akistan is a member of the WTO and has bilateral and multilateral trade agreements with many nations and international organizations. It is part of the South Asian Free Trade Area agreement and the China – Pakistan Free Trade Agreement.

Fluctuating world demand for its exports, domestic political uncertainty, and the impact of occasional droughts on its agricultural production have all contributed to variability in Pakistan's trade deficit. The trade deficit for the fiscal year 2013/14 is $7.743 billion, Exports is $10.367 billion in (July–November 2013)and imports is $18.110 billion

Pakistan's exports continue to be dominated by cotton textiles and apparel, imports include petroleum and petroleum products, edible oil, chemicals, fertilizer, capital goods, industrial raw materials, and consumer products.

On 12 December 2013, European Union granted GSP Plus status to Pakistan till 2017, which enabled it to export 20% of its good with 0 tariff and 70 percent at preferential rates to EU Market.The status was given after the European Parliament passed the resolution by 406-186 votes.

Exports:

Pakistan's exports increased more than 100% from $7.5 billion in 1999 to stand at $18 billion in the financial year 2007-2008.

Pakistan exports rice, kinnows, mangoes, furniture, cotton fiber, cement, tiles, marble, textiles,

 clothing, leather goods, sports goods (renowned for footballs/soccer balls), Cutlery, surgical instruments, electrical appliances, software, carpets, rugs, ice cream, livestock meat, chicken

, powdered milk, wheat, seafood (especially shrimp/prawns), vegetables, processed food items, Pakistani-assembled Suzukis (to Afghanistan and other countries), defense equipment (submarines, tanks, radars), salt, onyx, engineering goods, and many other items. Pakistan produces and exports cements to Asia and the Middle East. In August 2007, Pakistan started exporting cement to India to fill in the shortage there caused by the building boom. Russia is a growing market for Pakistani exporters. In 2009/2010 the export target of Pakistan was US $20 billion. As of April 2011,Pakistan exports stand at US $25 billion.

List of trading partners

Country	Percentage of imports	Percentage of exports	Percentage of total trade
China	19.7	11.1	16.9
European Union	10.4	18.2	13.0
United Arab Emirates	12.1	8.5	10.9
Saudi Arabia	12.2	8.5	9.0
United States	3.2	13.6	6.7
Kuwait	6.3	0.07	4.4
India	3.7	2.1	3.2
Iran	3.4	1.8	2.9
Japan	3.6	1.6	2.9
Malaysia	3.9	0.9	2.9
Afghanistan	0.3	7.6	2.8
Singapore	4.1	0.3	2.8

  Pakistan‐China Free Trade Agreement :

Diplomatic relations between Pakistan and China were established on 21 May 1951, shortly after the republic of china lost power in  in 1949. While initially ambivalent towards the idea of a Communist country on its borders, Pakistan hoped that China would serve as a counterweight to Indian influence. India had recognized China a year before, and Indian Prime Minister Nehru also hoped for closer relations with the Chinese. However, with escalating border tensions leading to the 1962 Sino-Indian war, China and Pakistan aligned with each other in a joint effort to counter Indian encroachment. One year after China's border war with India, Pakistan ceded the Trans-Karakoram Tract to China to end border disputes and improve diplomatic relations.

Economic relations :

Economic trade between Pakistan and China is increasing at a rapid pace and a free trade agreement has recently been signed. Military and technological transactions continue to dominate the economic relationship between the two nations, although in recent years China has pledged to vastly increase their investment in Pakistan's economy and infrastructure. Among other things, China has been helping to develop Pakistan's infrastructure through the building of power plants, roads and communication nodes. Current trade between both countries is at $9 billion, making China the second largest trade partner of Pakistan.

Both countries are keen on strengthening the economic ties between the two, and have promised to 'propel' cross-border trade. This has led to investment in Pakistan's nascent financial and energy sectors, amidst a surge of Chinese investment designed to strengthen ties. Pakistan has in turn been granted free trade zones in China.

The economic relationship between Pakistan and China is composed primarily of Chinese investment in Pakistani interests. China's increasing economic clout has enabled a wide variety of projects to be sponsored in Pakistan through Chinese credit. Pakistani investment in China is also encouraged, and cross-border trade remains fluid.

In 2011 China Kingho Group canceled a 19 billion mining deal because of security concerns.

On 26 April, China Mobile announced 1 billion of investment in Pakistan in telecommunication infrastructure and training of its officials within a period of three years. The announcement came a day after China Mobile subsidy Zong emerged as the highest bidder in the 3G auction, claiming a 10 MHz 3G band licence, qualifying for the 4G licence.

On 22 April 2015, According to China Daily, China released its first overseas investment project under the One Belt, One Road for developing a hydropower station near Jhelum.

China–Pakistan Economic Corridor

Pak-China Economic Corridor is under construction. It will connect Pakistan with China and the Central Asian countries with highway connecting Kashgar to Khunjrab and Gwadar .Gwadar port in southern Pakistan will serve as the trade nerve center for China, as most of its trade especially that of oil will be done through the port, which is already controlled by Beijing. Currently, sixty percent of China’s oil must be transported by ship from the Persian Gulf to the only commercial port in China, Shanghai, a distance of more than 16,000 kilometres. The journey takes two to three months, during which time the ships are vulnerable to pirates, bad weather, political rivals and other risks. Using Gwadar port instead will reduce the distance these ships must travel and will also enable oil transfers to be made year-round. On 20 April 2015, Xi Jinping arrived in Pakistan and signed agreements valued at $28 billion which includes hydro, wind and solar energy projects in Pakistan, with China's government providing concessional loans for infrastructure projects.

Pakistan–European Union relations :

Pakistan–European Union relations are the international relations between the Islamic Republic of Pakistan and the common foreign policy and trade relations of the European Union.

Agreements and trade :

The EU accounts for 20% of Pakistani external trade with Pakistani exports to the EU amounting to €3.4 billion, mainly textiles, medical equipment and leather products) and EU exports to Pakistan amounting to €3.8 billion (mainly mechanical and electrical equipment, and chemical and pharmaceutical products.

Since 2001, EU policy is to stay constructively and strongly engaged with Pakistan and to make a significant and visible engagement, both in political and economic terms. Measures include resumption and upgrading of political dialogue, signature of a 3rd Generation Co-operation Agreement, as well as additional development assistance.

In December 2006, the Council of the EU called on Afghanistan and Pakistan to deepen relations and to cooperate closely to deal with insecurity in border areas, while urging Pakistan to build on current efforts to prevent the use of its territory by the Taliban.

In order to enhance Pakistan’s capacity on WTO related issues, a trade-related technical assistance programme was launched in 2004 with a view to streamlining procedures and processes for trade facilitation in compliance with EU norms and standards.

EU and Pakistani relations are elevated to new strategic level with the EU-Pakistani Summist that has taken in 2009.

Development

Since the start of its cooperation with Pakistan in 1976, the European Commission has committed more than €500 million to projects and programmes. During the 1980s the Commission launched a mix of infrastructure and social development projects which focused on development of roads, bridges, a fishing harbour facility, rural electricity infrastructure, livestock, education, vocational training and integrated rural development. In the 1990s the Commission streamlined and consolidated its portfolio and reoriented its activities towards policy-based social sector investment programmes, placing greater emphasis on human development and environmental management in line with shifts in government policy. In addition, the Commission provided support to smaller-scale operations with NGOs in areas such as population welfare, child labour, income generation, drug demand reduction and rural health. Under the previous CSP, the EC cooperation in Pakistan focused on human development, in particular basic education programmes at provincial level.

For the period 2002-2006 €75 million were originally allocated for development and economic cooperation. Additional EC support to Pakistan was provided following the events of 2001 in recognition of Pakistan’s role as a partner in the fight against terrorism, including € 50 million for financial service reforms and to support development of micro-finance SMEs.

The 8 October 2005 earthquake had a devastating effect on the northern areas of Pakistan, in particular Azad Jammu and Kashmir and North West Frontier Province. In response to this calamity the Commission proposed an assistance package of € 93.6 million, consisting of both humanitarian aid (€ 43.6 million) and reconstruction support (€ 50 million) for commitment in 2005. Substantial assistance was also provided under other thematic budget lines, including for Afghan refugees in Pakistan.Under its environment cooperation policy, over the last decade the EC contributed a total of € 32 million to rehabilitation, management and conservation of natural resources, safeguarding and conservation of biodiversity, education and capacity-building through sustainable resource management with the involvement of local communities. Major target areas included upland areas of Punjab and Khyber Pakhtunkhwa (KP), benefiting more than 2 million people.

In December 2013, The European Union granted the much-awaited duty-free market access under the Generalized System of Preference (GSP)+ to Pakistan which will enable Islamabad to export textile goods to 27 European countries till 2017.

 The EU has granted the GSP Plus to Pakistan which will increase our exports by $2 billion per annum,” Minister for Finance Ishaq Dar said while talking to reporters here on Thursday.The EU is Pakistan’s largest trading partner. In 2012, the total EU-Pakistan trade amounted to Euros 8.2 billion. GSP+ will reduce tariffs to zero on over 90 percent of all product categories being exported by Pakistan to the EU. The European Commission’s preliminary assessment is that Pakistani exports, including textiles, and also other products such as leather would increase by Euro 574 million annually. The Pakistani textile industry estimates that exports to the EU of textiles alone under GSP+  will increase by $650 million in the first year.

President Mamnoon Hussain in a statement said that the EU’s GSP Plus status would strengthen Pakistan’s trade relations with the member countries of the European Union. “GSP Plus would also significantly help strengthen our economy through greater trade, generation of economic opportunities and creation of more jobs for our people,” the president stated.

Finance Minister Ishaq Dar said the GSP Plus status will increase the country’s exports by at least $2 billion.

Punjab Chief Minister Shahbaz Sharif said the grant of GSP+ was a good omen. He said the facility of GSP+ would enhance exports of Pakistan and the national economy would be strengthened due to an increase in trade activities.

Pakistan–United Arab Emirates Relations :

Pakistan–United Arab Emirates relations refer to bilateral relations between the Islamic Republic of Pakistan and theUnited Arab Emirates.

After the British left, Pakistan originally called for the UAE the successor of the Trucial States to include Bahrain and Qataras states of the United Arab Emirates, this however never materialised and relations with Abu Dhabi were established in 1971, Islamabad was the first country to extend recognition and Pakistan and the UAE enjoy extremely close and fraternal relations, founded on deep-rooted cultural affinities, shared faith and traditions, as also geographic proximity and identity of interests mainly reciprocates Pakistan’s continued position on Jammu and Kashmir and urged the International community to play its role effectively in resolving the crises. These relations date back to the UAE's formation in 1971, and have since evolved into wide-ranging co-operation in various fields. UAE has been a major donor of economic assistance to Pakistan. UAE has been appreciative of Pakistan's contribution to the evolution of key institutions in the Emirates such as armed forces, police, health and education, and has reciprocated in the same friendly manner to the full satisfaction of Pakistan. Both countries are Islamic countries.

Frequent exchanges of high level visits and regular bilateral consultations between the two countries are reflective of the fact that Pakistan and UAE have laid strong foundations of mutually beneficial relations, friendship and peaceful cooperation over the years. The UAE has emerged as one of Pakistan's major economic and trading partners. A large number of Pakistani expatriates, numbering nearly 400,000 are gainfully employed in UAE. The Pakistani expatriates in UAE have contributed in a significant manner to promotion of bilateral understanding and to the economy of Pakistan through their home remittances. The relationship between the two has been dubbed as a special relationship.The UAE also has a long cricket relationship with Pakistan, serving as a home ground for the Pakistan cricket team for the past few decades.

UAE Pakistan Assistance Program :

On the 12th of January, 2011, the UAE Pakistan Assistance Program was launched in order to help and provide assistance to Pakistan and mitigate the impact of floods by redeveloping infrastructure, as per the directives of His Highness Sheikh Khalifa Bin Zayed Al Nahyan, the President of the United Arab Emirates. The UAE PAP has worked along a comprehensive redevelopment plan that takes into account the harsh geography and the rough weather conditions of the region while focusing on four main areas of social redevelopment: health, education, water and infrastructure. The Program has taken some vital steps to ease the pain and suffering that the people of Swat have become accustomed to as it provided for the construction and rehabilitation of two bridges, 52 schools and 7 hospitals, as well as the implementation of 64 water supply schemes.

Pakistan’s refusal to join the Saudi-led operations in Yemen :

Pakistan’s refusal to join the Saudi-led operations in Yemen has affected its relations with the UAE. This was made clear in comments by the Minister of State for Foreign Affairs, Dr Anwar Gargashafter a unanimous resolution was passed by a special session of Pakistan’s parliament to remain neutral in the Yemen conflict.

UAE-Pakistan Energy Cooperation:

UAE is one of the leading Gulf Cooperation Council and Middle East and North Africa country in terms of renewable energy production. It has vast expertise, financial resources and a strong political commitment to achieve the desired goals of at least 7 percent of renewable energy mix (solar, wind, thermal, geothermal, nuclear, biomasses) in the days to come. Masdar is the icon of solar and wind energy productivity in the region as well as in the world. Since Pakistan has acute energy deficit in the country for so many years, addressing a joint news conference H.E. Sheikh Abdullah bin Zayed Al-Nahyan said there was huge potential to cooperate and coordinate in the energy sectors, especially the renewable energy and the UAE would be looking at ways and means to develop this sector in Pakistan in the days to come. It is predicted that brotherly country UAE cooperation in alternative energy i.e. solar energy would pay its dividends in the days to come.

He said relations between the two countries were diverse, encompassing political, economic and cultural dimensions as well as people to people contacts. The UAE minister was appreciative of the role being played by more than 1.5 million Pakistanis in the development of his native country.

India-Pakistan trade relations: Current and Potential:

In recent years, efforts towards promoting peace in South Asia have pivoted around the idea of improving trade relations as the best bet in forging a lasting relationship between India and Pakistan. Trade was certainly one of the most steadfast solutions proposed when six Indians and five Pakistanis met for the India-Pakistan Regional Young Leaders Initiative (IPRYLI) conference organised by the Asia Society in collaboration with the Jinnah Institute in Islamabad.

Currently, any altercation between the two countries inevitably leads to the cessation of some, if not all, trade activity. If healthy trade relations are built up between India and Pakistan – and the potential is immense –it can integrate the lives of millions of people in both countries. With livelihoods at stake, both India and Pakistan will be forced to stay engaged and find alternate means of dispute resolution. Over a period of time, this has the potential to significantly shift the paradigm of cross-border relations in South Asia.

Context

Though trade between the two countries has increased in the last couple of years, it is still far from reaching its potential, and remains extremely vulnerable to political fluctuations . In 2012-13, trade between India and Pakistan totalled $2.4 billion, a fraction of the total trade of the two countries

Following partition in 1947, India-Pakistan trade fell drastically; and came to a near standstill for almost nine years in the aftermath of the 1965 war. In more recent history, India stopped trade via land and air routes following the attack on Indian Parliament in 2001. In 2013, trade was blocked  following cross-border firing.

Barriers to trade and consequences

The real breakthrough in Indo-Pak trade came in 2005 – 58 years after partition – when a land route was opened at Attari for a limited number of commodities. India has now opened an Integrated Check Post (ICP) at Attari in April 2012 with improved warehousing and screening infrastructure. This has brought about a marked change in support to traders on both sides and facilitated faster movement of goods.

Similarly, trade through sea routes has also witnessed improvement after  changes in the maritime protocol were introduced in 2005. These changes led to a decrease in freight rates. However, despite these positive changes, several barriers to trade continue to exist.

Infrastructure constraints :

Even though infrastructure was improved through the ICP on the Indian side, similar facilities are yet to be created on the Pakistani side. Also, this quality of infrastructure does not extend to the rail cargo system even on the Indian side.

Transit rights :

India has not allowed Pakistan to access Nepal, Bangladesh and Bhutan via its territory and Pakistan has not given transit rights to India to access Afghanistan. This significantly affects trade potential, even with other neighbours.

Financing and banking facilities for traders :

Guaranteed payments are essential for building reliable business partnerships and for this banking channels need to be improved. In 2005, the Reserve Bank of India Governor and the Governor of the State Bank of Pakistan had signed an agreement to open branches of two Indian banks in Pakistan, and two Pakistani banks in India. This agreement has not yet been implemented.

Limitations on goods that can be traded :

Pakistan switched from the positive trading regime (which listed products that are permissible for trade between the two countries) to a negative list regime (that only bans a few items from trade, but permits the rest) in 2012. Under this, only the import of 1,209 Indian products is barred.

This is a positive development. However, Pakistan is yet to offer the Most Favoured Nation (MFN) status to India. This would grant India the same trading privileges as Pakistan offers any other country in the world.  In any case, road based trade is still severely restricted and only 137 items are allowed to be imported via road.

India had already granted MFN to Pakistan in 1996. In August 2012, India has also opened Foreign Direct Investment from Pakistan except in defence, space and atomic energy sectors.

Consequences :

Besides limiting trade between the two countries, the restrictive trading regime has resulted in large informal trade flows, most notably through third countries such as Dubai.

Informal trade flows are estimated to range from $250m to $3bn. One estimate pegs trade via the Mumbai-Dubai-Karachi route to be 88% of the total informal trade, and the remaining as cross-border informal trade through the Amritsar-Lahore and Rajasthan-Sind border routes.

Trade potential

Due to the impediments listed above, the trade potential between India and Pakistan – estimated at 2011 to be ten to twenty times greater than its current levels – has yet to be realised. Similarly, the potential in mineral fuels (such as petroleum, coal, or natural gas) was another $10.4 bn – $10.7 bn. In fact, there are further trade possibilities in the service sector, which is becoming increasingly important – IT, healthcare and entertainment (music, movies) etc.

Sector wise analysis reveals that bilateral trade is likely to increase from sectors such as textile, automobile, IT, BPO, health and entertainment, if these sectors are liberalised.

While it is important to recognize domestic constraints in opening markets, it is also important to minimize barriers wherever possible. Trade will also promote sectors where each country has a comparative advantage, thereby creating more jobs in those sectors. Moreover, as the FDI regime is liberalised, the investments will likely deepen the trade linkages between the two countries.

Trade figures should not be seen as mere statistics and numbers. Trade is inextricably linked to livelihoods. If trade relations between the two countries are normalized, Pakistan will get access to a market of over 1.2 bn consumers and India will get access to a market of over 180 mn consumers. The increased economic activity will lead to more employment opportunities and higher stakes for people on both sides in the maintenance of peaceful relations between the two countries. This will force the political class to tone down the ‘enemy’ rhetoric and institutionalise dispute resolution.

CONCLUSION :

1. Trade policy is a collection of rules and regulations which pertain to trade. Every nation has some form of trade policy in place, with public officials formulating the policy which they think would be most appropriate for their country.• The purpose of trade policy is to help a nations international trade run more smoothly, by setting clear standards and goals which can be understood by potential trading partners. Things like import and export, taxes, tariffs, inspection regulations, and quotas can all be part of a nations trade policy.
2.  The latest trade policy announced by the Government of Pakistan was the Strategic Trade Policy Framework for year 2009-12.• Ministry of commerce make the trade policy of Pakistan.• Trade policy presented by the Makhdoom Ameen Faheem.
3.  Purpose of trade policy
4. Set out the policy guidelines and identifying the principle action areas.• Need for developing and effectively implementing a national export competitiveness program.• To provide the reference to different trade measures by the Ministry of Commerce and other ministries from time to time.• To achieve sustainable high economic growth through exports with the help of policy and support interventions by the government, industry, civil society and donors.• Reducing the cost of business• Protection and promotion of SME sector  Purpose of trade policy• Enabling Pakistani exporting countries overcome the negative effects of global demand contraction.• Creating opportunities for employment• Environmental protection• Investing in human resources• Poverty alleviation• For promoting private sector as engine of growth• For focus on small scale sector particularly in agriculture
5.  Features of trade policy 2009-2010• Full insurance cover for purchasers/importers coming to Pakistan.• Cement, light engineering, leather garments, furniture, soda ash, hydrogen peroxide, sanitary wares including tiles, finished marble/granite/ onyx products exporters to be compensated for inland freight cost.• 25% support to surgical instruments, sports goods and cutlery sectors for brand development.• 25% of cost of labs in tanneries to be borne by government and 50% grants for purchase of flaying machines at slaughter houses.
6.  Features of trade policy 2009-2010• 25% freight subsidy for live seafood products exported by air.• Processed food exports to receive 6pc of export cost as R&D.• Government to bear 50pc cost of certification of halal products exports.• 50% cost of quality certification for domestic appliances to be borne by government.
7. 
   
8.  Features of trade policy 2010-2011• Increasing a number of items mainly raw materials from India in consultation with stakeholders, improvement in Research and Development, improvement in transit trade and trade facilitation.• To achieve the $23.5 billion export target by 2012.• The total expenditures on three-year STPF are estimated at Rs 35.22 billion.
9.  Features of trade policy 2010-2011• The government shall ask United States and European Union to create a legal window for duty concession on Pakistani products because Pakistan has suffered a lot due to security situation owing to frontline state against terrorism.• The Finance Division committed Rs 16 billion for funding of trade promotion activities for the current fiscal year 2010-11.•  The proposal to allow up to 5 years old and used cars imported in the country has been dropped.
10.  Important imports of Pakistan• Machinery• Petroleum• Chemicals• Vehicles and spare parts• Edible Oil• Wheat• Tea• Fertilizers• Plastic material• Paper Board• Iron ore and steel• Pharmaceutical products
11.  Important exports of Pakistan• Raw cotton, Textile products and Cotton yarn• Rice• Leather and leather products• Carpets and rugs, Tents• Synthetic textiles• Surgical instruments• Sports goods• Readymade garments• Vegetable, fruit and fish• Engineering goods• Chemicals and Pharmaceutical products
12. Targets for 2009-2012Targets set by the Government (Ministry of Commerce) Indicator Target 2009-2012• Exports Target $US Billion 17.8 - 23.5• Exports growth Projection 6% in 2009-10 $US Billion 18.8 10% in 2010-11 $US Billion 20.7 13% in 2011-12 $US Billion 23.5• Competitiveness Ranking 101 < 75• Engineering Sector Export Share 1.5% - 5%• Expansion of Regional Trade 17% - 25%
13.  Target and actual performance Targets: Actual Exports:• 2009-10: US$ Billion 18.8 • 2009-10: US$ Billion 19.5• 2010-11: US$ Billion 21.5 • 2010-11: US$ Billion 13.2• 2011-12: US$ Billion 23.5 (Till February 2011). It is estimated that government is likely to achieve exports of $US Billion 22
14.  Expenditures on strategic trade policy framework Objectives: Progress:• Ministry of Commerce • The current status of the planned to spend Rs. 35 funding of STPF initiatives is billion (2009-2012) for not satisfactory, after implementation of STPF. completion of all formalities. Ministry of• The amount shall be spent Finance has released only 1 on research and billion and pended the development. release of Rs 2.5 billion due to financial constraints. This has put STPF implementation in jeopardy.
15.  Annual increase/decrease in imports• During the first quarter of 2011, imports from the Asian continent, our major supplier, amounted to Rs 19,501 million with a share of 56.2% of total imports.• Compared to the first quarter of 2010 changes noted in the import bill were: India (+50.2%), China (+19.5%) and France (+17.7%)
16.  Annual increase/decrease in exports• In a presentation made at the meeting it was informed that in the first 10 months of the ongoing year.
17. 
    
18.  Conclusion• There was a mixed reaction by the business community on the trade policy 2009-12. Some rejected it out rightly because according to them continued severe energy shortage, high cost of production, high cost of doing business, weak infrastructure, inconsistent policies, lack of FDI, limited scope of joint venture, low chances of technology transfer deteriorating law and order situation, and above all denial of easy and smooth market access could play pivotal role to achieve the targeted export competitiveness till 2012.