Burke – Pakistan fears a successful negotiation of the Trans-Pacific Partnership agreement sought by U.S. President Barack Obama will benefit its competitors, hurting the country’s exports to America.
Pakistan’s exports are already losing ground in the U.S. market due to less focus on synthetic textiles and the TPP would further challenge its prospects, according to the second quarterly report (July-Dec.) issued by Pakistan’s State Bank on May 15.
“In plain terms, this agreement (TTP) would allow major competitors like Vietnam to export garments and footwear to the US at zero tariffs,’’ said the report of challenges to Pakistani exports which fell over five percent in the first half of the 2014-15 financial year to June.
Obama’s trade proposals, including TPP, have faced opposition from liberals, labor unions and even from his fellow democrats who say the pact will hurt U.S. Jobs. The TPP, a pact among 12 nations is the largest the U.S. would join in more than two decades.
Apart from facing challenges in the U.S. market, Pakistani exports also face challenges in the European market due to the continuous weakening of the Euro Area that accounts for over a quarter of the country’s export market. Europe continues to suffer from a stagnating economy, tumbling inflation and more recently, by fears of deflation.
Notwithstanding challenges to its exports, Pakistan’s economy benefitted from the sharp decline in global oil prices, saving $691 million in the first half of the current year, the report said. Overall, the decline in international oil prices has lowered Pakistan’s oil import bill by $1.3 billion and if the prices stay where they are, Pakistan can save up to $2.5 billion more in March-June quarter, the report said.
On the other hand, the decline in oil prices may hurt growth in Pakistan’s remittances from the Gulf countries which account for more than one-third of the total amount being sent by overseas Pakistanis.
While spending plans by the GCC (Gul Cooperation Council) governments have not been impacted by oil prices, the pace of Pakistan’s remittances growth cannot remain immune to the oil slump indefinitely, according to the report. Of the total remittances in the first ten months of the current fiscal year, Pakistanis in Gulf countries contributed $5.13 billion.
While the first half auger well for Pakistan, the state bank warned that the persistent structural weaknesses continue to take a toll on the country’s overall economic performance. Energy shortages continues to be a serious issue which held back growth in a number of industries. Large-scale manufacturing growth fell sharply to 2.3 percent in H1-Fy15, compared to 6.6 percent in the same period of last year.