inter alia, by increased domestic production of consumer goods. Care will need to be taken that the objectives are met by market forces rather than by administrative means, including border measures.

Pakistan's medium-term trade policy programme includes further liberalization of the trade and exchange system. In the framework of a three year tariff reform (1994/97), tariff rates and other taxes on international trade will be cut substantially and the number of products on the Negative List will be further reduced. Import liberalization is expected to increase competition between imports and domestic production and contribute to more efficient resource allocation and the development of a more efficient export sector.

Pakistan is not a member of any free-trade agreements. Tariffs are applied almost exclusively on an m.f.n. basis, although preferences are extended on a relatively small number of products to certain developing countries in the framework of the GATT Protocol relating to Trade Negotiations among Developing Countries. Pakistan, together with Iran and Turkey, is a member of the Economic Cooperation Organization and grants a 10 per cent duty reduction on 16 products.

The European Union and 15 other trading partners grant GSP tariff treatment to Pakistan's exports. In 1992/93, 43 per cent of Pakistan's exports received preferential treatment under GSP schemes. In this regard, textiles and clothing are among the most sensitive areas of GSP treatment, wholly or partially excluded in a number of countries.

Recent evolution

Pakistan has recognized that the high protection given to the domestic economy has insulated the country from foreign competition, generated a strong anti-export bias in resource allocation and increased inefficiency, waste and decline of quality. As a result, Pakistan's export structure has remained over-concentrated on a small number of agriculture-based products; in more sophisticated product areas the country's export structure has been internationally uncompetitive.

Recent trade-related reforms include the reduction of the Negative List from 300 to 75 items between 1988 and 1994; a cut in the average statutory tariff rate from 77 to 50 per cent with further reduction to a maximum of 35 per cent by 1997; the integration of "para-tariffs" into the single tariff rate by mid-1994; reduction, followed by elimination of import licensing and the Restricted List; liberalization of the foreign investment régime and abolition of industrial licensing.

Pakistan was an active participant in the Uruguay Round, with the major objective of strengthening the multilateral trading system, phasing out the Multifibre Arrangement (MFA), integrating the textile and clothing sector into the GATT, bringing agriculture fully under GATT disciplines and providing special and differential treatment to developing countries and the elaboration of an "equitable agreement for trade in services". Pakistan found the results of the Uruguay Round "discouraging" mainly due to less than average tariff reductions in its main export product areas and the slow speed of the integration of the textile sector into the GATT.

Type and incidence of trade policy instruments

Despite substantial tariff reductions in recent years, Pakistan is still a high-tariff economy. At present, the simple average of statutory duty rates is 50 per cent with the highest standard tariff rate of 70 per cent. Tariff escalation is substantial in areas such as food, textiles, leather, and paper, petroleum.

In the 1994/95 Budget year, the 6 per cent import fee, the 5 per cent Iqra surcharge and regulatory duties have been integrated into a single customs tariff. Nevertheless, the tariff system is still not transparent, as numerous, mostly time-bound, exemptions and concessions are applied under the system of Special Regulatory Orders (S.R.Os). As a consequence, different rates are frequently applied to the same product and applied rates are substantially lower than statutory duties. The tariff reform programme, to be implemented between 1994 and 1997, is expected to improve the tariff structure not only through reducing the still high taxes on international trade, but also through further simplification of the tariff structure through elimination of most tariff exemptions and concessions.

Pakistan had only a very small number of tariff bindings before the Uruguay Round. Under the Uruguay Round, the country is to bind about 33 per cent of its tariff lines, 81 per cent of its tariffs in HS chapters 1-24 (94 per cent of agricultural products as defined in the Uruguay Round) and 25 per cent of tariffs in chapters 25-97.

Pakistan did not sign the Tokyo Round Customs Valuation Code, due to its perceived difficulties in implementing the "transaction value" concept of the Code in circumstances when false invoicing and cheating on imports constituted a serious problem. The valuation of imported goods is made through comparing declared values with prices published regularly in the official Valuation Manual; this can complicate customs clearance procedure and lead to a lack of transparency and greater administrative discretion in the system. Smuggling is substantial, partly due to high tariffs. It is expected that the implementation of tariff reforms will lead to a decline of this illegal activity. By accepting the results of the Uruguay Round, Pakistan is committed to adopting the valuation methods specified in the Agreement.

Until recently, import prohibitions, import licensing and other non-tariff measures were extensively used to control import flows. In the last several years, Pakistan has made substantial progress in eliminating or reducing non-tariff barriers to trade. The number of tariff lines included in the Negative List has been reduced from 300 to 75 (whose importation is prohibited, unless specifically authorized).

The scope of import licensing was reduced then completely eliminated in 1993. The Import Policy Order, 1994, has also abolished the Restricted List, products on which were importable only through designated importers. Until mid-1994, certain products (agricultural tractors and some motor vehicles in CBU condition) were subject to standardization requirements, which meant that only some specified makes were importable; this restriction has also been abolished, as have import quotas on machinery and millwork.

However, Pakistan still applies a substantial number of non-tariff measures. The Negative List includes not only products whose import is banned for religious, health or safety reasons, but also goods such as textile and clothing items, which are restricted, as stated by the authorities, for balance-of-payments reasons. According to the Pakistani authorities, items on the Negative List can be imported in terms of the relevant provisions of the Import Policy Order. However, the Secretariat is not aware of the country's practice in this respect and it is not clear, given that import licensing has been abolished, what instruments are used to authorize imports of items which are on the Negative List. Other non-tariff measures applied to imports include various health, safety and procedural requirements, motivated mainly by safety, health and security considerations. All imports from India are prohibited, unless authorized by specific legislation.

The scope of State-trading has been reduced substantially. Currently the Trading Corporation of Pakistan, does not seem to have any exclusive or special trade privileges. However, the state-owned Rice Market Corporation and the Cotton Export Corporation still enjoy some inherited advantages over their private competitors, despite the fact that they do not enjoy exclusive trade rights.

Government procurement policies and practices of Pakistan are not fully known to the Secretariat. The relevant rules in force clearly favour domestic sources over foreign ones. The authorities, however, state that recently the practice has changed and no preferences are given to local production.

Pakistan makes efforts to base its standards on international norms. National standards on a small number of items are inferior to international norms due to the domestic non-availability of the required technology. Pakistan standards do not seem to constitute a major impediment to trade.

A number of major competitive export products of the country, such as raw cotton and rice, are subject to export taxes, either for revenue reasons or to serve as disincentive to exporting raw materials. However, the scope of such taxes has been reduced in recent years. Some agricultural products bear export restrictions, to ensure adequate internal supply. Exports of textiles and clothing to countries with which Pakistan has concluded bilateral restraint agreement under the MFA, are subject to export quotas.

Pakistan provides export incentives mainly in the form of compensation to exports by duty and tax concessions, duty free status, export processing zones and bonded warehousing. Import liberalization is considered as the main vehicle for promoting exports and diversifying the product structure. About half of Pakistan's exports benefit from concessionary credits; although state subsidies are not involved, the export finance system is designed in a way that puts the burden of such credits on the non-export sector. Tax exemptions on income originating from exports are also widely available.

During the first four decades of Pakistan's history, import-substituting industrialization was financed from resources transferred from agriculture. Domestic prices of agricultural raw materials and food were kept low and the urban population received generous subsidies. In recent years, the degree of state intervention has been reduced, agricultural prices have been brought closer to world

market levels and revenue transfer from agriculture to industry has been diminished. Nevertheless, available Producer Subsidy Equivalent calculations, based on 1986-90 data, indicate that PSEs were negative for Pakistan's major export crops such as cotton and basmati rice. This fact showed that government policies were still biased against agriculture; input subsidies to agricultural producers were more than offset by the taxing effect of other agriculture-related policy instruments. The major goals of the National Agricultural Policy, adopted in May 1991, include the establishment of social equity, self reliance, export orientation, sustainability and enhanced productivity.

Pakistan places special emphasis on industrialization. The Government gives importance to private investment in high-technology, value added and export industries; support for industrial development include tax concessions, exemption from customs duty, import and monetary incentives. Development of engineering industries is supported by a non-compulsory "deletion" programme, with incentives for encouraging local content; once an entrepreneur has agreed to a deletion programme, fiscal penalties can be imposed for non-compliance.

Policies affecting industry have changed substantially since 1988. Over 100 enterprises have been privatized and the degree of State intervention in industrial matters has been reduced. Industrial licensing has been abolished, except in a small number sectors and foreign investment policy has become more liberal. The insulation of Pakistan's industry from the rest of the world has diminished, but industry still remains protected by high tariffs and some other measures.

Temporary measures

Although Pakistan's legislation authorizes anti-dumping or countervailing duties, no such measures have ever been imposed. To date only one application for anti-dumping action has been reviewed by the Commission, on imports of jute from Bangladesh. [he full implementation of the present tariff reform and trade liberalization programme is likely to expose a number of domestic producers to external competition; that may bring an increased number of applications for anti-dumping or countervailing actions. Pakistan is a signatory to both the Anti-Dumping and the Subsidies Code. Pakistan does not have separate safeguard legislation and it has never taken safeguard actions.

New initiatives

Recently, the Government of Pakistan has intensified the reform of its trade system with the objective to enhance its effectiveness and export capabilities through increased market orientation and competition with foreign goods and services. As noted, para-tariff measures have been integrated into the customs duty and at the end of the implementation of the tariff reform programme in 1997, the highest tariff rates will be reduced to 35 per cent and most tariff concessions and exemptions will be phased out. It is also expected that the number of items on the Negative List will be reduced substantially.

Trade Policies and Foreign Trading Partners

With its comprehensive macroeconomic and structural reform programme introduced since 1988, Pakistan has made the first substantial steps towards reversing the country's inward-looking, isolationist policies and greater integration into the world economy. These reforms, if consistently implemented, and accompanied by appropriate macroeconomic and social measures, will lead to more efficient resource allocation, diversified economic development and increased competitiveness of Pakistan's economy on both domestic and foreign markets.

Pakistan's trade measures are applied basically on a non-discriminatory basis; it signed the Tokyo Round codes with the exception of the Customs Valuation and the Government Procurement Codes. Under the Uruguay Round, Pakistan has accepted all the Multilateral Trade Agreements; however, the low proportion of tariff rates bound by Pakistan, even after the Uruguay Round, indicates that its growing integration into the trading system currently underway will continue to be gradual.

Pakistan is a developing country, whose economy is vulnerable to external trade barriers. A particular feature of Pakistan's economy is that its leading export product group, textiles and clothing, has been subject to a restrictive trade régime for decades. Pakistan has paid a high price in terms of export losses for this derogation from the GATT discipline. For this reason, Pakistan is deeply interested in the integration of the textile sector, as export opportunities in this product area have a direct and substantial influence on the country's economic growth. It is thus very important that Pakistan's trading partners assume their responsibilities through the ratification and consistent implementation of the Uruguay Round results, in establishing a favourable trading environment that motivate Pakistan to continue and deepen its trade reform and liberalization.

Government report Back to top

TRADE POLICY REVIEW BODY: PAKISTAN
Report by the Government

Pakistan's trade policy is formulated with the aim of maximising gains from international trade through the promotion of freer trade in the context of a global multilateral trading system, and the encouragement of efficient and competitive domestic production activities. A free and competitive trading and production environment will contribute to the economic and social development of Pakistan. Towards this end, the Government has implemented an extensive liberalisation of the trade regime. Over the last six years, non-tariff barriers have been replaced with tariffs; the maximum level of tariffs has been reduced to 70 per cent with a few exceptions; the tariff structure has been rationalized with the aim of reducing disparities in effective protection; and all 'other charges' have been merged in the statutory tariff regime; all items have been made importable except for a few whose entry is restricted on religious, health and security considerations, or on account of balance of payments difficulties.

To complement the liberalisation of the trade regime, the exchange system has been fully liberalised. As of July 1, 1994, Pakistan has adopted current account convertibility of the rupee and eliminated all multiple currency practices. Accordingly Pakistan has accepted and fulfilled the obligations of Article VIII of the IMF's Articles of Agreement.

One of the important objectives of the measures described above has been the elimination of an anti-export bias in resource allocation and to encourage efficient and competitive import substituting activities. The Trade Policy announced by the Government for 1994/95 specified the following objectives:

(i) Prepare Pakistan's industry for a freer global trading system emerging from the Uruguay Round Agreements.

(ii) Stimulate exports by facilitating easy access to raw materials, intermediates and machinery.

(iii) Encourage efficient and competitive import substitution.

(iv) Impart greater transparency by minimizing administrative controls.

(v) Simplify and streamline procedures to make these user friendly.

(vi) Ensure availability of essential commodities in the domestic economy.

(vii) Adopt tariff measures instead of quantitative restrictions.

(viii) Facilitate the transfer of technology into the country.

(ix) Strengthen research and development capabilities and encourage human resource development.

(x) Liberalise controls in the economy and place greater reliance on market forces to promote efficiency and growth.

(xi) And to provide a stable economic environment through greater continuity in policy planning.

Problems in External Markets

As stated elsewhere, Pakistan is one of the founder members of the General Agreement. Oddly enough, however, the two most important areas of its export interest have largely been kept outside the scope of the normal rules of the multilateral trading system, and of the successive rounds of liberalisation under the GATT auspices. While agriculture fell victim to trade distortions through large-scale subsidisation by the major industrialised countries, the textiles sector has encountered systematic barriers against normal growth of trade and discriminatory treatment through the Multi-fibre Arrangement and its predecessor short and long-term arrangements. Even the results of the Uruguay Round have fallen short of the Pakistan's genuine expectations in these areas. In agriculture, massive subsidisation, both for production and export, has been legitimised. In textiles, likewise, the restrictions are likely to persist for a long period of ten years.

In addition, exports are being increasingly subjected to initiation of anti-dumping and countervailing investigations which creates uncertainty and depresses the business sentiment. Investigation periods are sometimes quite lengthy and the legal costs of defending against these cases is prohibitive. The phenomenon is matter of particular concern because although a number of investigations initiated into alleged dumping or subsidisation of imports from Pakistan all resulted in negative findings, they had already created a damaging impact on normal growth of trade.

During the last few years, the growing tendency towards creation of trading blocs is extremely worrisome to Pakistan, especially as these discriminate against non-member countries.  Back to top