Strategic trade policy framework (STPF)

Will the revised trade policy work

GMT 16:39 2017 Monday ,10 July

Sriyadithatextile - Will the revised trade policy work

Strategic trade policy framework (STPF)

The government is set to revise its three-year trade policy framework on all institutional, policy and entrepreneurial levels thereby making it friendlier for exporters.

The strategic trade policy framework (STPF), announced in March last year, largely remains unimplemented, and the government’s efforts to promote exports have borne little fruit. Besides, most initiatives remain only on paper.

The framework aimed at expanding exports to $35 billion by 2018, improving export competitiveness, shifting the economy from factor-driven to innovation-driven and increasing the share in regional trade.

However, exports have continued to fall and are expected to reach $20bn this fiscal year compared to around $25bn in 2013.

“The mid-course correction in the policy will be ready by end-July,” an official of the commerce ministry said. It will then be submitted to the cabinet for approval. The ministry will hold a meeting with major associations and chambers in August to implement the policy this fiscal year.

All export related schemes and initiatives will be revisited. “We have identified the problems in these schemes which will be improved through amendments,” the ministry official said.

The performance of the current framework has been dismal on all levels. In the last two years, only cosmetic measures have been taken at an institutional level.

The departments identified for revamping were: the Trade Development Authority of Pakistan (TDAP), Pakistan Horticulture Development and Export Company (PHDEC) and the secretariat of the commerce ministry.

The Trade Dispute Resolution Organisation (TDRO), Services Trade Development Council, Pakistan Institute of Trade and Development, National Tariff Commission (NTC) and the Domestic Commerce Wing are also on the revamp list.

It was also announced that councils would be set up to promote the export of pharmaceuticals, cosmetics and rice, but no steps have been taken in this regard. The export policy also proposed setting up a committee to restructure subordinate offices of the commerce ministry.

The official says there’s a strong resistance to change which is one reason for the poor implementation of institutional initiatives. “We’ll carry out some reforms in the next fiscal year in some of these institutions,” he said.

One of the breakthroughs is the allocation of Rs500m for the PHDEC to strengthen the company in the next fiscal year.

However, the challenge will be to revamp the secretariat of commerce ministry because of competing interests of various services groups.

Recently, the government appointed members of the NTC and window dressed the TDAP. The only area where interest was shown was the appointment of trade officers abroad.

The second pillar of the framework is export development initiatives (EDIs). The cash support scheme announced in the STPF was copied from the failed textile policy.

Most initiatives like product design, technology upgrade, branding and certification failed to perform in the case of the textile sector while the same were announced for non-textile products. The commerce ministry has also failed to come up with some innovative measures to boost exports.

Secondly, the scheme design was considered faulty as no exporter could fulfil the criteria mentioned while stringent conditions had become imperative to avoid misuse of the facility.

As a result, not a single exporter has availed itself of any of the five cash support schemes in the last two years.

The third issue related to timely releases of the allocated funds for the EDIs.

The government announced Rs7bn for the first year for the cash support schemes, another Rs6bn for second year and Rs6bn for the third year.

The funds for the first year lapsed while only Rs950m was released in the second year against the committed amount of Rs13bn. Of the Rs950m, Rs400m was lapsed and surrendered to the finance ministry.

As for short-term export measures, four products including basmati rice, horticulture, meat and its products and jewellery were identified for the markets of Iran, China, Afghanistan and the European Union.

It was decided that Rs500m would be spent to promote their exports, especially for building warehouses for rice in Iran and Saudi Arabia. However, nothing has happened on this account as well.

On policy level, the ministry has yet to finalise the much-awaited law for protecting the ownership rights of goods and a law for TDRO for resolving trade disputes. Only NTC-related laws were finalised.

The most frequent government intervention is at the enterprise or industry level which has not yielded the required results to boost exports.

The scope of the trade policy framework was limited only to 40 per cent of exportable goods which fell under the category of non-textiles. Textile and clothing exports, which constitute nearly 60pc of Pakistan’s total exports, are covered by a separate policy. Experts argue there’s a need for single export policy for all products.

The implementation of trade initiatives is a major issue. There is no effective forum to oversee and monitor implementation, and 70-80pc of the initiatives are never implemented.

There is a serious human resources problem in the Ministry of Commerce and its subordinate TDAP, which is the implementing arm for trade initiatives. Different agencies and departments are involved in the implementation of the trade policy, which is also causing delays.

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