TEXTILE NEEDS A SOLID REVAMP
August 05, 2011
Globalization has introduced a totally new and radical trend in International trade modalities, which depends on competitive modes of trade, comprising of cost of production, competitive standards, and special permission to allow sale of other country’s good according to pre-fixed standards. Pakistan’s progress in this context is quite incomplete and full of massive loopholes, which need to be plugged in badly. When textile trade was able to break the limitation of quota factor and enter free trading zones, as in accordance with efforts and policies as laid by global trading organizations, the time was quite ripe and very important for Pakistan to prepare and evolve a conducive far -reaching and long range strategy regarding the effects of its textile industry on such implications. This could have neatly tackled and catered for necessary reforms in Country’s textile sector, economic issues and other trade concessions through various political and other international trade accords.
This issue can be viewed in the context that during 2003-2005, textile trade broke its shell of safe Pakistani textile quota factor, and entered the free trade zoning; a factor which undoubtly effected the exports, and was the leading causality among other list of falling exports in 2006-2007; as these remained far from its targeted 1000 million export units. Even if it is shortly presumed that all other factors kept on changing in trade, except for change in quota-free regime. This factor is further assured by the fact that both private sector and government failed to take any preview of factors influencing exports at all. And it is this very factor that after the end of quota factor, Pakistan simply succumbed to being an export casualty. Among other numerous weaknesses in industrial sector, supply chain can also be easily cited, followed by anti-dumping duties, abroad, levied by some European entities over some factors of textile trade of Pakistan.
There is a dire need to review the causes of Loss of interest in investment in Industry, rise in investment in real estate and stock market, and loss of exports. Supply chain and/or other well-laid strategies of supply are but an internal matter, which are related to government’s economic /trade policies, and can also be termed as trade facilities in relation to internal trade. EU had/has always tried to resolve the issue of trade dumping in a political context, and has always failed miserably. But ultimately it was resolved in accordance with international trade organization’s accord. This also spells a total failure of political endeavors and diplomacy factors. The global textile factor spells out at U$.500 billion, while Pakistan’s limit has been restrained at U$.10 billion. The only competitiveness has been for the goods, which contribute U$130 billion worth of international trade in relation to textile. One other thing that has been globally required is to change any product with minimum production costs without comprising quality. Bangladesh is an evident example of this factor, as despite not utilizing cotton, it is still considered to an excellent source of textile related goods. A conducive strategy is imperative for running the operations smoothly, which entails involving our textile related trade in global textile trade worth U$. 500 billion, while production of various other goods can contribute to easing the strains of competitiveness.
It is really strange, as it is painful that a Country, ranking fourth in cotton crop is far from being the fourth largest exporter; not even tenth largest to be exact. Rather the share seems to be no more than 2%. Another bitter reality is that an agro based Country has cotton imports worth U$. 1 billion. Basing our reliance on capitol goods, machinery and other factors, mixed with prices would disclose that export trade minus import prices stands at mere less than U$. 10 billion. Reviewing textile factor reveals that Pakistan was far away from 2/3rds of textile trade; this being the exact ambit where we as a Country need to seek our due share.
One more distinct factor is that electricity prices kept on increasing from 2003 to 2005, but still the textile trade also registered a two-digit increase on comparative basis, which reveals that the problem lies in other factors and inputs as well. A World Bank report had indicated that Chinese production surpassed Pakistan by 64%, and Pakistan can seek a solution in internal reforms. Meanwhile unconventional goods other than textiles are being exported at an increased incidence, and can be further increased after improving the quality. One of the international trade accords is Technical Barriers Accord (TBA), approved by all nations, and is related to priorities for quality. Pakistan has severe political reservations to this accord, which are but meaningless, and Pakistan would have to associate itself with the norms of this accord.
Pakistani exports are suffering from 10x10 syndrome, according to which 10 countries, and 10 products determine our exports and prices, while diversification should be, but an essential part of our trade policy. Increase in tariffs of gas and electricity are of comparatively lesser concerns as compared to the astronomical menace of loadshedding of electricity and gas, and lesser gas pressure; the sheer availability and quality of these production tools.
Besides there is dire need to strengthen the major role of PSQCA, and there is quite a wide margin of improvement required in PCSIR and other research oriented organizations. Diplomatic missions would also have to play their due parts as economy improvement centers, with all diplomatic staff playing it’s conducive role. Subsidies, which include freight, re-finance and discounted loans should not be limited to certain reserved categories of trade, and should be allowed to reach all industry. Subsidies develop bad influence in our setup and should rather be diverted to entire industry.