Rethinking trade policy

Pakistan's preparation for its Strategic Trade Policy (STP) 2026-31 presents a crucial opportunity to not only set new export targets but fundamentally rethink its export strategy. The credibility of any new policy hinges on addressing the structural weaknesses that have consistently hampered implementation over the past decade.

Past strategies, including STP 2015-20 and STP 2021-26, fell far short of their ambitious export goals. The former envisioned $35 billion by 2020 but achieved only $20.5 billion, while the latter targeted $57 billion by 2025 but reached just $32 billion. These shortfalls underscore a persistent problem: policies alone do not yield results without effective governance and strong institutions. Weak governance has led to poor resource allocation, reduced competitiveness, and inefficient markets.

The new STP must begin with an honest assessment of why previous policies failed. Questions remain about whether targets were realistic, if production capacity was adequately assessed, and if industrial bottlenecks were identified and resolved. The effectiveness of the National Export Promotion Board, chaired by the prime minister, in reviewing progress and resolving implementation issues also needs scrutiny. Issues such as excessive taxation, high energy prices, cumbersome regulations, and the rising cost of doing business must be addressed.

While external shocks like the COVID-19 pandemic, floods, and global conflicts have disrupted trade, they cannot solely explain Pakistan's export stagnation. Domestic policy choices, including an overvalued currency between 2013 and 2018, have also played a significant role. Furthermore, despite repeated commitments, Pakistan has failed to diversify its exports beyond textiles, food, and leather, which still constitute over 80% of total exports. Export destinations also remain highly concentrated, with the US, EU, China, and UAE accounting for over 60% of shipments. The upcoming policy must prioritize product and market diversification, alongside technological upgrading, to achieve sustainable export growth.