Economic Diplomacy Need of Hour, says Pakistan FM
'Pakistan Times' Sindh Bureau

KARACHI: Foreign Minister Khurshid M. Kasuri has said the foreign policy of Pakistan with a focus on the role of Economic Diplomacy is need of the time. This he said while addressing the members of Karachi Chamber of Commerce and Industry here on Tuesday.

The Foreign Minister said the present government’s vision is to develop Pakistan as a modern, progressive, moderate and forward looking Islamic welfare state with stable democracy, strong national defence and a knowledge based economy.

Pakistan today has all the attributes of a modern emerging economy, with a clear sense of direction and commitment to maintain a stable and peaceful environment, internally as well as externally. The government was also pursuing a path of social and economic progress in the country, the region and the world, he said.

He said that our foreign policy is essentially shaped and underpinned by national security concerns and well-being of the people of Pakistan.

Within these parameters, our primary objective is to safeguard the country’s independence, sovereignty and territorial integrity and to strive for promoting political, economic and trade relations with other countries and project true image of the country in the international community.

Pakistan has the advantage of a unique location by being at the cross-roads of South Asia, Central and West Asia and the Middle East.

He said our strategic location not only offers immense opportunities but also poses enormous challenges.

The Government is therefore working to develop transport and trade corridors to leverage and benefit from this location. The strategic concept of the National Trade Corridor, which aimed at upgrading and expanding our rail, road, air and port networks, would serve as the gateway for the access of our goods and services, as well as a convenient transit route for other countries to the Central Asian Markets.

Our focus is geared towards harnessing economic and commercial opportunities that our geo-strategic location presents. Pakistan believes in active engagement with the international community as is evidenced by the growing number of high level visits to and from Pakistan, he said.

The Minister said Pakistan’s foreign policy was focused on the promotion of regional and international peace and security as well as the economic and social development of its people and as a result of Pakistan’s principled and dynamic foreign policy, positive trends were being witnessed in our relations with neighbours including China, the Islamic world, USA, EU, Russia, East Asia and Japan.

Foreign Minister Khursheed Kasuri said Pakistan has been pursuing the path of peace and stability in its own region and beyond.

We have done so through dialogue for peaceful settlement of disputes, exercise of strategic restraint and strengthening of regional cooperation. We offer the shortest access to the sea for the Central Asian States and Western China. We have the potential to become the hub of cooperation for energy, trade and tourism. Pakistan is the only country that is a member of both ECO and SAARC, and has “Observer “ status in the Shanghai Cooperation Organization. Pakistan is also a leading member of the OIC, he said.

Pakistan had been suffering from the scourge of terrorism for many years. The international community awakened to it in a stark manner, when the menace manifested itself in a most horrific way on September 11, 2001.

At this crucial juncture of world history, Pakistan had to take the road which, as Robert Frost would have put it, was “less traveled”. We remain committed to challenging extremism and rooting out terrorism, in all its forms and manifestations; for we recognize that it constitutes a menace, not only to the international community, but to our own security and well being as well, he said.

The Minister said a proactive economic diplomatic engagement is crucial as the thrust of international relations is shifting from geo-politics to geo-economics.

The emerging new international trade and economic dispensation, influenced in several different ways by the process of globalization, presents both opportunities as well as challenges to developing countries like Pakistan.

With globalization gaining even greater pace, Pakistan hoped to be fully integrated with the global economy through enhanced competitiveness and fostering knowledge-based economy. Pakistan is determined to ride the tide of globalization and turn this challenge into an opportunity.

These trends are reflected in the consistent efforts of the Foreign Office while addressing new emerging realities, he said.

In addition to it’s focus on political issues, the Foreign Office lays a special emphasis on economic, commercial and trade matters. Foreign Service Officers are being specially equipped to be able to deal with these issues as well.

An Economic Coordination Division was created in the Foreign Office over two decades ago to monitor and coordinate economic issues and trade promotion efforts with the concerned Ministries and the Missions as well as at the multilateral level.

In tandem with the EAD and the Ministry of Commerce, and other concerned Ministries, the Foreign Office intervenes, whenever necessary, to promote and protect Pakistan’s economic-and commercial interests said Kasuri.

Kasuri said Pakistani diplomatic missions abroad played pivotal role in promoting our economic, commercial interests. This is one of the primary responsibilities given to our Ambassadors.

Securing greater inflows of foreign direct investment, reduction of external debt, diversification of our export markets, enhanced market access and projecting a positive image of Pakistan are some of the priority areas for our diplomacy. Missions are now fully engaged with international economic and commercial organizations across the globe, putting across Pakistan’s viewpoint effectively and safeguarding these interests.

The Ministry of Foreign Affairs and Pakistan Missions abroad are active partners in the government efforts leading to the economic revival of Pakistan which had seen the size of Pakistan’s economy being doubled, a phenomenal increase in exports (from US$ 7.8 billion in 1998-1999 to US $17 billion in 2006-07), having one of the highest per capita incomes in South Asia (US$ 925) and Foreign Investment touching its highest ever ‘level of US$ 8.4 billion (FDI US$ 5.1 billion) in 2006-07. All sectors of the economy are open for investment by foreign investors.

Pakistan offers 100% equity to foreign investment with the facility of repatriation of capital and profit on investment.

Pakistan is ahead of many countries in implementing economic reform and improving governance as well as very well positioned to make the best of the available opportunities.

Pakistan has been ranked as one of the top ten reformers globally and the top reformer in the South Asian region in a recent study conducted by the World Bank.

It is the quality of our reforms which have made Pakistan an attractive destination for local and foreign investment and put it on a high growth trajectory. The main thrust of the government’s policy has been to restore investors’ confidence regarding security of capital, profitability of business and establishment of the necessary infrastructure that would facilitate business operations in the country.

Our Missions abroad are also finding new avenues for employment of Pakistan’s professionals, skilled and un-skilled workers which, besides helping in creating employment opportunities, also contribute towards valuable foreign exchange remitted by overseas Pakistanis. These remittances, which are the third largest source of foreign exchange inflows in the country, totaled US$ 5.5 billion in 2006-07- the highest ever in the country’s history, the Minister said.

The process of globalization presents opportunities as well as challenges to developing countries like Pakistan.

The task is indeed made more complex and difficult by the establishment and rapid expansion of the WTO.

The current global trading environment is rapidly transforming the world into an integrated single market with most countries bringing down tariff walls and eliminating or reducing non-tariff measures.

Global tariff reductions by most countries have spawned exciting opportunities. Our best opportunity for market access lies in the success of the current WTO Doha Round of negotiations. A successful conclusion will bring down tariffs especially on Non-Agriculture products, and mitigate to a large extent the adverse impact of preferential tariff concessions enjoyed by Pakistan’s competitors in our major markets.

He said Pakistan was closely monitoring the WTO process. Hopefully, the process will move forward and address, among others, the needs and concerns of the developing countries particularly those of the low-income developing countries. Pakistan on its part remains committed to the success of multilateral trade negotiations under WTO. But, in view of the unpredictable fate of the multilateral trading system, like other developing countries Pakistan is concerned about the quality of future trading environment.

“ We have adopted a proactive approach to convert the challenges of globalization into opportunities. One of the important initiatives in this regard is to seek membership of as many regional trading arrangements as economically and politically viable.”

Pakistan is committed to developing and strengthening trade and economic relations with the rest of the world, both bilaterally and multilaterally. Pakistan has played a pioneering role in the development of the regional arrangements like the ECO, SAARC and D-8. We have joined the ASEAN Regional Forum.

Pakistan has concluded the South Asian Free Trade Area Agreement, SAFTA. Pakistan attaches great importance to this Agreement. Pakistan’s commitment to this process is rooted in the conviction that the future of this region lies in economic cooperation.

Pakistan is making every effort to create an environment conducive for such cooperation, both in the political and economic dimensions. We have also concluded an Economic Cooperation Organization Trade Agreement under the ECO. We are negotiating a Trade Preferential System under the aegis of Organization of Islamic Conference and have signed the D-8 Preferential Trade Agreement, he said.

A historic full-fledged FTA with China is now effective. The FTA has opened the door to a huge and’ friendly market for Pakistan and created enormous opportunities for FDI in the manufacturing sectors in Pakistan. The Pakistan-Sri Lanka FT A which is operational since June 2005 is also yielding encouraging benefits as exports of both countries have increased.

He said the ASEAN countries had the most successful Free Trade Agreement in Asia. In order to gain a foothold in the ASEAN region, Pakistan is working on a two-pronged strategy. The first is have bilateral FTAs with major countries of the ASEAN like Indonesia, Singapore, Malaysia and Thailand and the second is to negotiate a bilateral agreement with the entire association on a 10+ 1 basis (i.e. one Non Member with the ten Members).

FTA negotiations with Malaysia have been successfully concluded, and the agreement is expected to be signed this year. Negotiations with Singapore and Indonesia are also at an advanced stage.

He said efforts were ongoing for an FT A with the GCC (the Gulf Cooperation Council). A PT A is being signed shortly with Mauritius. An FTA with the Mercosur countries (Argentina, Brazil, Venezuela, Paraguay and Uruguay) and PTA with Russia are also being worked on.

The Foreign Minister said Pakistan continued to work towards improved bilateral market access to the EU. We now have an institutional mechanism, the sub-Group on trade, under the aegis of the Pakistan-EU Joint Commission set-up under the 3rd Generation Cooperation Agreement in May 2007.

For creating stability and secure market access for businesses in our border regions, the Government of Pakistan is in discussions with the U.S. Government for special trade incentives. These special trade incentives would create economic activity and generate jobs, thereby strengthening regional security, he said.

During his visit to Pakistan in 2006, the U.S. President had announced a Reconstruction Opportunity Zones programme, specially designated for border regions in Pakistan. Products produced in these Reconstruction Opportunity Zones would qualify for duty free entry into the United States. Pakistan and the U.S. Government are in consultation on the modalities of this programme. It is expected that the ROZs would cover a large number of tariff lines including a number of textile and apparel categories, he said.

In the last eight years Pakistan had undergone a most positive transformation. Comprehensive and far-reaching reforms in all walks of life had been implemented. Political, social, economic and governance reforms had brought about a sea-change and led to economic revival.

The Foreign Office would continue to be in the forefront to complement and support the government’s efforts in this regard. I also assure you that the Foreign Office would always be available and forthcoming for any assistance, suggestions or queries from bodies such as the Karachi Chambers of Commerce and Industry to help promote economic diplomacy, he said.●