Chapter 10: Trade Flashcards
What are Pakistan’s major exports?
- Raw cotton
- Cotton yarn
- Readymade garments
- Fruits and vegetables
- Fish
- Leather
- Carpets and rugs
- Sports goods
- Surgical instruments
- Leather products.
Which countries are the main export destinations for Pakistan?
- UK
- Europe
- USA
- Middle Eastern countries
- China
- Hong Kong
- Japan.
What are Pakistan’s major imports?
- Petroleum
- machinery
- fertilizers
- chemicals
- cosmetics
- edible oil
- tea
- automobiles.
Which countries are Pakistan’s primary import sources?
Key import sources are:
- UK
- Europe
- USA
- Middle East
- Malaysia
- Japan
- Sri Lanka.
What is the negative balance of payment, and what are its causes for Pakistan?
- The negative balance of payment means more imports than exports.
- Causes include lack of standardization, low quality, dependence on few exports (like cotton), limited access to global markets, low industrialization, and political instability.
- An embargo was imposed by the USA in 1996 due to child labor concerns.
How does a negative balance of trade affect Pakistan’s economy?
It leads to:
- Reduced development projects, increased loans, risk of trade embargos, inflation due to higher taxes, reduced consumer demand, and slower commercial activity.
How can Pakistan improve its balance of payments?
Solutions include:
- Increasing exports, exporting value-added products, developing cottage industries, maintaining quality control, reducing taxes, and setting up export processing zones.
When was the Export Processing Zone Authority (EPZA) established in Pakistan, and what is its purpose?
The EPZA was established in 1980 to:
- boost industrialization
- create jobs
- transfer technology
- increase exports by providing facilities for local and foreign investors.
What incentives are offered to investors in Pakistan’s Export Processing Zones (EPZs)?
- Incentives include 100% ownership rights, no investment limits, duty-free imports, no sales tax, and exemptions from import duties.
- EPZs are in Karachi, Sialkot, Risalpur, Lahore, Faisalabad, and Gwadar.
Why is Gwadar important as an EPZ?
- Gwadar’s strategic location near Central Asia, deep-water port, and infrastructure projects like Mirani Dam and desalination plants make it a regional trade hub with significant potential for foreign investment.
What is the Export Promotion Bureau (EPB) purpose in Pakistan?
- Established to regulate export activities, the EPB raises awareness, supports entrepreneurs, and helps secure entry into international markets.
- It has been replaced by the Trade Development Authority of Pakistan (TDAP).
What is the World Trade Organization (WTO), and when did Pakistan become a member?
- The WTO, established in 1995, promotes free trade by reducing restrictions on exports and imports.
- Pakistan joined as a signatory in December 2004.
What opportunities and challenges has Pakistan faced since joining the WTO in 2005?
Opportunities include:
- market access for exports, but challenges include modernizing the textile industry, competing in services, and complying with quality standards amid high production costs.
What is an exchange rate, and how does its depreciation affect trade?
- An exchange rate is the value of one currency against another.
- Depreciation of the rupee makes imports expensive and exports cheaper, while appreciation makes imports cheaper and exports more expensive.
What are trade barriers, and what are their pros and cons?
- Trade barriers protect local industries and encourage self-sufficiency, but they also limit consumer choice, increase production costs, and reduce competition, leading to inefficiency.
