August 10, 2020: A new report published by the International Trade Centre (ITC) and the World Bank Group reveals that more than half of Pakistani exporters struggle with domestic and foreign regulatory barriers.
Trade regulations in areas such as testing, certification and licensing are challenging for 60% of Pakistan’s agricultural exporters. This is largely because most countries have stringent regulations in place to protect human health and the environment. The survey found that 47% of companies that export manufactured goods also have difficulty with these regulations. Destination countries, particularly in Asia and Europe, are responsible for most of the reported barriers. In addition, domestic rules – from export inspections and tax refunds to export certification – also create difficulties. About 45% of the measures that cause problems for Pakistani exporters originate in Pakistan.
The report’s recommendations focus on greater transparency, upgraded quality and customs infrastructure, streamlined procedures and better enforcement of quality compliance. It also recommends digital solutions, such as an integrated trade portal to give exporters the guidance and information they need to succeed.
“Pakistan has the potential to increase its exports by up to $12 billion by 2024 from its current figure of $24 billion. But market frictions such as regulatory obstacles and lack of information transparency put up to $7 billion of this untapped export potential at risk – especially for small businesses looking to trade more across borders’, stated Dorothy Tembo, acting Executive Director of the International Trade Centre. “There is however great scope for Pakistan to streamline processes, improve quality management and work with exporters to provide consistent, transparent and timely information.”
The most demanding measures are conformity assessment requirements such as testing and product certification, the survey finds. The report, based on a survey of approximately 1200 exporters, identifies the toughest trade hurdles facing Pakistani businesses. The report suggests ways for the government and the private sector to crank up competitiveness by addressing issues such as export inspections, tax refunds and export certification.
“For Pakistani exporters that are trying to introduce new products, access to export intelligence and information on what it takes to reach a new market is very valuable, particularly for new, small exporters that lack the scale to invest in information searching,” said Gonzalo Varela, Senior Economist at the World Bank in Pakistan. “Digital trade portals, easily accessible to everyone regardless of location or gender, can be a step in making non-tariff measures more transparent, and compliance less costly.”
The report contributes to the development of Strategic Trade Policy Framework (STPF) spearheaded by the Ministry of Commerce with the assistance of the World Bank under Pakistan Trade and Investment Policy Program (PTIPP). The PTIPP program is a collaborative effort between the Ministry of Commerce, the Australian Department of Foreign Affairs and Trade and the World Bank Group aimed at supporting Pakistan’s efforts to increase regional trade and investment, with a particular focus on strengthening links to other South Asian markets.