Pakistan's major exports include raw cotton, textiles, rice, leather products, carpets, surgical instruments, and sports goods. Exports were targeted to increase by 12.9% but food exports declined by 3.5% due to lower rice and fruit production from adverse weather. Textile exports grew slightly as exports of items like knitwear and readymade garments increased, while raw cotton and cotton cloth declined. The largest export markets are the US, UK, and Germany, though exports are highly concentrated in few countries and commodities. Issues to address include increasing value-added, quality, and diversifying exports.

2. MAJOR EXPORTS
1. Raw cotton, Textile products and Cotton yarn.
2. Rice.
3. Leather and leather products.
4. Carpets and rugs, Tents.
5. Synthetic textiles.
6. Surgical instruments.
7. Sports goods.
8. Readymade garments.
9. Vegetable, fruit and fish.
10. Engineering goods.
11. Chemicals and Pharmaceutical products.

3. 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.

4.  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.

5. Direction of Exports of Pakistan
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.

6. ISSUES TO BE CONSIDERED SERIOUSLY
 Pakistan needs to diversify its exports not only in terms
of commodities but also in terms of markets.
 Heavy concentration of exports in few commodities and
few markets can lead to export instability.
 Other issues which need to be addressed include low
value added and poor quality, obsolete use of machinery
and technology, higher wastage of inputs adding to the
cost of production, low labor productivity, little spending
on research and development, export houses lacking
capacity to meet bulk orders, inability to meet
requirements of consumers I terms of fashion and design,
non-adherence to contracted quality and delivery
schedule, lack of marketing techniques etc.

7. Major Imports of Pakistan
1. Machinery.
2. Petroleum.
3. Chemicals.
4. Vehicles and spare parts.
5. Edible Oil.
6. Wheat.
7. Tea.
8. Fertilizers.
9. Plastic material.
10. Paper Board
11. Iron ore and steel.
12. Pharmaceutical products.

8. Imports of Pakistan
 Pakistan’s imports are also highly concentrated in few
items namely, machinery, petroleum and petroleum
products, chemicals, transport equipment, edible oil, iron
and steel, fertilizer and tea.
 These imports accounted for 73% of total imports during
2006-07. Among these categories machinery,
petroleum/petroleum products and chemicals accounted
for 53.4% of total imports.

9. Direction of Imports of Pakistan
 Pakistan’s imports are highly concentrated in few
countries.
 Over 40 percent of them continue to originate from just
seven countries namely, the USA, Japan, Kuwait, Saudi
Arabia, Germany, UK and Malaysia.
 Saudi Arabia is emerging as major supplier to Pakistan
followed by the USA and Japan.
 The shares of USA and Japan, with some fluctuations,
exhibited a declining trend because of the shift in the
import of machinery/capital goods and raw materials to
other sources.

10.  On the other hand, the share of Pakistan’s imports from
Saudi Arabia has been rising due to higher imports of
POL products.
 Malaysia share has shown rising, as well as, falling
trends over the years mainly on account of fluctuations in
palm oil prices.

11. COMMERCIAL POLICY
 It is an economic policy which is concerned with those
decisions, strategies and instruments which influence the
foreign trade sector of an economy.
 In the commercial policy it is to be decided that what
will be the exports and imports of the country, whether
the foreign trade sector will be consisting of consumer
goods or the producer goods and whether the trade will
be free or restricted.

12.  All this means that commercial policy can be
decomposed into
 (1) Export and import Policy
 (2) Foreign exchange policy and
 (3) Tarrif Policy.
 In case of Pakistan the commercial policy is also consist
of above mentioned policies.

13. Instruments of Commercial Policy
The commercial policy is consisted of following
instruments.
1. Tarrif (Import Tax)
2. Quota System
3. Exchange Control
4. Export subsidies
5. Voluntary Export Restraints
6. State Trading
7. Multiple Exchange rate system

15. OBJECTIVES :
1. To increase Exports: The under developed
countries are preys to “Trade Gap”. It means that
their exports are less than their imports. As a
result they have to face deficit in their balance of
payments.
2. Diversification in Exports: To remove deficit in
balance of payments not only the exports should
be boosted up, but a diversification in exports be
also brought. The quality of exports is improved.

16. The new markets for exports be discovered the share
of manufactured goods in exports be increased for
this all, the exporters be encouraged.
3. Protection to Infant Industries: The purpose of
import policy is to protect the infant domestic
industries. As the industries of under developed
countries like Pakistan can not compete with
industries of developed countries. Therefore if the
domestic markets are supplied with foreign products
the process of industrialization in home country will
never start. The country will remain backward.

17. Therefore in order to protect the infant industries, the
commercial policy aims at imposing import duties,
quota system and exchange control etc.
4. Improvement in Terms of Trade: The ratio
between the prices of exports and prices of imports is
known as terms of trade The terms of trade of
developing countries like Pakistan goes on to fall. It
means that they have to give more exports against
their imports. In other words the prices of exports go
on to fall while the prices of imports go on to
increase in case of developing countries.

18. 5. Stability in Internal and External Value of
Currency:
Whenever a country faces deficit in its balance of
payments, the external value of the currency goes on
to fall. This not only leads to decrease the
international value of the currency but inflation is
also generated in the country. Thus commercial
policy can be applied to bring internal and external
stability in the value of currency

19. 6. Commercial Links: The commercial policy can
be applied to make commercial links with other
countries. For this purpose the trade delegates can be
sent abroad. The trade fairs and exhibitions can be
arranged. In this way, a country can popularize its
products and exports. Consequently the exports are
boosted up and balance of payments will improve.

20. TARRIF AND QUOTAS
Tarrif:
A tariff is a tax imposed on imports, which are
goods coming into a country. The tax may range
from a few percent of the cost of the good to well
over 100% of the cost of the goods. This tax is
ultimately passed on to consumers, resulting in
higher prices.

21. Tariff Effects
 The additional tax, or tariff, on imported goods
can discourage foreign countries or businesses
from trying to sell products in a foreign country.
The additional taxes make the foreign import
either too expensive or not nearly as competitive
as it would be if the tariff didn't exist.
 This can lead to fewer choices of goods and a
lower quality for consumers. The amount of
chocolate, fruits and vegetables, and automotive
parts you have to choose from are all subject to
the effects of tariffs.

22. Quota:
A quota sets a numerical limit on how much of a
product can be imported into a country. This helps to
protect producers of domestic products from facing
too much competition and ultimately going out of
business.
Ultimately, quotas benefit and protect the producers
of a good in a domestic economy, though the
consumers end up paying more if the domestically
produced goods are priced higher than imports.

23. Quota Effects:
 The numerical limits imposed on imported goods
through quotas ultimately leads to higher prices
paid by consumers.
 Essentially, the import quota prevents or limits
domestic consumers from buying imported goods.
The import quota reduces the supply of imports.

24. Export Subsidies:
Government help to exporters, generally in two
forms
(1)Service subsidy: trade information, trade shows,
feasibility studies, foreign representation, etc.
(2) Cash subsidy:
(a) rebate on imported raw materials and duty-free
import of manufacturing equipment (called
indirect cash subsidy); or
(b) drawback as a percentage of the value of exports
(called direct cash subsidy).

25. Although World trade Organization (WTO, formerly
GATT) recognizes that subsidies hinder fair
competition and distort trade practices, it has not
been able to define precisely what kind of assistance
constitutes a subsidy.
REBATE:
A rebate is an amount paid by way of reduction,
return, or refund on what has already been paid or
contributed. It is a type of sales promotion that
marketers use primarily as incentives or supplements
to product sales.

26. SEE YOU IN NEXT
CLASS