The government is proactive in signing free trade agreements with various countries but without any positive results at the end. There is a long list of FTAs the successive governments in Pakistan have signed with potential trade partners over the years, but the country’s exports could not be picked up at the minimum standard level. So is the case with foreign investment in the country. The current government is going to finalize another three FTAs with Iran, Turkey and Thailand by the end of this year, but problem is at home and not with any other country. Trade agreements are signed with a hope that the country will get export opportunities, but the increasing cost of doing business, energy crisis and the higher cost of production have rendering the manufacturing sector incapable of competing in the international market.
To assess that how well is the trade and investment policy of Pakistan, there is a need to compare it with other countries in the region. The economic performance of Sri Lanka and Bangladesh is attracting foreign investment and they have made better use of free trade agreements. Pakistan has so far failed to reap the benefits of the trade agreements signed with various countries of the world. According to economists, apart from dealing with complex taxation system and energy crisis, the government must ensure security at all levels in the country as terrorist incidents create negative impression among the potential investors. The best way to increase trade volume is to enhance regional connectivity and build modern infrastructure. Despite political difficulties, road connectivity will pave the way for enhanced trade activities within the countries in the region. A poor infrastructure is the main hurdle in trade and investment in the country. Due to its geographical location, Pakistan has the potential to become hub of regional as well as international trade.
Pakistan is part of the South Asian Free Trade Agreement but trust deficit between Pakistan and India is a major hurdle in increasing the regional cooperation. The government also needs to change the customs laws with regard to its trade with neighbouring countries such as Iran. Instead of facilitating the legal trade, our officials are made to use their energies in curbing smuggling. Unfortunately, the volume of smuggling is increasing through land, sea and air routes and our Customs Department is effectively dealing with the emerging situation. Unless the government removes trade barriers, it will be difficult to overcome smuggling activities. The effective use of free trade agreements not only help curb smuggling but also increase legal trade.
