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Removal of NTMs to Promote Pakistan’s Textile Sector
1
Rabia ManzoorNovember 28, 2018
• Motivation
• Objectives
• Methodology
• Key Findings
• Conclusion and Recommendations
Outline
• The study is important to fulfill the constitutional and policyobligations through addressing the various types of NTMs thatpersist in the Pakistan's textile sector.
• Textile is the most important manufacturing sector of Pakistan:
➢ Contribute nearly 60% to the country’s total exports
➢ Provides employment to about 40% of industrial labour force
➢ Contributes 8.5 % to gross domestic product (GDP) of the country
Source: Ministry of Finance, GoP
Motivation
• Situation analysis of textile sector
• Identification of various types of NTMs affecting Pakistan’s textile exports
• An assessment of these NTMs country wise and category wise
• Proposing corrective measures to remove the NTMs for promotion of Pakistan's textile sector
Objectives
Methodology
Research Methods
Secondary Information
Literature Review
Descriptive Analysis
Primary Information
Key Informant Interviews
Interactions with Business
Community
Mixed methods to analyze the situation analysis of textile sector, NTMsimposed by various countries, gather evidence from the exporters to evolvenew approaches for the removal of NTMs and enhance trade promotion.
Methodological procedures:
➢ Quantitative methods for analysis of Pakistan's textile sector andinforce NTMs to date
➢ Qualitative methods to identify the NTMs that exporters face in theglobal markets and removal of NTMs and enhance trade promotion
Methodology
Primary Information
• No. of officials interviewed = 15 key informant interviews
• No. of Informal Interviews with Business Community = 20
Secondary Information
• No. of relevant datasets used = 05
• No. of secondary source documents consulted = 25
Source Material Used
Findings: Situation Analysis of Pakistan's Textile sector
8
Trade of Pakistan’s Textile Sector
• The exports of textile sector are higher than the imports throughout the time period of 2010-17
• Trade gap was high in 2011 when the exports were at its maximum level and Pakistan enjoys export surplus in textile sector
• During 2017 total trade volume is at the maximum point due to rise in imports as exports were $ 13018 million whereas imports were $ 3804 million
Source: State Bank of Pakistan
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
2010 2011 2012 2013 2014 2015 2016 2017
Val
ue
in $
Mill
ion
Year
Exports Imports Total
Share of Pakistan's Textile in Total Exports
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Share of Pakistan’s Textile in Total Exports
Share of textile exports in total exports has kept on increasing with the passage of time
In 2010, share of textile in total exports was 52.5% which decreased to 52.1% in next fiscal year
After 2011 share of textile in total exports continuously increased
Source: Economic Survey of Pakistan
52.552.1
53.554
55
57
60
61
46
48
50
52
54
56
58
60
62
2010 2011 2012 2013 2014 2015 2016 2017
% s
har
e
Year
Pakistan's Share in Global Textiles and Clothing Exports
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Pakistan's Share in Global Textiles and Clothing Exports
Share of Pakistan's textile in Global Textiles and Clothing Exports has kept on decreasing over the time.
In 2014, share of textile in total exports was 1.65% which increased to 1.68% in next fiscal year and after that stagnant even in 2016 and 2017.
Source: ITC
1.81.79
1.74
1.71
1.65
1.68
1.65 1.65
1.55
1.6
1.65
1.7
1.75
1.8
1.85
2010 2011 2012 2013 2014 2015 2016 2017
% S
har
e
Year
Pakistan's Share in Global Textiles and Clothing Exports
Major Export Markets of Pakistan's Textile sector
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Major Export Markets of Pakistan’s Textile Sector
• Pakistan’s textile export markets arehighly concentrated towards fewmarkets as share of top five marketsremained more than 50% in total textileexports during 2010-17
• Share of Pakistan’s textile exportstowards top five export markets was53.7% in 2010 which further increasedto 60.8% in 2011
• In recent year of 2017, this share nowstands at 58.9%
Export Markets during 2010-17 ($ Billion)
Source: Authors’ illustration based on WITS
25
10.9
9.2
6.5
4.6
0
5
10
15
20
25
30
United States China UnitedKingdom
Germany Bangladesh
Exp
ort
Val
ue
($
Bill
ion
)
Export Markets
HS Chapter Product Description Cases of NTMs
50 Silk 41
51 Wool, Fine or Coarse Animal Hair, Horsehair Yarn and Woven Fabrics 67
52 Cotton 60
53 Other Vegetables Textile Fibers, Paper Yarn and Woven Fabrics of Paper Yarn 40
54 Man-Made Filaments, Strips and the Lake of Man-Made Textile Materials 23
55 Man-Made Staple Fibers 53
56 Wadding, Felt and Nonwovens, Special Yarns, Twine, Cordage, Ropes, Cables
and Article Thereof
27
57 Carpets and Other Textile Floor Coverings 38
58 Special Woven Fabrics, Tufted Textile, Fabrics, Lace, Tapestries, Trimmings and
Embroidery
22
59 Impregnated, Coated, Covered or Laminated, Textile Fabrics, Textile Articles of A
Kind Suitable for Industrial Use
26
60 Knitted or Crocheted Fabrics 18
61 Articles of Apparel and Clothing Accessories, Knitted Crocheted 25
62 Articles of Apparel and Clothing Accessories, Not Knitted or Crocheted 25
63 Other Made-Up Textile Articles, Sets, Worn Clothing and Worn textile Articles
and Rags
55
Total 490
NTMs in Pakistan's Textile sector
Types of NTMs on Pakistan’s Textile Exports by no. of cases
13
Types of NTMs on Pakistan’s Textile Exports by no. of cases
• At aggregate level, around 27% of 490 NTM cases are related to SPS followed by export related measures with 22% cases
• Restrictions related to TBT are 19%, pre shipment inspection measures are 12%
Source: Authors’ illustration based on UNCTAD-TRAINS dataset
SPS27%
Exp22%
TBT19%
INSP12%
PC8%
QC7%
CTPM4%
Oth1%
NTMs imposed by Various Countries on Pakistan’s Textile Exports
14
Country Wise NTMs
• Top three countries in terms ofimposing NTMs on Pakistan’s textileexports are Turkey which is imposing22 NTMs, followed by US (13) andCanada (10)
• These countries imposed 08 types ofNTMs which are Sanitary and Phytosanitary (SPS), technical barriers totrade (TBT), export related measures(Exp), quantity control (QC), pricecontrol (PC), pre shipment inspection(INSP), Contingent trade protectivemeasures (CTPM) and other measures(OTH)
Source: Authors’ illustration based on UNCTAD-TRAINS dataset
22
13
10
65
43
1
0
5
10
15
20
25
Various Countries Imposed NTMs on Pakistan's Textile exports
Strict Compliance requirements of Testing and Certifications• Strict compliance requirements of testing and certification is a major
constraints
• Facing social (labor, facility and work environment), regulatory (Labeling,safety and origin), environmental and customer specific requirements(physical, chemical and others)
• To get certification from nominated agencies
• Lack of bargaining power
• Although some certifications are costly but it may bring other businessopportunities
• Some certification helps them to differentiate their products fromcompetitors
Concerns of Pakistani Exporters regarding NTMs
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Less Competitive due to NTMs• Exports are less competitive in price terms as compared to regional
competitors
• Unable to offer low prices due to comparatively high cost of doingbusiness
• Cost of products are higher due to bottlenecks in custom procedures, hightransit cost due to inadequate port infrastructure, non-harmonization ofworking days and high credit interest rates.
Unrealistic and Strict Social Compliance Measures• Unrealistic and strict social compliance measures are hampering the
exports
• Extra tough requirements are also put in place such as provision of normaland hot water, use of metal detectors, sitting and canteen facilities atfirms, ethical issues of work and restrictive chemical norms etc.
Concerns of Pakistani Exporters regarding NTMs
16
Technical Barriers to Trade and SPS Restrictions• Widespread confusion regarding the SPS and TBT standards
Fluctuating Quality Standards and Procedural Steps
• Importing countries imposes standards for goods, If the standards are not met, the goods are rejected
• Certain countries insist on specific labeling and packaging of the products
Export related NTMs
• Export related restrictions are specifically one of the most citied issues in Pakistan's textile industry.
• Some of the problems are procedural delays, lack of promotions schemes, non-harmonization of working days, lack of infrastructural facilities, inadequate government subsidies schemes.
Concerns of Pakistani Exporters regarding NTMs
17
Uniformity of standards and certifying agencies
Measures need to be rationalized and
simplified
Providing Testing and Certification facilities at
cheaper rate
Set up NTMs national committee and
concentrate on costing saving measures
Build and Strengthen Relations between
Exporters and Buyers
Harmonize the social, quality, ethical and
environmental requirements
Key Recommendations
