Various research reports mentioned that trade is always a two-way exchange, but when undertaken freely, both parties are better off. This is as true when participants reside in dissimilar states as it is when they live in the same place. Studies also recorded that the imports do not decline or slow economic growth. Through fostering specialization and the transfer of technology, they lead directly to faster economic growth and development as well as enhanced standards of living. Unluckily, the advantages of specialization and technological progress do not accrue equally to everyone, and may worsen the economic lot of some people. No one, however, gravely scorns economic advancements.
In the developing countries like Pakistan, lack of policy support as well as research & development (R&D) keep the country dependent on imported goods/products that disturb the foreign exchange earnings.
| PAKISTAN IMPORTS | ||
| Commodities | %Change for value in million Rupees in December, 2017 over | |
| November, 2017 | December, 2016 | |
| Petroleum products | 2.06 | 6.49 |
| Petroleum crude | 1.32 | 58.72 |
| Electrical machinery & apparatus | 48.55 | 12.95 |
| Iron & Steel | 24.53 | 28.45 |
| Natural gas, liquefied | 8.61 | 108.62 |
| Plastic materials | 10.22 | 12.49 |
| Palm oil | 0.11 | 2.71 |
| Power generating machinery | -20.15 | -35.4 |
| Iron & steel scrap | 3.54 | 24.79 |
| Other apparatus (Telecom) | 98.28 | 9.8 |
Presently the Government of Pakistan has imposed regulatory duty on import of 36 new commodities and increased its rates on the existing 240 products in a fresh move to curtail growing trade deficit of Pakistan. The import of these eatable and luxury items — on which the duty has been raised by up to 50 percent — saw almost 40 percent growth in the first three months of the ongoing fiscal year 2017-18, despite the fact that the government has already rose regulatory duties on most of these products in the last budget. This is the second time that the present government has come up with such a huge rise in the rates of regulatory duties on imported items.
In the budget for 2017-18, the government increased the regulatory duties on 565 tariff lines. Furthermore, FBR issued a new notification of regulatory duties on 731 tariff lines. But customs official proclaimed that all the items subjected to regulatory duties were consolidated into one SRO as against the earlier eight different SROs. It is also said that no change was made in regulatory duties on 430 tariff lines.
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The experts say that the additional duty to be collected from these products would be used to offer cash subsidy to exporters and clear their outstanding dues stuck with the government. The new items that were subjected to regulatory duties include washing preparations, plastic products, tyres of trucks and cars, parts of air-conditioner, varnishes and cigarette papers. Despite of all these scenario, PBS mentioned in a report that imports (provisional) into Pakistan during December, 2017 worth to Rs.533,670 million as compared to Rs516,015 million in November 2017 and Rs467,036 million during December, 2016 explaining a rise of 3.42 percent over November 2017 and of 14.27 percent over December 2016. PBS also mentioned that imports during July-December 2017 totaled Rs3,065,385 million as compared to Rs2,545,503 million during the same period of previous year explaining a rise of 20.42 percent.
In terms of US dollars the imports during July-December 2017 totaled $28,941 million as compared to $24,323 million during the same period of previous year showing a rise of 18.99 percent. It is also mentioned that main products/commodities of imports during December 2017 were petroleum products (Rs.67,233 million), petroleum crude (Rs32,006 million), electrical machinery & apparatus (Rs26,714 million), iron & steel (Rs21,309 million), natural gas, liquefied (Rs19,045 million), plastic materials (Rs18,668 million), palm oil (Rs.18,647 million), power generating machinery (Rs15,456 million), iron & steel scrap (Rs13,155 million) and other apparatus (telecom) (Rs11,548 million).
Furthermore, experts also recorded that Pakistan’s current account deficit lessened 21.5 percent month-on-month, worth to $1.13 billion in December as against to $1.44 billion in November 2017, suggesting that the rise in exports and imposition of regulatory duty on imports have started to reflect in macroeconomic indicators.
State Bank of Pakistan reported that the contraction still means that Pakistan’s current account deficit widened 59 percent in the cumulative six-month period (July-December) of the ongoing fiscal year 2017-18, amounting to $7.41 billion as against to $4.66 billion in the corresponding period of the last year.
Investors have shown concerns about the rising deficit after Pakistan registered a much higher-than-predicted deficit of $12.4 billion in the previous fiscal year that closed on June 2017.
Economic managers also calculated that the deficit in FY2016 was just $4.86 billion. To control the gap in imports and exports, the Government of Pakistan in October improved regulatory duties by up to 350 percent on 356 essential and luxury products/goods that is predicted to dent the growing import bill in coming months. As a percentage of GDP, it is said that the deficit increased to 4.4 percent in the first six months of FY2018 as opposed to 3.1 percent in the corresponding period of the last year.
Conclusion
In nut shell, international trade has optimistic impact on our economy. I would also like to mention here that the economy Pakistan can be better if government should adopt multipurpose policies like improvement in tax and revenue structure, enhancing fiscal, monetary strategies and structural adjustments policies and eradicate anti-competitive market practices.