I have been following Profit’s articles from a while now. This is in response to the news item published on February 2nd, about Pakistan’s trade deal with the European Union, and also in response to the news item published on February 9th, about IMF blaming the SBP for inflation. Regarding Pakistan’s economic policies, although the preferential trade agreement with the EU seems beneficial on the surface, I am skeptical about the amount of difference it can make to Pakistan’s terms of trade. The news item did not specify details of the trade pact, like which items were to be traded and how much tariffs would be lowered. No matter how lenient trade agreements seem, if Pakistan is only exporting primary commodities and in turn purchasing value added goods from the EU, Pakistan’s export will remain vulnerable and low priced. In the global system imposed on third world countries today, and under current IMF regulations, Pakistan has no option but to focus on export led growth. The situation is not extremely bleak though, and there is opportunity in the EU deal waiting to be seized. My suggestion to policy makers is that they should focus on improving terms of trade with the EU, and use the export profits to invest in diversifying future export commodities. The government should also make sure that there are no latent ‘strings attached’ that could harm our already fragile economy.
FATIMA AKRAM HAYAT