Post on 16-Apr-2017
Saad Amanullah KhanPresidentAmerican Business Council
EXPORTS IMPORTS+
DO YOUKNOW
WORLD TRADE STATISTICS
Total GlobalMerchandise
Trade$35.4 Trillion
Total Global Services
Trade$3.7 Trillion
Total Merchandise + Service Trade
is 56%Global GDP
is 32% Pakistan
Pakistan Trade is 0.1% of Global
Pakistan GDP is0.3% of Global GDP
Trade (Current)
Trade (Potential)
0 20 40 60 80 100 120 140 160 180
60
180
Pakistan Trade should be3 x times LARGER
In US$ Billions
DO YOUKNOW
PAKISTAN’sTRADE
HISTORY
CY 70CY 72
CY 74CY 76
CY 78CY 80
CY 82CY 84
CY 86CY 88
CY 90CY 92
CY 94CY 96
CY 98CY 00
CY 02CY 04
CY 06CY 08
CY 100
5
10
15
20
25
30
35
40
45
0 20 40 60 80 100 120 140 160 180 200
24
33
177 Exports Imports Pakistan GDP US$
Pakistan Trade Data ($ Billions)Export fall way below
Imports
CY 70CY 72
CY 74CY 76
CY 78CY 80
CY 82CY 84
CY 86CY 88
CY 90CY 92
CY 94CY 96
CY 98CY 00
CY 02CY 04
CY 06CY 08
CY 10
(20)
(15)
(10)
(5)
0
5
(18)
Current Account US$
1970 1990 20100%
5%
10%
15%
20%
25%
30%
8%
14%
8%
18%
14%
28%
4%
23%
Pakistan Bangladesh World India
EXPORT as % of GDP (1970 – 2010)
6.0%
3.7%
14.4%
24
40
Pakistan Bangladesh World India South Korea Malaysia Thailand0%
10%
20%
30%
40%
50%
60%
6%10%
14%19%
39%
56% 56%
Export (% of GDP) 2010 vs. 1970
Pakistan Bangladesh World India South Korea Malaysia Thailand-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
-2%
12%9%
16%
24%23%
37%
Export (% of GDP) 2010 vs. 1990
Over the Last 40 Years
Even WORSE overThe last 20 Years period
Increase in Export (% of GDP)
DISMAL PERFORMANCE
Based onCurrent GDPGrowth rates
HYPOTHESISGLOBAL TRADE
IN ALLSUCCESSFUL
ECONOMIES ….
“GDP GROWTH” HAS A DIRECTCORRELATION
WITH“TRADE GROWTH”
16
Based onCurrent GDPGrowth rates
HYPOTHESISLET US TEST THIS
All Data used is from:
GLOBAL DATAGoods & Services
CY 1990
CY 1992
CY 1994
CY 1996
CY 1998
CY 2000
CY 2002
CY 2004
CY 2006
CY 2008
CY 20100
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
GDP: $22 Trillion $63 Trillion
TRADE: $8.5 Trillion $35 Trillion
Co-relation Coefficient = 1.0
INDIA FACTS
CY 90
CY 91
CY 92
CY 93
CY 94
CY 95
CY 96
CY 97
CY 98
CY 99
CY 00
CY 01
CY 02
CY 03
CY 04
CY 05
CY 06
CY 07
CY 08
CY 09
CY 10
0
300
600
900
1,200
1,500
1,800
GDP: $0.3 Trillion $1.6 Trillio
n
TRADE: $50 Billion $837 Billion
Co-relation Coefficient = 1.0
PAKISTAN FACTS
CY 90
CY 91
CY 92
CY 93
CY 94
CY 95
CY 96
CY 97
CY 98
CY 99
CY 00
CY 01
CY 02
CY 03
CY 04
CY 05
CY 06
CY 07
CY 08
CY 09
CY 10
0
40
80
120
160
200
GDP: $40 Billion $177 Billion
TRADE: $16 Billion $57 Billion
Co-relation Coefficient = 0.9
CY 90
CY 91
CY 92
CY 93
CY 94
CY 95
CY 96
CY 97
CY 98
CY 99
CY 00
CY 01
CY 02
CY 03
CY 04
CY 05
CY 06
CY 07
CY 08
CY 09
CY 10
20,000
30,000
40,000
50,000
60,000
70,000
35%
40%
45%
50%
55%
60%
65%World GDP (Size) Trade as % of GDP
TRADE as % of GDP (1990 – 2010)
Co-relation Coefficient = 0.9
35%
40%
45%
50%
55%
60%
65%
20,000
30,000
40,000
50,000
60,000
70,000
CY 90
CY 91
CY 92
CY 93
CY 94
CY 95
CY 96
CY 97
CY 98
CY 99
CY 00
CY 01
CY 02
CY 03
CY 04
CY 05
CY 06
CY 07
CY 08
CY 09
CY 10
World GDP (Size) Trade as % of GDP
0%
10%
20%
30%
40%
50%
60%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
CY 90
CY 91
CY 92
CY 93
CY 94
CY 95
CY 96
CY 97
CY 98
CY 99
CY 00
CY 01
CY 02
CY 03
CY 04
CY 05
CY 06
CY 07
CY 08
CY 09
CY 10
India GDP (Size) Trade as % of GDP
15%
20%
25%
30%
35%
40%
45%
50%
55%
30
40
50
60
70
80
90
100
110
CY 90
CY 91
CY 92
CY 93
CY 94
CY 95
CY 96
CY 97
CY 98
CY 99
CY 00
CY 01
CY 02
CY 03
CY 04
CY 05
CY 06
CY 07
CY 08
CY 09
CY 10
Bangladesh GDP (Size) Trade as % of GDP
25%
27%
29%
31%
33%
35%
37%
39%
40
60
80
100
120
140
160
180
CY 90
CY 91
CY 92
CY 93
CY 94
CY 95
CY 96
CY 97
CY 98
CY 99
CY 00
CY 01
CY 02
CY 03
CY 04
CY 05
CY 06
CY 07
CY 08
CY 09
CY 10
Pakistan GDP (Size) Trade as % of GDP
0.9 0.9
0.9
PAKISTANTRADE DATA IS
NOT CORRELATEDWITH
GDP GROWTH
(0.4)
(0.2)
(0.0)
0.2
0.4
0.6
0.8
1.0 1.0
0.4
0.9 0.9
0.7 0.7 0.9 0.9
(0.2)
0.9 0.9 0.8 0.7
0.6
40 Yrs 20 Yrs
Correlation Co-efficient of GDP with TRADE as % of GDP
TRADE as % of GDP (1970 – 1990)
and review last 40 years1970 – 2010
trend in 2 chunks
Let us focus onSOUTH ASIAN
countries
TRADE as % of GDP (1970 – 1990)
CY 70
CY 71
CY 72
CY 73
CY 74
CY 75
CY 76
CY 77
CY 78
CY 79
CY 80
CY 81
CY 82
CY 83
CY 84
CY 85
CY 86
CY 87
CY 88
CY 89
0%
5%
10%
15%
20%
25%
30%
35%
40%
8%
15%
21%
19%
22%
36%
India Bangladesh Pakistan
TRADE as % of GDP (1990 – 2010)
CY 90
CY 91
CY 92
CY 93
CY 94
CY 95
CY 96
CY 97
CY 98
CY 99
CY 00
CY 01
CY 02
CY 03
CY 04
CY 05
CY 06
CY 07
CY 08
CY 09
CY 10
15%
20%
25%
30%
35%
40%
45%
50%
55%
15%
50%
20%
43%39%
32%
India Bangladesh Pakistan
TRADE as % of GDP (1990 – 2010)
TRADE % of GDP 1990 2010 ChangePakistan 39% 32% -7%India 15% 50% 34%Bangladesh 20% 43% 24%World 39% 56% 17%
CY 90
CY 91
CY 92
CY 93
CY 94
CY 95
CY 96
CY 97
CY 98
CY 99
CY 00
CY 01
CY 02
CY 03
CY 04
CY 05
CY 06
CY 07
CY 08
CY 09
CY 10
27%
29%
31%
33%
35%
37%
39%
41%39%
32%
VERYERRATIC
RECOVERY 2000 - 2006
DOWNWARD SPIRAL
NUCLEARBLAST &
SANCTIONS
TRADE as % of GDP (1990 – 2010)
TRADE ORGANIC GROWTH
Example:
Organic Trade Growth: 4.3%
Period: 1990 - 2010
GDP Growth: 6.2%Trade Growth: 10.5%
Pakistan India Bangladesh World-2.0%-1.0%0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%
-1.0%
6.6%
4.3%
2.0%
Trade “Organic Growth”(Trade Growth – GDP Growth)
Period: 1990 to 2010
CONCLUSION:PAKISTAN TRADE IS
WITH GDP GROWTHNOT CORRELATED
QED
WHY !
Some Key Symptoms Impact of decades of Protectionists policies
Protectionist Policies
Effective Levies on import as high as 90% until early 1990’s !!
1. Made local industries INEFFICIENT
2. Cost structure UNCOMPETITIVE
Export Performance2000 to 2010
CY 2000 CY 2001 CY 2002 CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008 CY 2009 CY 201012
14
16
18
20
22
24
26
13
Exports as % of GDP
14%13%
Despite Export doubling from $10 Billion to $24 Billion, the “% of GDP”
remained FLAT
CY 2000 CY 2001 CY 2002 CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008 CY 2009 CY 201012
14
16
18
20
22
24
26
13 13
14
Exports as % of GDP
14%
23%
18%
Exports as % of GDP
1990 2010 1990 -- 2010 $ Billion $ Billion CAGR %
Pakistan 6 24 7%Bangladesh 2 18 12%India 23 384 15%
Export Data
Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones
Type of Trade Agreements
FTA Free Trade Agreements
RTS Regional Trade Agreements
PTA Preferential Trade Agreements
BIT Bilateral Investment Treaty
Others (Transit Agreements)
3
1
1
-
-
Pakistan Trade Agreements1. Afghan Transit Trade Agreement Mar
19652. Pakistan-Sri Lanka FTA Aug 20023. South Asia FTA (SAFTA) Jan 20044. Pakistan-China FTA Nov 20065. Pakistan-Malaysia FTA Nov 2007 Potential
1. Pakistan-UAE2. BIT with USA
Regional Trade Agreements (RTA) are proliferating…
0
5
10
15
20
25
30
1958 1969 1976 1984 1989 1994 1999 2004
New Agreements Annually
Annual number
+300 RTA’s in Operation+2500 IIT’s in Operation
Canada
USA Mexico
Chile
Uruguay
Paraguay Brazil Argentina
Mercosur
Bolivia
Colombia Venezuela
Peru Ecuador
Costa Rica
Nicaragua
El Salvador
Honduras Guatemala
CACM
Trinidad & Tobago
Antigua & Barbuda Barbados
Belize
Dominica Grenada
Guyana Jamaica
Suriname
St. Lucia
St. Vincent & Grenadines St. Kitts & Nevis
CARICOM
Panama
Dominican Republic
“ American and Asian Spaghetti Bowl
-
Andean Community
Bahamas
Haiti
Brunei Cambodia Thailand
Laos
Malaysia Philippines
Myanmar
Singapore
Indonesia Vietnam
Japan
New Zealand
Australia
ASEAN
Korea
PR China Hong Kong
Taiwan
Russia
Papua New Guinea APEC
Intra - Asia - Pacific in force Intra - Asia - Pacific signed
FTAA
Intra - Americas in force
Trans - Pacific signed
APEC
FTAA
Source: Devlin and Estevadeordal (2004)
Complex global trading system
AlgeriaLibyaMorocco MauritaniaTunisia
AMU
GhanaNigeria Cape Verde
Gambia
ECOWAS
Benin NigerTogo Burkina FasoCote d’Ivoire
Conseil de L’Entente
Guinea-Bissau Mali Senegal
WAEMU
Liberia Sierra Leaone Guinea
Mano River Union CLISS
CameroonCentral African Rep.GabonEquat. GuineaRep.Congo
Chad
Sao Tomé & Principe
ECCAS
CEMAC
Angola
Burundi*Rwanda*
Egypt
DR Congo
DjiboutiEthiopiaEritreaSudan
Kenya*Uganda*
Somalia
Tanzania*
EAC
South AfricaBotswanaLesotho
Namibia*Swaziland*
Mozambique
SACU
Malawi*Zambia*Zimbabwe*
Mauritius*Syechelles*
Comoros*Madagascar*
Reunion
IOC
*CBI
SADC
COMESA Nile River Basin IGAD
AMU: Arab Maghreb UnionCBI: Cross Border InitiativeCEMAC: Economic & Monetary Community of Central AfricaCILSS: Permanent Interstate Committee on Drought Control in the SahelCOMESA: Common Market for Eastern and Southern AfricaEAC: East African CooperationECOWAS: Economic Community of Western African StudiesIGAD: Inter-Governmental Authority for GovernmentIOC: Indian Ocean CommissionSACU: Southern African Customs UnionSADC: Southern African Development CommunityWAEMU: West African Economic & Monetary Union
Overlapping African agreements…
SAFTA TRACK RECORD
Bangladesh India Pakistan Sri Lanka0
50
100
150
200
250
300
350
2007200820092010
GAP
43% 47% 10%
0.1%
= 90%
Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Lack of progressive Trade policies.
TRADE POLICES• Need long term (min 5 year) trade polices
locked by sector– Awaiting launching of “Strategic Trade Policy
Framework” for 2012-15 • Desperately need polices to BOOST exports• Heavily promote Service Sector & Agro Exports• Promote Regional Trade (India case in point)• Close coordination with Private Sector
Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Lack of progressive Trade policies. Is hurdle “Trade Policy” or “Global Politics” ?
Global Politics: Trade Barriers
TariffsNon-tariff barriers to trade
Import licensesImport quotasSubsidiesLocal content requirementsEmbargoTrade restrictionProtection of local industry
Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Lack of progressive Trade policies. Key hurdle “Trade Policy” or “Global Politics” ? Weak Intellectual protection legislature
Weak IPO Legislation • Copyright protection is a major economic,
political and diplomatic issue.• Pakistan has been on the US “Special 301
Watch List” since 1989• Being a signatory of WTO (1995) we must
conform to all laws including TRIPS (which covers intellectual property laws)
• Intellectual Property Organisation (IPO) Ordinance 2012 promulgated on 24 Apr 2012.
17 Years
Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Lack of consistency in key Trade policies. Key hurdle “Trade Policy” or “Global Politics” ? Weak Intellectual protection legislature Poor in-country logistics
Logistics Challenges
• Lacking efficient “in-land” logistic :– Railways– Water-ways– Indigenous Truck manufacturing
• Major investment to convert from archaic ‘Adda System’ to ‘On-line Tracking’ and quality delivery system.
• Need exponential growth in Road Network.
Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Low utilization of existing FTA’s Lack of consistency in key Trade policies. Key hurdle “Trade Policy” or “Global Politics” ? Weak Intellectual protection legislature Poor in-country logistics High cost of Airport and Port charges
Karachi Port
Port Qasim
Jawahar Lal NehruSri Lanka
SingaporeDubai
0
5,000
10,000
15,000
20,000
25,000
30,000
Port Charges (US$)
11,900
10,500
2,800
1,940 50
KPT Port Charges Breakdown (US$)
Port DuesPilotageBerth Fee (per day)Tug ChargesMooring
Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Lack of consistency in key Trade policies. Key hurdle “Trade Policy” or “Global Politics” ? Weak Intellectual protection legislature Poor in-country logistics High cost of Airport and Port charges Lack of streamlined systems in Customs and
border controls
Efficient Customs More Trade
R2 = 0.1354
0
50
100
150
200
0 5 10 15 20 25 30 35Days through customs, imports
Ratio of total trade to GDP, 90 countries%
For clearance in 2.5 days, Trade to GDP ratio goes
beyond 100%
CUSTOMS• Trade facilitation: as “crossing border” and
“shipments cost” are considered more significant barrier than “tariff rates”.
• Key functions: Revenue collection, protection of IPR and, increasingly, national security
• Ensure all trade and border related agencies work together to simplify and harmonize systems and procedures.
FTA’s
CUSTOMS
IMPORT EXPORT
Pakistan needs to take active role in
the Trade discussion
including the “DOHA
Development Round”
WE NEED TO ….
Elevate “Trade” to a prominent role in Country Policy Dialogue
Focus on Exports, Logistics, Governance & Customs
NOW YOU
KNOW
Disproportional GDP Growth
TRADE GROWTHCAN Drive
SUBMIT FOCUS: 4 issues1. What policies are needed to drive
disproportional TRADE growth? 2. What are the key barriers which
hamper TRADE and how can we eliminate them?
3. What role private sector can play to increase EXPORTS?
4. How can international partners help Pakistan improve our TRADE performance?
THANK YOU