MAKING TRADE WORK FOR

DEVELOPMENT
Talking Points
1. Trade is an essential vehicle for developing countries to reach the Sustainable
Development Goals (SDGs). By promoting investment and employment, increased trade
can enhance the incomes of developing country citizens and improve their livelihoods
and access to essential services. By providing developing country states with an enhanced
basis for tax revenue, increased trade can help the scaling up of the provision of social
services.1
2. The development dimension of trade policy must be central to the design and application
of the trading rules. This has several aspects, including appropriate measures to respond
to development needs, and in certain circumstances, the need for special and differential
treatment for developing and least developed countries.
3. The second key idea relating trade to development is that meaningful participation in the
multilateral trading system by developing countries is most difficult unless they are
adequately prepared to participate. This is why much emphasis needs to be put on
technical assistance and capacity building.
4. Since 1995, the share of developing countries in world trade has increased to some 50%.
South-South trade now accounts for over a quarter of global trade. The group of LeastDeveloped Countries (LDCs) still suffers from very low levels of trade, but it had trade
expanding faster than average trade growth in the world, doubling its share of world
trade. Furthermore, the World Trade Organization (WTO) has vastly expanded its
membership, with no less than 33 countries acceding to the organization since 1995.2
5. On WTO negotiations, the Bali Agreement on Trade Facilitation is a milestone for
boosting the role of trade for development, embodying a new approach to assist
developing countries to improve customs procedures and transit regimes. Implementing
that agreement and, more importantly, using it to lower domestic trade costs more
generally for example, by improving infrastructural services as well as hard
infrastructure is likely to have very high development payoffs.
1 Making Trade Work for Development, Aid for Trade
2 Leveraging Trade for Development: An Agenda for the Nairobi WTO Ministerial,
ECIPE Bulletin No. 7/2015
7th June 2016Page 1

6. On trade-capacity building, the 2005 Aid for Trade initiative has mobilized substantial
additional development assistance funding to boost trade and reduce supply-capacity
constraints. There is also more focus on the regional integration of markets.
7. Market integration is often a precondition for increasing the ability of firms and farmers
in developing countries, especially landlocked LDCs, to benefit from wider trade
opportunities. Today, trade is much more of an integral element of national development
strategies than it was at the birth of the WTO and, vice versa, development ambitions are
more prominent in WTO activities.
8. Households and firms around the world, not least in poorer countries, would benefit from
reduced trade-distorting subsidies, lower barriers to trade, and less policy uncertainty.
9. What is more, the lack of progress in addressing deep-rooted and long-standing concerns
that developing countries have with the current rules governing global trade undermine
their trust in the WTO, its membership, and proposals for trade negotiations in the future.
10. However, there is a silver lining to the Nairobi meeting: targeted trade initiatives to assist
the poorest countries in the world, the vast majority of which are African countries. The
key elements of these initiatives centre upon implementing commitments agreed at
previous Ministerial meetings. Specifically, these commitments are:
a. Providing LDCs with Duty-Free, Quota-Free (DFQF) access to markets;
b. Applying preferential rules of origin that are simple and transparent, allowing
firms to utilize DFQF access; and
c. Granting LDCs preferential access for their export of services. Essentially, these
initiatives are about fulfilling past promises. If anything, they have become all the
more important and timely after the adoption of the Sustainable Development
Goals.

Pakistan Perspective
7th June 2016Page 2

1. Exports were $20.5 billion during Jul-Apr FY2012-13. Against this, exports for the
same period in FY2015-16 were recorded at $18.2 showing a decline of 11%. The
main reason for this decline is global commodity prices.3
2. Imports were recorded at $33.0 billion during Jul-Apr FY2012- 13 compared to $32.7
billion for the same period in FY2015-16. Savings in the import bill of oil were nearly
40% but we diverted these savings to increased imports of machinery and industrial
raw materials, thus enabling more growth oriented activities. The imports of
machinery over the last three years have increased by a cumulative growth of 40%,
which is again an indication of rising investment in the economy;4
3. For Exports promotion, the Government of Pakistan would be announcing this year
additional measures to incentivize exports and taking other initiatives to ease the cost
of doing business and improving the overall regulatory regime to facilitate exporters.5
4. Pakistans export potential has not been fully realized due to depressed commodity
prices and slowdown in major export markets. In order to strengthen exports and
remove bottlenecks faced by exporters, Finance Minister announced a number of
measures in his previous budget speech of 2015-16.6 These included:
a.
b.
c.
d.

Approval of strategic medium-term trade policy framework;

Establishment of Export-Import Bank also known as the Exim Bank;
Drawback on local taxes and levies to the tune of Rs.1.4 billion; and,
Reduction of mark-up rates on Export Refinance Facility and Long Term
Finance Facility.7

5. In addition to that The European Union (EU) has granted Generalized System of
Preferences (GSP) Plus status to Pakistan in December 2013, granting Pakistani
products a duty free access to the European market.

3 Ministry of Finance
4 Ibid
5 Minister of Finance Budget Speech
6 Ministry of Finance, Finance Ministers Federal Budget Speech 2016-17
7 Ibid
7th June 2016Page 3