Tuesday, September 27, 2022
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Approval of a New Strategic Trade Policy Framework

ISLAMABAD: After a two-year delay, the cabinet adopted the Strategic Trade Policy Framework 2020-25 on Tuesday. The framework calls for actions that will help businesses create, distribute, and sell items more efficiently than their competitors.

This is the government’s fourth strategic framework, which it unveiled in 2009 and earmarked Rs45 billion to achieve over the following five years by providing subsidies and other assistance to non-textile industries.

Unlike previous frameworks, the government did not announce an export objective in conjunction with the sectoral support. The cabinet has asked the finance division to work out a realistic export target and submit it to the Economic Coordination Committee for approval.

Also read: Imports rise by 103 percent in 4MFY22, increasing the trade imbalance

Earlier, it was proposed that the policy would help increase export target to $37bn by end of its implementation. Earlier for 2009-12, 2012-15 and 2015-18, the commerce division notified three policy frameworks, but none of them was successful in achieving its objectives, especially regarding the export targets due to various reasons. The previous frameworks also failed to alter the export paradigm.

Officials told that the government would soon approve the Textile and Apparel Policy 2020-25, laden with cash subsidies and lower rates on utilities to boost production and export of value-added textile products. The support for the textile sector runs in billions of rupees, especially under the head of subsiding utility cost.

The cabinet will approve shortly a scheme for payment of Drawback of Local Taxes and Levy, which is simply a cash subsidy on export proceeds from the country. This will be an additional subsidy for the sector.

The State Bank of Pakistan will also offer hefty incentives to the entrepreneurs and the scheme will be made part of the textile policy. It is proposed to allocate a hefty amount for the Export Finance Scheme and Long Term Financing Facility.

Main focus of the policy framework 2020-25 will be on geographical and product diversification, reduction of cost for manufacturing through tariff rationalisation, pursuit of regional connectivity and Look Africa policy, enhancement of market access through free trade and preferential trade agreements.

The framework will also focus on facilitation of logistics and tracking under TIR and enhancement of regional connectivity for access to Central Asian Republics, Turkey and Iran, through them to Europe and Russia.

Also read: Traders reject increase in prices of petroleum products.

The policy is dynamic in nature and will be subject to course correction based on constant monitoring and evaluation. There will be an institutionalised mechanism for robust monitoring and implementation of the policy to minimise policy implementation gaps, which have traditionally remained a weak link due to multi-organisational roles in the export ecosystem.

In order to oversee the policy implementation, a cross functional National Export Development Board (NEDB) has already been constituted under the chairmanship of the prime minister and comprising senior public sector officials of relevant organizations and private sector representatives.

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