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Rising trade deficit

Rising trade deficit

The trade deficit of the country crossed 8.4 percent during the financial year 2015-16 as exports have been declining drastically for the last three years. According to the latest trade data, the trade deficit increased to $9.3 billion during the first four months of the current financial year as imports grew by six percent during the period. The major items imported during the four months included petroleum products, machinery, food items and raw cotton, which is required in a huge quantity to meet the demand of the local industry. The deficit increased to $23.9 billion in 2015-16 from $22.1 billion a year earlier. The government is claiming credit of the deficit on the ground that import of machinery has increased for the development of infrastructural projects in the country, but fact remains there is a huge gap between the volumes of imports and exports. The country imported goods worth $40.3 billion, but could export products worth $21.9 billion in 2015-16. Pakistan has already signed free trade agreements with various countries, but could not maintain the balance of trade to its favour. Chinese goods are freely dumped in the country and hundreds of industrial units have been either closed or are near to closure. However, bilateral trade with United States remained in Pakistan’s favour during 2015-16 in which exports remained $3.5 billion and imports $1.8 billion.

Pakistan is bound to cooperate with the United States under Trade and Investment Framework Agreement signed in 2003. However, the country could not benefit from the technological advancement of the United States in various fields of the economy, including agriculture sector. Pakistan needs seed technology which is necessary to boost cotton production. The trade agreements often lack vitality and follow up. As a result, agreements alone could not bring any good to this nation. At least 163 nations have granted the status of most favoured nation to Pakistan, allowing it a non-discriminatory access to their markets. According to official reports, a crew of 1,962 officials work in 122 missions abroad costing the nation around Rs 3 billion a year. The utility of the commercial attachés is always questioned keeping in view their performance in business and trade. There is a need to introduce a new policy for the missions with main thrust on business than political affairs. The capacity building programmes should also be launched for the officials of the foreign missions to find the markets of Pakistani products in host countries. Unless the government takes steps to enhance exports, the problem of trade deficit will continue to haunt the national economy.

Pakistan’s cottage industry is very strong and there is need to find foreign markets to enhance exports and earn foreign exchange.