ICom Notes Part 2 Commercial Geography Foreign Trade of Pakistan

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Foreign Trade of Pakistan

INTRODUCTION When Pakistan came into being her economy was completely based on agriculture. The experts consisted of agricultural products only. For the economic development of the country there was need for diversification of her trade and a change in her pattern. The government of Pakistan decided to industrialize the country as rapidly as possible. Export promotion was regarded as one of the highest national commitments by the government. Various measures were adopted for export improvement. Pakistan participated in International Trade Conferences and Fairs. The Export Promotion Bureau and Export Promotion Council were set up to provide assistance and information to potential foreign buyers. A large number of concessions and incentives were given to the export trade section etc. As a result the pattern of trade in Pakistan changed. Experts increased and now these include industrial finished products as well as raw materials.

In spite of the different measures taken by the government for boosting the export, still our imports are greater than the exports. The balance of trade is unfavorable and deficit.

The year 1991-92 was estimated to have closed with a balance of payment deficit of dollar 2.6 billion plus. Indeed as far as one may go back the balance of payment has been in the red, with the figure hovering over dollar 1 billion through out the last ten years or so.

CHIEF EXPORT ITEMS OF PAKISTAN

Following are the main items which may be included in our export list:

1.Cotton

Cotton ranks at the top of the export list of Pakistan. Pakistan occupies first position in Asia and second position in the world as an exporter of cotton and cotton products. Export of Raw cotton, cotton cloth and cotton yarn together contribute approximately 40 to 42% to the total export earning of Pakistan. Karachi with the cotton growing hinterland has almost the monopoly of the trade.

(a) Cotton Cloth

Cotton fabrics are at the top of our export list. We export a large amount of cotton cloth every year. Due to increasing demand, its export has gone higher enough.

Some of the customers of cotton cloth are U.K,U.S..,U.S.S.R., Hong Kong, Japan, Singapore, W. Germany and Sudan.

(b) Cotton Yarn

It is another important export item of our country. Its export is increasing every year. Important Customers are Japan, U.K, Hong Kong, W. Germany, U.S.A., Sri Lanka, and Burma.

(c) Raw Cotton

Pakistan grows surplus amount of best quality long staple American Upland Cotton which is very much demanded all over the world. Our main customers of raw cotton are U.K., China, Japan, Hong Kong, Belgium, Indonesia, Italy, Singapore and Bangladesh.

2.Rice

Pakistan has emerged as one of the leading exporters of rice .In the previous years rice was at the top of our export list but due to fluctuation in the world market, its demand has decreased. Best qualities like Basmati and Irri-6 are exported. Pakistan exports rice to almost all the Gulf States and Middle Eastern, European, East Asian and some African countries.

3.Carpets, Rugs And Mats

Pakistan earns a large amount of foreign exchange by exporting very fine quality carpets (both hand and machine made) rugs and mats. Due to heavy competition in world’s market their demand is increasing.

U.S.A. is an important buyer of Pakistani carpets, rugs and mats. Other customers are mostly European countries including France, U.K., Italy, Switzerland, W. Germany, Belgium etc.

4.Fish And Fish Preparations

Fish is exported, fresh, canned and dried. Shrimps are exported to Japan and U.S.A. canned fish finds its market mostly in W. Europe. Middle Eastern and South Asian countries (specially Sri Lanka) are also important customers of Pakistani fish and fish preparation.

5.Leather And Hides

Pakistan produces hides and skin worth approximately 2 crore every year of which 40 % are exported. Now, because of leather industries in our country export of hides and skin. Italy, Spain, Japan, France, China, Romania, W. Germany etc. are important markets in this regard.

6.Synthetic Textile Products

Pakistani Synthetic Textile Products are popular in various foreign countries. These are mainly exported to Middle Eastern, African and South American countries.

7.Petroleum Products

There are 3 oil refineries in Pakistan where crude petroleum is imported and a number of petroleum products are being produced. Some of the surplus products are exported to India, Turkey, Sri Lanka, Singapore etc.

8.Sports Goods

Pakistan has a worthy name in exporting sports goods to more than 100 countries, principally to W. Germany, U.K., Italy, U.S.A., France etc.

9.Surgical Instruments

Pakistan is also exporting surgical equipment to China, Japan, America and Canada.

Besides the above mentioned items, Pakistan exports a number of miscellaneous items like raw wool, Tobacco, Fruits, Vegetables etc. to various countries.

CHIEF IMPORT ITEMS OF PAKISTAN

Following are the main items of our country:

1.Mineral Oil

Our country is not self sufficient in our mineral oil requirements. The present oil production of our own country meets only about 24% of the country’s requirements. So to meet the deficiency, we have to import a large amount of mineral oil from other countries. We import mineral oil from Saudi Arabia, Iran, U.A.E and other Middle East countries.

2.Machinery

As our country is in its developing stage, we have to import different kinds of machinery to meet the demands of various industries. The machines are usually imported from Japan, U.S.A. and European countries.

3.Edible Oil

The production of edible oil is is not sufficient to meet the demand of our Ghee industry. Although the government has taken various measures to boost up the production of oil seeds, but in-spite of those our country is still deficient in edible oil so we have to import enough amount of edible oil e.g. soya-bean oil from U.S.A. and Palm oil from Malaysia and Indonesia.

4.Chemicals And Drugs

The economy of our country mainly demands on agriculture, so to get higher yield from different crops spray of various chemicals is essential. Thus to meet all these demands of our agricultural sector, we have to import various kinds of chemicals and drugs from other countries. The chemicals and drugs are mainly imported from Japan, Germany, U.S.A, U.K,  and other European countries.

5.Dyes And Colors

Various Industries of our country use a number of dyes and colors as raw material in their products such as textile, tinting etc. so to meet the demand of all these industries, various kinds of colors and dyes are imported. These colors and dyes are mainly imported from Japan ,U.K.,U.S.A. etc.

6.Tea

Our country produces a very small quantity of tea which is sufficient to meet the demand of our country. So various tea companies port huge amount of tea. Tea is mainly imported from Sri Lanka, Bangladesh, India and Kenya.

7.Electric Goods

Different kinds of electrical goods are needed in our country .The local industries are not in in the position to meet the required demand so we have to import a large number of electric goods from Japan, S.A., U.K. and other European countries.

8.Transport Equipment

Our country needs different kinds of transport equipment e.g. buses, cars, rickshaws, motorcycles. So demand of these are high and hence they are imported from Japan, Italy and other countries.

9.Paper And Paper Products

Before 1971,we had a number of paper mills our eastern wing and our requirements were fulfilled from the eastern. Although, after 1971 some paper mills were set up in the water wing, are still deficient in paper especially in paper for newspaper industry. We have to import a large amount of news print paper and other kinds of paper from Canada, Japan, Sweden, U.S.A. etc.

DIRECTION OF TRADE

The global concentration of Pakistan’s trade can be broadly classified to the following major groups of countries:

1.West European Countries

In this group U.K., France, W. Germany, Belgium, Nether lands and other Scandinavian countries can be included: These countries are the main buyers of our export goods e.g. Cotton cloth, carpets, rugs, sports goods and many other items and we import machines, electric goods, chemicals and various other items from these countries. Our exports are less in comparison to the imports from these countries and balance of trade is in favor of these countries.

2.Middle East Countries

Saudi Arabia, Iraq, U.A.E. and other Arab countries can be included in this group. These countries are the top buyers of our export goods, such as rice, cotton cloth and various other items, but due to oil crises and Iran-Iraq war, our export to these countries has declined to some extent, but our imports from these countries have increased enough. We import mineral oil and various other items from these countries. Thus due to heavy imports from these countries, the balance of trade is in their favor.

3.Asian Countries

Japan, Hong Kong, China, Singapore, Malaysia, Indonesia and various other countries can be included in this group. Our exports to these countries has been decreasing every year, and imports have increase too much so due to these circumstance the balance of trade go in the favor of these countries. Japan is the top buyer of our export goods in Asian countries, but we have to import large amount of machinery, chemicals, transport equipment and various other items from Japan. Besides Japan we do trade with others. Asian countries, such as we import palm oil from Malaysia and Indonesia and Tea from Sri Lanka and Bangladesh.

4.North American Countries

U.S.A., Mexico, Canada and other countries can be included in this group. The exports of our country to North American group is not progressive, but we import so many kinds of goods, such as machinery, electrical goods, soybean oil and requirements for our armed forces and various other items, and our imports are about three times greater than our exports. So due to all these conditions the balance of trade remains in favor of these countries.

5.R.C.D. Countries

In this group are included Iran, Turkey and newly Independent Central Asian Republics namely Tajikistan, Uzbekistan, Azerbaijan and Turkmenistan. Pakistani exports to Turkey and Iran are quite enough. Although all these countries are trying to make their balances of trade favorable, but in-spite of various measures taken by the concerned countries still Pakistan’s imports are greater than exports, so the balance of trade remains to the favor of these countries.

6.East European Countries

This group includes countries of eastern Europe such as Poland, U.S.S.R., Romania, Hungary, Yugoslavia, Greece and others. Such countries import large amount of our export goods such as rice, cotton cloth, sports goods, carpets and various other items ,but our imports are comparatively less than our exports, so balance of trade is in favor of our country.

Besides the above we do trade with so many African, central and South American countries and also the various Asian and Oceania countries.