Saad Amanullah Khan's Presentation for ABC Economic Summit titled "Trade Beyond Borders"
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I made this presentation for the 2nd American Business Council (ABC) Economic Summit held in 2012 when I was the President of ABC. Here the focus was to debate trade and its implication -- an area where Pakistan lags significantly vs. other countries. Speaker in addition to me included Zubyr Soomro, Omar Ayub Khan, Arvind Saxena (Indian Commerical Attache) and Michael Dodman (US Consul General in Karachi)
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Saad Amanullah Khan's Presentation for ABC Economic Summit titled "Trade Beyond Borders"
- 1. Saad Amanullah Khan President American Business Council
- 6. Total Merchandise + Service Trade is 56% Global GDP is 32% Pakistan
- 7. Pakistan Trade is 0.1% of Global Pakistan GDP is 0.3% of Global GDP
- 8. 0 50 100 150 200 Trade (Current) Trade (Potential) 60 180 Pakistan Trade should be 3 x times LARGER In US$ Billions
- 10. 24 33 177 0 20 40 60 80 100 120 140 160 180 200 0 5 10 15 20 25 30 35 40 45 CY 70 CY 72 CY 74 CY 76 CY 78 CY 80 CY 82 CY 84 CY 86 CY 88 CY 90 CY 92 CY 94 CY 96 CY 98 CY 00 CY 02 CY 04 CY 06 CY 08 CY 10 Exports Imports Pakistan GDP US$ Pakistan Trade Data ($ Billions) Export fall way below Imports (18)(20) (15) (10) (5) 0 5 CY 70 CY 72 CY 74 CY 76 CY 78 CY 80 CY 82 CY 84 CY 86 CY 88 CY 90 CY 92 CY 94 CY 96 CY 98 CY 00 CY 02 CY 04 CY 06 CY 08 CY 10 Current Account US$
- 11. 8% 14% 8% 18% 14% 28% 4% 23% 0% 5% 10% 15% 20% 25% 30% 1970 1990 2010 Pakistan Bangladesh World India EXPORT as % of GDP (1970 – 2010) 6.0% 3.7% 14.4% 24 40
- 12. 6% 10% 14% 19% 39% 56% 56% 0% 10% 20% 30% 40% 50% 60% Pakistan Bangladesh World India South Korea Malaysia Thailand Export (% of GDP) 2010 vs. 1970 -2% 12% 9% 16% 24% 23% 37% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% Pakistan Bangladesh World India South Korea Malaysia Thailand Export (% of GDP) 2010 vs. 1990 Over the Last 40 Years Even WORSE over The last 20 Years period Increase in Export (% of GDP) DISMAL PERFORMANCE
- 13. Based on Current GDP Growth rates
- 15. “GDP GROWTH” HAS A DIRECT CORRELATION WITH “TRADE GROWTH”
- 16. Based on Current GDP Growth rates 16
- 18. GLOBAL DATA Goods & Services 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 CY1990 CY1991 CY1992 CY1993 CY1994 CY1995 CY1996 CY1997 CY1998 CY1999 CY2000 CY2001 CY2002 CY2003 CY2004 CY2005 CY2006 CY2007 CY2008 CY2009 CY2010
- 22. 35% 40% 45% 50% 55% 60% 65% 20,000 30,000 40,000 50,000 60,000 70,000 CY 90 CY 91 CY 92 CY 93 CY 94 CY 95 CY 96 CY 97 CY 98 CY 99 CY 00 CY 01 CY 02 CY 03 CY 04 CY 05 CY 06 CY 07 CY 08 CY 09 CY 10 World GDP (Size) Trade as % of GDP TRADE as % of GDP (1990 – 2010)
- 23. 35% 40% 45% 50% 55% 60% 65% 20,000 30,000 40,000 50,000 60,000 70,000 CY 90 CY 91 CY 92 CY 93 CY 94 CY 95 CY 96 CY 97 CY 98 CY 99 CY 00 CY 01 CY 02 CY 03 CY 04 CY 05 CY 06 CY 07 CY 08 CY 09 CY 10 WorldGDP(Size) Trade as % of GDP 0% 10% 20% 30% 40% 50% 60% 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 CY 90 CY 91 CY 92 CY 93 CY 94 CY 95 CY 96 CY 97 CY 98 CY 99 CY 00 CY 01 CY 02 CY 03 CY 04 CY 05 CY 06 CY 07 CY 08 CY 09 CY 10 IndiaGDP (Size) Trade as % of GDP 15% 20% 25% 30% 35% 40% 45% 50% 55% 30 40 50 60 70 80 90 100 110 CY 90 CY 91 CY 92 CY 93 CY 94 CY 95 CY 96 CY 97 CY 98 CY 99 CY 00 CY 01 CY 02 CY 03 CY 04 CY 05 CY 06 CY 07 CY 08 CY 09 CY 10 BangladeshGDP(Size) Trade as % of GDP 25% 27% 29% 31% 33% 35% 37% 39% 40 60 80 100 120 140 160 180 CY 90 CY 91 CY 92 CY 93 CY 94 CY 95 CY 96 CY 97 CY 98 CY 99 CY 00 CY 01 CY 02 CY 03 CY 04 CY 05 CY 06 CY 07 CY 08 CY 09 CY 10 PakistanGDP (Size) Trade as % of GDP
- 24. PAKISTAN TRADE DATA IS NOT CORRELATED WITH GDP GROWTH
- 25. 1.0 0.4 0.9 0.9 0.7 0.7 0.90.9 (0.2) 0.9 0.9 0.8 0.7 0.6 (0.4) (0.2) 0.0 0.2 0.4 0.6 0.8 1.0 40 Yrs 20 Yrs Correlation Co-efficient of GDP with TRADE as % of GDP
- 26. TRADE as % of GDP (1970 – 1990)
- 27. TRADE as % of GDP (1970 – 1990) 8% 15% 21% 19% 22% 36% 0% 5% 10% 15% 20% 25% 30% 35% 40% CY 70 CY 71 CY 72 CY 73 CY 74 CY 75 CY 76 CY 77 CY 78 CY 79 CY 80 CY 81 CY 82 CY 83 CY 84 CY 85 CY 86 CY 87 CY 88 CY 89 India Bangladesh Pakistan
- 28. TRADE as % of GDP (1990 – 2010) 15% 50% 20% 43%39% 32% 15% 20% 25% 30% 35% 40% 45% 50% 55% CY 90 CY 91 CY 92 CY 93 CY 94 CY 95 CY 96 CY 97 CY 98 CY 99 CY 00 CY 01 CY 02 CY 03 CY 04 CY 05 CY 06 CY 07 CY 08 CY 09 CY 10 India Bangladesh Pakistan
- 29. TRADE as % of GDP (1990 – 2010) TRADE % of GDP 1990 2010 Change Pakistan 39% 32% -7% India 15% 50% 34% Bangladesh 20% 43% 24% World 39% 56% 17%
- 30. 39% 32% 27% 29% 31% 33% 35% 37% 39% 41% CY 90 CY 91 CY 92 CY 93 CY 94 CY 95 CY 96 CY 97 CY 98 CY 99 CY 00 CY 01 CY 02 CY 03 CY 04 CY 05 CY 06 CY 07 CY 08 CY 09 CY 10 VERY ERRATIC RECOVERY 2000 - 2006 DOWNWARD SPIRAL NUCLEAR BLAST & SANCTIONS TRADE as % of GDP (1990 – 2010)
- 33. -1.0% 6.6% 4.3% 2.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% Pakistan India Bangladesh World Trade “Organic Growth” (Trade Growth – GDP Growth) Period: 1990 to 2010
- 34. CONCLUSION: PAKISTAN TRADE IS WITH GDP GROWTH NOT CORRELATED QED
- 36. Some Key Symptoms Impact of decades of Protectionists policies
- 38. Export Performance 2000 to 2010
- 39. 13 12 14 16 18 20 22 24 26 CY 2000 CY 2001 CY 2002 CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 Exports as % of GDP 14% 13% Despite Export doubling from $10 Billion to $24 Billion, the “% of GDP” remained FLAT
- 40. 13 13 14 12 14 16 18 20 22 24 26 CY 2000 CY 2001 CY 2002 CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 Exports as % of GDP 14% 23% 18%
- 41. Exports as % of GDP 1990 2010 1990 -- 2010 $ Billion $ Billion CAGR % Pakistan 6 24 7% Bangladesh 2 18 12% India 23 384 15% Export Data
- 42. Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones
- 43. Type of Trade Agreements FTA Free Trade Agreements RTS Regional Trade Agreements PTA Preferential Trade Agreements BIT Bilateral Investment Treaty Others (Transit Agreements) 3 1 1 - -
- 44. Pakistan Trade Agreements 1. Afghan Transit Trade Agreement Mar 1965 2. Pakistan-Sri Lanka FTA Aug 2002 3. South Asia FTA (SAFTA) Jan 2004 4. Pakistan-China FTA Nov 2006 5. Pakistan-Malaysia FTA Nov 2007 Potential 1. Pakistan-UAE 2. BIT with USA
- 45. Regional Trade Agreements (RTA) are proliferating… 0 5 10 15 20 25 30 1958 1969 1976 1984 1989 1994 1999 2004 New Agreements Annually Annual number +300 RTA’s in Operation +2500 IIT’s in Operation
- 46. Canada USA Mexico Chile Uruguay Paraguay BrazilArgentina Mercosur Bolivia Colombia Venezuela Peru Ecuador Costa Rica Nicaragua El Salvador Honduras Guatemala CACM Trinidad & Tobago Antigua & Barbuda Barbados Belize Dominica Grenada Guyana Jamaica Suriname St. Lucia St. Vincent & Grenadines St. Kitts & Nevis CARICOM Panama Dominican Republic “ American and Asian Spaghetti Bowl - Andean Community Bahamas Haiti Brunei Cambodia Thailand Laos Malaysia Philippines Myanmar Singapore Indonesia Vietnam Japan New Zealand Australia ASEAN Korea PR China Hong Kong Taiwan Russia Papua New Guinea APEC Intra-Asia-Pacific in force Intra-Asia-Pacific signed FTAA Intra-Americas in force Trans-Pacific signed APEC FTAA Source: Devlin and Estevadeordal (2004) Complex global trading system
- 47. Algeria Libya Morocco Mauritania Tunisia AMU Ghana Nigeria Cape Verde Gambia ECOWAS Benin Niger Togo Burkina Faso Cote d’Ivoire Conseil de L’Entente Guinea-Bissau Mali Senegal WAEMU Liberia Sierra Leaone Guinea Mano River Union CLISS Cameroon Central African Rep. Gabon Equat. Guinea Rep.Congo Chad Sao Tomé & Principe ECCAS CEMAC Angola Burundi* Rwanda* Egypt DR Congo Djibouti Ethiopia Eritrea Sudan Kenya* Uganda* Somalia Tanzania* EAC South Africa Botswana Lesotho Namibia* Swaziland* Mozambique SACU Malawi* Zambia* Zimbabwe* Mauritius* Syechelles* Comoros* Madagascar* Reunion IOC *CBI SADC COMESA Nile River Basin IGAD AMU: Arab Maghreb Union CBI: Cross Border Initiative CEMAC: Economic & Monetary Community of Central Africa CILSS: Permanent Interstate Committee on Drought Control in the Sahel COMESA: Common Market for Eastern and Southern Africa EAC: East African Cooperation ECOWAS: Economic Community of Western African Studies IGAD: Inter-Governmental Authority for Government IOC: Indian Ocean Commission SACU: Southern African Customs Union SADC: Southern African Development Community WAEMU: West African Economic & Monetary Union Overlapping African agreements…
- 48. SAFTA TRACK RECORD 0 50 100 150 200 250 300 350 Bangladesh India Pakistan Sri Lanka 2007 2008 2009 2010 GAP 43% 47% 10% 0.1% = 90%
- 49. Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Lack of progressive Trade policies.
- 50. TRADE POLICES • Need long term (min 5 year) trade polices locked by sector – Awaiting launching of “Strategic Trade Policy Framework” for 2012-15 • Desperately need polices to BOOST exports • Heavily promote Service Sector & Agro Exports • Promote Regional Trade (India case in point) • Close coordination with Private Sector
- 51. Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Lack of progressive Trade policies. Is hurdle “Trade Policy” or “Global Politics” ?
- 52. Global Politics: Trade Barriers Tariffs Non-tariff barriers to trade Import licenses Import quotas Subsidies Local content requirements Embargo Trade restriction Protection of local industry
- 53. Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Lack of progressive Trade policies. Key hurdle “Trade Policy” or “Global Politics” ? Weak Intellectual protection legislature
- 54. Weak IPO Legislation • Copyright protection is a major economic, political and diplomatic issue. • Pakistan has been on the US “Special 301 Watch List” since 1989 • Being a signatory of WTO (1995) we must conform to all laws including TRIPS (which covers intellectual property laws) • Intellectual Property Organisation (IPO) Ordinance 2012 promulgated on 24 Apr 2012.
- 55. Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Lack of consistency in key Trade policies. Key hurdle “Trade Policy” or “Global Politics” ? Weak Intellectual protection legislature Poor in-country logistics
- 56. Logistics Challenges • Lacking efficient “in-land” logistic : – Railways – Water-ways – Indigenous Truck manufacturing • Major investment to convert from archaic ‘Adda System’ to ‘On-line Tracking’ and quality delivery system. • Need exponential growth in Road Network.
- 57. Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Low utilization of existing FTA’s Lack of consistency in key Trade policies. Key hurdle “Trade Policy” or “Global Politics” ? Weak Intellectual protection legislature Poor in-country logistics High cost of Airport and Port charges
- 58. 0 5,000 10,000 15,000 20,000 25,000 30,000 Port Charges (US$) 11,900 10,500 2,800 1,940 50 KPT Port Charges Breakdown (US$) Port Dues Pilotage Berth Fee (per day) Tug Charges Mooring
- 59. Some Key Symptoms Impact of decades of Protectionists policies Lack of FTA and low utilization of existing ones Lack of consistency in key Trade policies. Key hurdle “Trade Policy” or “Global Politics” ? Weak Intellectual protection legislature Poor in-country logistics High cost of Airport and Port charges Lack of streamlined systems in Customs and border controls
- 60. Efficient Customs More Trade R2 = 0.1354 0 50 100 150 200 0 5 10 15 20 25 30 35 Days through customs, imports Ratio of total trade to GDP, 90 countries % For clearance in 2.5 days, Trade to GDP ratio goes beyond 100%
- 61. CUSTOMS • Trade facilitation: as “crossing border” and “shipments cost” are considered more significant barrier than “tariff rates”. • Key functions: Revenue collection, protection of IPR and, increasingly, national security • Ensure all trade and border related agencies work together to simplify and harmonize systems and procedures.
- 62. Pakistan needs to take active role in the Trade discussion including the “DOHA Development Round”
- 64. WE NEED TO ….
- 65. NOW YOU KNOW
- 67. SUBMIT FOCUS: 4 issues 1. What policies are needed to drive disproportional TRADE growth? 2. What are the key barriers which hamper TRADE and how can we eliminate them? 3. What role private sector can play to increase EXPORTS? 4. How can international partners help Pakistan improve our TRADE performance?
- 68. THANK YOU
Editor's Notes
- Its all about import and exports beyond a country’s borders, which we call International Trade
- Let me share with you some statistics about world trade