Background

Fluctuating world demand for its exports, domestic political uncertainty, and the impact of
occasional droughts on its agricultural production have all contributed to variability in Pakistan's
trade deficit. The trade deficit for the fiscal year 2013/14 is $7.743 billion, Exports is $10.367
billion in (JulyNovember 2013) and imports is $18.110 billion
Pakistan's exports continue to be dominated by cotton textiles and apparel, imports include
petroleum and petroleum products,

Edible oil,

Chemicals,

Fertilizer,

Capital goods,

Industrial raw materials,

Consumer products.

On 12 December 2013, European Union granted GSP Plus status to Pakistan till 2017, which
enabled it to export 20% of its good with 0 tariff and 70 percent at preferential rates to EU
Market. The status was given after the European Parliament passed the resolution by 406-186
votes.

Last Ten Years History of Exports

The most intense growth of the countrys exports was observed at the end of the 1980s and at
beginning of the 1990s. The most recent period, however, is associated with a deceleration of
export growth, points out the analysis.
While both imports and exports have been growing at the margin exports have rebounded at a
slightly faster pace. The main products leading this recovery have been rice, textiles like mens
shirts of cotton, womens apparel, petroleum oil and bed and bathroom linen, as well as cotton
yarn.
Pakistans recent trade performance is one of stagnation, as indicated by a decrease in its tradeto-GDP ratio over the last decade. At the same time peer countries have leapfrogged with high
growth rates.
Pakistans position below the predicted line indicates that it under-trades compared to smaller
countries at comparable levels of per capita income.
Pakistans average trade-to-GDP ratio for the period 2007-09 was smaller than what it was a
decade earlier (1997-99), in contrast to the shares of its peers. In 1997-99, Pakistans trade-toGDP ratio was as high as Chinas, and much higher than Indias. Ten years on, shares of both
China and India almost doubled while Pakistans fell.
Geographically, the EU and the US represent the most important destinations of Pakistans
exports. The US and European markets absorb 31 percent and 23 percent of Pakistans total

exports. China represents the third most important destinations, with an 11.5 percent share. UAE,
Afghanistan, Oman and Turkey have recently become important destinations.
Pakistan appears to be still under-exporting with the large and fast growing economies of the
21st Century. Pakistans exports to Japan, Brazil, Russia, and India with which ties are fraught
with political relations, are below.
In South Asia, Pakistans exports to Sri Lanka have grown in response to a bilateral trade
agreement in place. Pakistan trades heavily with members of the Gulf Cooperation Council
(GCC).
In terms of quality and sophistication, the analysis notes that the technological content of exports
in Pakistan is low. High-tech exports constituted less than two per cent in 2008, a share broadly
unchanged in the past 25 years. This is extremely low for a country which has good educational
and research institutions, and a large population.
Over the last decade, Pakistan has upgraded the export quality of the differentiated products.
This can be seen by the increase in the mean unit value and by the increase in the standard
deviations between 2000 and 2007. For some products this quality upgrading, though, has taken
place at a slower pace than the average quality upgrading by world exporters.
Export Performance of Pakistan 2004-05
A target of $ 13.7 billion. Our exports at the close of the year amounted to $ 14.41 billion, an
increase of 17% over last years export level.
Textiles and Garments export:
Textile and Garments contributed 25.2%. It is encouraging to note that five of the sub sectors
namely cotton cloth, knitwear, bed wear, readymade garments and cotton yarn achieved exports
in excess of US$ one billion each during 2004-2005
Export of rice:
During 2004-2005, export of rice, at US$ 933 million, was 47.1% higher over the corresponding
period of last year.
Export Performance of Pakistan 2005-06

The rapid increase in the international oil prices

In terms of sectors, during the period July 2005- May 2006,

Textile exports increased by $ 1.39 billion,

Rice by $ 178 million,

Leather products by $ 152.5 million,

Petroleum products by $ 242 million,

Chemicals by $ 23.1 million

And other miscellaneous items by $ 888 million

Export Performance of Pakistan 2006-07

During the first 11 months of 2006-07, for example The Petroleum Group Imports increased by
11.1% as compared to the same period of 2005-06. Despite the challenges that our exports have
had to face during last year, they have still continued to grow.
The exports of Textiles Group
During the first 11 months of 2006-07, the exports of Textiles Group increased by 6%. Among
these, Art Silk & Synthetic textiles have grown by 122%, Tents and Canvas by 99%, and Yarn
other than cotton yarn by 82.7%.

List of trading partner

The following is a list of Pakistan's main trading partners as of 2010-2014.

Country

Percentage of exports

United States

13.6

United Arab Emirates

8.5

Singapore

0.3

Saudi Arabia

8.5

Malaysia

0.9

Kuwait

0.07

Japan

1.6

Iran

1.8

Country

Percentage of exports

India

2.1

European Union

18.2

China

11.1

Afghanistan

7.6

Major Export Market

Country

07-08

08-09

09-10

10-11

11-12

U.S.A

19.5

18.5

17.4

16.0

14.9

U.K

5.4

4.9

5.3

4.9

5.0

Germany

4.3

4.2

4.1

5.1

4.5

Hong Kong

2.7

2.1

2.2

2.0

1.7

U.A.E

10.9

8.2

8.9

7.3

9.7

Sub Total

42.8

38.3

37.9

35.3

35.8

Other Countries

57.2

61.7

62.1

64.7

64.2

Total

100.0

100.0

100.0

100.0

100

Major Exports of Pakistan

Exports were targeted at $18.6 billion or 12.9 percent higher than last year. Export of food group
declined by 3.5 percent. This declined is caused by a 2.6 percent and 14.3 percent decline in
exports of rice and fruits. Export of rice declined due to lesser production caused by adverse
weather condition which kept the domestic price higher. It was more profitable to sell within the
country than to export. Exports of textile manufactures grew by 0.2 percent. Prominent among
these are export of knitwear 13.9 percent, readymade garments 6.8 percent, made up articles 8.9
percent, cotton yarn 4.6 percent and towels 2.6 percent. Exports of other textile materials
registered a high double digit growth of 17.2 percent. Export of raw cotton, cotton cloth and bed
wear on the other hand registered a decline. Although Pakistan trade with a large number of
countries its exports are however highly concentrated in few countries including USA,
Germany, Japan, UK, Hong Kong, Dubai and Saudi Arabia which account for one-half of its
exports. The United States is largest export market for Pakistan, accounting for 28.4 percent of
its exports followed by UK and Germany. Japan is fast vanishing as export market for Pakistan
as its share in total exports has been on decline for one decade, reaching less than one percent
from 5.7 percent a decade ago. From 2001-2007 show that textile exports accounted for a major
share of total exports. Textile exports showed year on year growth, especially in 2001-03, and
overall almost tripled in five years from $4,503 million to $11,014 million. Non-textile exports,
after declining initially, showed healthy growth during the three year period 2005-2007. The
remaining period 2007-2008 onwards presents a varying landscape. Non-textile exports saw a
marked improvement following 2007, increasing from $5,952 million in 2006 to $8,272 million
in 2007. They continued to increase and reached US$ 11.4 billion in 2011/12, almost equal to
textile exports. However, overall growth for total exports from 2007-2012 at 5.9 percent was
lower than that of 2001-06. Pakistan accounts for a nominal share of the global market, and its
share of exports declined sharply after 2005, falling from a peak of 0.16 percent in 2003 to its
lowest value in 2008 at 0.12 percent. This is largely owing to the worsening financial conditions
globally in this period. The average share of exports for the years 2001-2007 was 0.15 percent,
which fell in the 2007-2012 period to 0.13 percent.
WORLD TOP 10 COUNTRIES WITH HIGHEST EXPORTS FOR YEAR 2012
Rank
1
2
3
4
5
6
7
8
9
10

Country
China
United States
Germany
Japan
France
South Korea
Netherlands
Russia
Italy
United kingdom

US dollars $
$2,057,000,000,000
$1,564,000,000,000
$1,460,000,000,000
$773,900,000,000
$567,100,000,000
$552,600,000,000
$538,500,000,000
$529,600,000,000
$478,900,000,000
$474,600,000,000

Problem to increase the export

At a time when many developing countries are rapidly expanding their exports, Pakistan
continues to struggle to accelerate the export of manufactured goods. It is generally believed that
the countrys exports are not competitive in international markets and that Pakistan is, therefore,
unable to expand its market share. In particular, firms often complain of the lack of an
investment-conducive climate, which impedes business expansion and exports.
Export competitiveness is a complex issue. The factors that affect export competitiveness vary
over time, and across sectors and geography. To keep the analysis manageable, we identify some
common features that generally help improve the business environment by reducing risks, costs,
and time, thus motivating entrepreneurs to invest more in terms of money and effort. The major
constraints to creating a good business environment are categorized under:

Terrorism
Lack of trained labor
Financial inputs
Energy
Physical infrastructure
Bureaucratic hurdles
Institutional rigidities

This broadly classifies the obstacles that manufacturers/exporters face in most instances, but
these obstacles do not affect all sectors uniformly. As pointed out in Section 1, we adopt an
indirect approach to assess how these factors can impact business performance. We have relied
on respondents judgments regarding the intensity of the obstacle, having asked them to rank
each issue according to their perception of its severity. We then use the rankings to provide a
general assessment of the incidence by sector of these obstacles.
Export Promotion Measures:
Since independence in 1947, Pakistan has been facing a peculiar situation of slow
growth in respect of its exports. The exports have increased at an annual growth
rate of 5.6% whereas some other developing countries in Asia like Korea, Taiwan,
China, Malaysia has succeeded in increasing their exports manifold and reducing
poverty at rapid speed. The Government of Pakistan is quite aware of this situation
and has taken concrete measures to boost external trade in the country. The
exports have grown by about 112% from $7.8 billion in 1998-99 to $16.5 billion in
2005-06. The exports further went up to $17.1 billion in 2006-07. It is projected
at $19.2 billion in 2007-08.

Main elements in export development:

Pakistan's exports base is extremely narrow. About 63% of its exports earning are contributed by
the cotton group alone. The other three items namely leather, synthetic made ups and rice
contribute about 15% of total exports. Unfortunately the above four items are relatively low
value added product. Pakistan has not made much progress in increasing the number of products.
Pakistan is also yet to enter in hi-tech exports. In short, Pakistan is lagging in product
diversification, value addition diversification, hi-tech industries to face the fierce global
competition, faced with lower % share of industry in GDP, the Government of Pakistan is taking
the following measures for export promotion.

Suggestions to Increase Exports

Value added in exports:
Pakistan's share in international trade is merely 0.12 percent. For increasing exports, it necessary
that it should move towards higher value added in exports. Pakistan is importing new machinery
for quality improvements in textile manufactures, leather jackets, and other products so that its
exports should grow.
Cluster development:
If there is a concentration of small and medium enterprises producing related goods, it helps the
industries in complementing each other resources and exports. The Government of Pakistan is
providing loan and building infrastructure to develop light engineering industry to Gujranwala
and Gujrat, cutlery industry of Wazirabad and Sports industry of Sialkot, marble industry of
Karachi. If the businesses succeed in improving the quality and quantity of their produce, it will
help in increasing the volume of exports.
Setting export processing zones:
The Government is establishing new export processing zones in Sialkot, Gwadar, Quetta and
Multan for facilitating businesses to export goods. Appointment of trade commissioners. The
appointment of trade commissioners is also helping in promoting country's image and securing
orders for exports.
Improvement in physical and financial infrastructure:
The Government is investing heavily in the improvement of physical and financial structure
including shipment, clearance, cargo space, handling at the parts and airports for smooth flow of
export and import of goods.

Refund of sales tax:

The procedure for refund of sales tax has been simplified. It will help the exporters to free up
time and focus on marketing of goods in the international market.
WTO obligations:
Pakistan is one of the founding members of World Trade Organization (WTO). It is fully abiding
by WTO rules of non-discrimination among various members in their tariff regimes and other
rules and regulations. It is hoped that Pakistan will get a larger share of its products in the
international market. Pakistan needs to meet challenges and avail opportunities in all sub-sectors.
New era of exports:
Pakistan is now preparing itself rapidly for the new era of exports where hi-tech and information
technology (IT) has major role to play.
Export of horticulture products:
For increasing export of perishable horticulture products, the setting up cool chains and cold
storages is being encouraged in the country.
Warehouse city:
A modern warehouse house city in Karachi is being set up with public private partnership and
run by professional management.
Neglected regions:
Focus on trade is now on neglected regions of the world.

Conclusion:
Pakistan international trade is suffering from huge amount of deficit due to low demand for its
exports. Domestic political instability also accounts for trade deficit. By 2011 exports forecast
that Pakistan oil imports will raise. Pakistan basically is an agrarian society supported to some
extent by the industrial one. Pakistan has a good business deals with its partner, but unlocking it
imports more than the exports. Exports, moreover, are mostly composed of raw materials instead
of manufactured or finished goods.