Benazir Bhutto, October 16, 1996
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For countries like Pakistan, increased world trade can bring the best of times — but it could also herald the worst of times. Without a well thought-out, cautious strategy, Pakistan and other developing nations may be left behind while developed nations prosper.
Few can doubt the importance of trade to a country's economy. According to one study, for instance, a 10 percent increase in exports will yield a 3.1 percent increase in gross domestic product. And we have numerous examples of just such a correlation in Japan, Southeast Asia and Germany. These are examples Pakistan must look toward as models for the future.
Over the past few years, the environment in which global trading takes place has changed considerably. With completion of the Uruguay Round of the GATT and the establishment of the World Trade Organization, international trade has been approached in a comprehensive manner.
The seven previous rounds of GATT trade negotiations were primarily concerned with reducing tariffs and ensuring a better mechanism for international trade dispute settlement. This overemphasized the role of tariffs as an impediment to trade, completely overlooking some major factors in global trade.
But recent developments have helped make a difference. The World Trade Organization has put in place a multilateral trading system since Jan. 1, 1995, based on the principles of non-discrimination, predictable and growing access to markets, promotion of fair competition, and encouragement of development and economic reform. And the Uruguay Round dealt specifically with agriculture, trade in services, trade-related intellectual property rights and trade-related investment measures — issues of great importance to Pakistan.
My country's main export commodities, such as agricultural products, traditionally have been heavily protected in developed market economies.
Restrictions on trade in cotton textiles and in other fibers, for instance, led to the discriminatory Multi-fiber Agreement. Fortunately, over the next 10 years, the agreement's quotas will be phased out , providing opportunities for sustained expansion in quota-free exports. This gradual removal of trade limitations will help Pakistan increase the value of its exports in textiles and value-added goods like garments.
As for trade in service industries, the most important trade of this type in developing countries is tourism. Pakistan ranks very low in revenues from this area, so the impact of liberalization of trade in services on Pakistan will take some time before becoming noticeable. Additionally, the presence of 21 foreign banks and two foreign insurance companies in Pakistan has not affected the business of our indigenous banks or insurance companies in a significant manner.
Of more concern to nations like Pakistan is the trend of imposing non-tariff trade barriers on developing countries in the name of human rights, child labor, gender discrimination and environmental issues. While these socioeconomic issues are important for every civilized society, it is unfair to associate them with exportable commodities.
These types of problems generally stem from the socioeconomic evolution of a society — as a society grows, the difficulties are overcome. That does not mean problems like this should be ignored — rather, a concerted legal and executive effort should be made to find solutions. But these problems cannot just be wished away.
If a country denies a developing nation market access because of human rights or other social factors, it can only result in discriminatory setbacks to economic growth. In other words, a developed nation, in trying to punish a developing nation for its supposed violations, is actually contributing to the problem.
Although Pakistan is still coming to grips with many of the difficulties I mentioned above, it now ranks as one of the top 10 economies of the Indian Ocean Rim in terms of gross domestic product. Our GDP grew from $40 billion in 1990 to $62 billion in 1996. Our merchandise exports grew from $4.97 billion in 1990 to $8.95 billion in 1996. And as a market of over 130 million people, there's still plenty of room for Pakistan to grow.
With our unflinching commitment to the process of liberalization in the economic sector, we hope to generate forces that will not only continue to enlarge our GDP but also will result leaving the difficulties of poverty behind us.
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