Pakistan’s economy is least integrated with the global value chain and hence, will not suffer significantly from the recent US-China trade war in the short-term.
However, Pakistan should revisit its trade and industrial policy and direct its production incentives and preferences under free trade agreements towards products that are in demand in countries with lower trade barriers, higher consumer confidence, a stable growth outlook and potential for supply-chain integration.
This was the crux of deliberations by trade experts at a special seminar on ‘Where does Pakistan stand in a global trade war?’ organized by the Sustainable Development Policy Institute (SDPI) on Monday.
Speaking on the occasion, National Tariff Commission member Roubina Ather said that the greatest threat of trade war is protectionism, which in turn will shrink the global trade volume. “We should not be over-concerned about the ongoing global trade war, mainly between China and the US, as Pakistan is not so much integrated with the global value-chain,” she said. If the trade war goes further, the textile sector and the apparel market may suffer in the long-term, she added.
Also addressing the seminar, SDPI Joint Executive Director Dr. Vaqar Ahmed said that the ongoing trade war between China and the US may cause a rise in the cost of production and raw material in developing countries, which in turn could bring inflation and threaten the global economic recovery. “As trade declines and commodities output fall, this could also result in lower wages and unemployment,” he said.