MAJOR EXPORTS

1. Raw cotton, Textile products and Cotton yarn.

2. Rice.

3. Leather and leather products.

4. Carpets and rugs, Tents.

5. Synthetic textiles.

6. Surgical instruments.

7. Sports goods.

8. Readymade garments.

9. Vegetable, fruit and fish.

10. Engineering goods.

11. Chemicals and Pharmaceutical products.

Exports of Pakistan Exports were targeted at $18.6 billion or 12.9 percent

higher than last year.

Export of food group declined by 3.5 percent.

This declined is caused by a 2.6 percent and 14.3

percent decline in exports of rice and fruits.

Export of rice declined due to lesser production caused

by adverse weather condition which kept the domestic

price higher.

It was more profitable to sell within the country than to

export. Exports of textile manufactures grew by 0.2

percent.

Prominent among these are export of knitwear 13.9

percent, readymade garments 6.8 percent, made up

articles 8.9 percent, cotton yarn 4.6 percent and towels

2.6 percent.

Exports of other textile materials registered a high

double digit growth of 17.2 percent.

Export of raw cotton, cotton cloth and bed wear on the

other hand registered a decline.

Direction of Exports of Pakistan

Although Pakistan trade with a large number of countries

its exports are however highly concentrated in few

countries including USA, Germany, Japan, UK, Hong

Kong, Dubai and Saudi Arabia which account for one-

half of its exports.

The United States is largest export market for Pakistan,

accounting for 28.4 percent of its exports followed by

UK and Germany.

Japan is fast vanishing as export market for Pakistan as

its share in total exports has been on decline for one

decade, reaching less than one percent from 5.7 percent a

decade ago.

ISSUES TO BE CONSIDERED SERIOUSLY

Pakistan needs to diversify its exports not only in terms

of commodities but also in terms of markets.

Heavy concentration of exports in few commodities and

few markets can lead to export instability.

Other issues which need to be addressed include low

value added and poor quality, obsolete use of machinery

and technology, higher wastage of inputs adding to the

cost of production, low labor productivity, little spending

on research and development, export houses lacking

capacity to meet bulk orders, inability to meet

requirements of consumers I terms of fashion and design,

non-adherence to contracted quality and delivery

schedule, lack of marketing techniques etc.

Major Imports of Pakistan

1. Machinery.

2. Petroleum.

3. Chemicals.

4. Vehicles and spare parts.

5. Edible Oil.

6. Wheat.

7. Tea.

8. Fertilizers.

9. Plastic material.

10. Paper Board

11. Iron ore and steel.

12. Pharmaceutical products.

Imports of Pakistan

Pakistan’s imports are also highly concentrated in few

items namely, machinery, petroleum and petroleum

products, chemicals, transport equipment, edible oil, iron

and steel, fertilizer and tea.

These imports accounted for 73% of total imports during

2006-07. Among these categories machinery,

petroleum/petroleum products and chemicals accounted

for 53.4% of total imports.

Direction of Imports of Pakistan

Pakistan’s imports are highly concentrated in few

countries.

Over 40 percent of them continue to originate from just

seven countries namely, the USA, Japan, Kuwait, Saudi

Arabia, Germany, UK and Malaysia.

Saudi Arabia is emerging as major supplier to Pakistan

followed by the USA and Japan.

The shares of USA and Japan, with some fluctuations,

exhibited a declining trend because of the shift in the

import of machinery/capital goods and raw materials to

other sources.

On the other hand, the share of Pakistan’s imports from

Saudi Arabia has been rising due to higher imports of

POL products.

Malaysia share has shown rising, as well as, falling

trends over the years mainly on account of fluctuations in

palm oil prices.

COMMERCIAL POLICY

It is an economic policy which is concerned with those

decisions, strategies and instruments which influence the

foreign trade sector of an economy.

In the commercial policy it is to be decided that what

will be the exports and imports of the country, whether

the foreign trade sector will be consisting of consumer

goods or the producer goods and whether the trade will

be free or restricted.

All this means that commercial policy can be

decomposed into

(1) Export and import Policy

(2) Foreign exchange policy and

(3) Tarrif Policy.

In case of Pakistan the commercial policy is also consist

of above mentioned policies.

Instruments of Commercial Policy

The commercial policy is consisted of following

instruments.

1. Tarrif (Import Tax)

2. Quota System

3. Exchange Control

4. Export subsidies

5. Voluntary Export Restraints

6. State Trading

7. Multiple Exchange rate system

OBJECTIVES :1. To increase Exports: The under developed

countries are preys to “Trade Gap”. It means that

their exports are less than their imports. As a

result they have to face deficit in their balance of

payments.

2. Diversification in Exports: To remove deficit in

balance of payments not only the exports should

be boosted up, but a diversification in exports be

also brought. The quality of exports is improved.

The new markets for exports be discovered the share

of manufactured goods in exports be increased for

this all, the exporters be encouraged.

3. Protection to Infant Industries: The purpose of

import policy is to protect the infant domestic

industries. As the industries of under developed

countries like Pakistan can not compete with

industries of developed countries. Therefore if the

domestic markets are supplied with foreign products

the process of industrialization in home country will

never start. The country will remain backward.

Therefore in order to protect the infant industries, the

commercial policy aims at imposing import duties,

quota system and exchange control etc.

4. Improvement in Terms of Trade: The ratio

between the prices of exports and prices of imports is

known as terms of trade The terms of trade of

developing countries like Pakistan goes on to fall. It

means that they have to give more exports against

their imports. In other words the prices of exports go

on to fall while the prices of imports go on to

increase in case of developing countries.

5. Stability in Internal and External Value of

Currency:

Whenever a country faces deficit in its balance of

payments, the external value of the currency goes on

to fall. This not only leads to decrease the

international value of the currency but inflation is

also generated in the country. Thus commercial

policy can be applied to bring internal and external

stability in the value of currency

6. Commercial Links: The commercial policy can

be applied to make commercial links with other

countries. For this purpose the trade delegates can be

sent abroad. The trade fairs and exhibitions can be

arranged. In this way, a country can popularize its

products and exports. Consequently the exports are

boosted up and balance of payments will improve.

TARRIF AND QUOTAS

Tarrif:

A tariff is a tax imposed on imports, which are

goods coming into a country. The tax may range

from a few percent of the cost of the good to well

over 100% of the cost of the goods. This tax is

ultimately passed on to consumers, resulting in

higher prices.

Tariff Effects

The additional tax, or tariff, on imported goods

can discourage foreign countries or businesses

from trying to sell products in a foreign country.

The additional taxes make the foreign import

either too expensive or not nearly as competitive

as it would be if the tariff didn't exist.

This can lead to fewer choices of goods and a

lower quality for consumers. The amount of

chocolate, fruits and vegetables, and automotive

parts you have to choose from are all subject to

the effects of tariffs.

Quota:

A quota sets a numerical limit on how much of a

product can be imported into a country. This helps to

protect producers of domestic products from facing

too much competition and ultimately going out of

business.

Ultimately, quotas benefit and protect the producers

of a good in a domestic economy, though the

consumers end up paying more if the domestically

produced goods are priced higher than imports.

Quota Effects:

The numerical limits imposed on imported goods

through quotas ultimately leads to higher prices

paid by consumers.

Essentially, the import quota prevents or limits

domestic consumers from buying imported goods.

The import quota reduces the supply of imports.

Export Subsidies:

Government help to exporters, generally in two

forms

(1)Service subsidy: trade information, trade shows,

feasibility studies, foreign representation, etc.

(2) Cash subsidy:

(a) rebate on imported raw materials and duty-free

import of manufacturing equipment (called

indirect cash subsidy); or

(b) drawback as a percentage of the value of exports

(called direct cash subsidy).

Although World trade Organization (WTO, formerly

GATT) recognizes that subsidies hinder fair

competition and distort trade practices, it has not

been able to define precisely what kind of assistance

constitutes a subsidy.

REBATE:

A rebate is an amount paid by way of reduction,

return, or refund on what has already been paid or

contributed. It is a type of sales promotion that

marketers use primarily as incentives or supplements

to product sales.

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