Frequently Asked Questions

1. What is the USAID Trade Project?

The USAID Trade Project is geared towards increasing sustainable economic growth and stability in Pakistan. Through technical, infrastructural and procedural assistance the project supports the Government of Pakistan and private sector stakeholders in improving the trade environment through effective trade policy implementation and capacity building and increasing regional trade. This shall be achieved via increasing trade at Pakistan's borders; enhancing capacity of Pakistan's private and public sector institutions to develop and manage sustainable and competitive Special Economic Zones (SEZs), specifically the Reconstruction Opportunity Zones (ROZs). The trade project will accelerate Pakistan's integration into the global economy by reducing the time and cost of international trade through Pakistan and increasing cross-border trade.

2. What are the principle objectives of the project?

The principle objectives of the three main components that constitute the Pakistan Trade Project are:

a. Improved Pakistan Trade Environment:

• Reduction in the cost of inbound and outbound trade.
• Significant increase in trade volumes.
• Diversified exports, with more industries and services represented in trade flows.
• Greater participation of Women and SMEs.
• Increased regional and Pakistan-USA Trade.

b. Increased Trade at Pakistani Borders:

• Increased cross border trade.
• Improved trade facilitation along the Afghan border (Afghan Pakistan Transit Trade Agreement implementation, capacity building and infrastructure).
• Improved transit facilitation (policies, procedures, bond regime and single window).

c. Support for Sustainable and Competitive Special Economic Zones and Reconstruction Opportunity Zones:

• Established, operational ROZs in critical areas.
• Measurably increased exports to the USA by enterprises in ROZs and other industrial zones.
• Global Development Alliances facilitated to increase business activity in ROZs and other industrial zones.

3. What are the trade benefits of the USAID Trade Project?

The trade benefits of the Project are several in terms of addressing Pakistan’s trade challenges:

• Direct and indirect job creation through competitive and sustainable Special Economic Zones and ROZs that would encourage investment in some of the most under-developed areas of Pakistan.
• Local Participation: The Trade Project maximizes local participation, through focusing on building capacity of Pakistani public and private sector institutions as key implementing partners of project activities and as the key agents for sustaining the impact and the direction of change beyond the life of this project.
• Relevance, ownership, sustainability, and collaboration: Through a continuous consultative approach, local focus, and development of local capacity, the Trade Project is designed to ensure its benefits persist long after the program moves on.
• Gender- Youth and Small and Medium Enterprises (SMEs) - impact: The Trade Project activities ensure that the Project's impact is spread more equitably amongst the marginalized segments of Pakistan's economy, namely: the youth, women and Small and Medium Enterprises.
• Monitoring and Constant Improvement: The Trade Project has set systematic and measurable targets. To monitor our progress against the latter, we have identified meaningful indicators. These will provide feedback and data to measure return on investment and calibrate program activities as needed.

4. At which land border posts is work being carried out?

Work will be carried out at the Torkham border post, Chaman border post and Sust border post.

5. Is the project providing only procedural support?

No the project is not providing procedural support only it is also providing infrastructural support along with implementation of improvements.

6. What will the project entail vis` a vis` procedural and infrastructural support?

1. Procedural support includes documentation in customs of custom formalities. It includes the following:

• Harmonization of documents.
• One window operation.
• Joint inspections with Pakistan- Afghanistan customs.
• Electronic exchange of data between Pakistan custom offices at sea-ports and land border stations as well as between Pak- Afghan customs.

2. Infrastructural support includes the following:

• Link roads entering and exiting from border complexes.
• Dedicated separate lanes/channels/areas for imports, exports and their examination and inspection.
• Lighting, electricity power generators.

For effective operational functioning at border posts sub-committees comprising of representatives from private and public sectors will be established as an ongoing formal standing committee.

7. What measures are being taken for the sustainability of the project and how is local participation being ensured?

An integrated system has been established in collaboration with the Government of Pakistan for the sustainability of the project. All planned program activities are being carried out collectively with the Ministry of Commerce, relevant ministries, federal and provincial departments and the private sector ensuring local participation. This will also confirm sustainability of project activities after the completion of the project term since they are being carried out with local partners. It will also create ownership on part of the Government as implementation which started initially with the coordination and facilitation of the Pakistan Trade Project will ultimately be carried forward by them. This reflects the commitment on part of USAID to strengthen local participation and institutions.

8. What is the project aiming to achieve in terms of developing Pakistan's exports and trade with US?

United States of America (USA) is the largest importer of Pakistani goods. More than twenty three percent of Pakistani goods are exported to USA. During the years 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 (July to March) Pakistan's share of exports to USA have been 23.5%, 23.9%, 23.9%, 25.5%, 24.6%, 19.5% and 18.8% respectively. During July 2009, exports to USA amounted to US$286.908 million which is 19.55% of the total exports during that month . Thus being the largest importer it comes as no alarm that USA is interested in further development and expansion of Pakistan's exports. An increased market access to the United States would also have a positive impact on the life of the common man because it would increase exports, mobilize economic activity in Pakistan and result in growth of GDP (Gross Domestic Product) in the country.

9. What are Pakistan's major exports to the US? Are they provided with a level playing field so that they can compete with LDCs (Least Developed Country's) and NAFTA (North American Free Trade Agreement)? How beneficial is a Free Trade Agreement (FTA) between USA and Pakistan?

In order to eliminate trade barriers between US and Pakistan it was considered necessary by both countries that they need to enter into a treaty. This led to the establishment of the Pakistan Friendship and Commerce Treaty. The trade agreement was signed on November 12, 1959 with several amendments and ratifications made until it became enforced on February 12, 1961. This resulted in an increase in Pakistani exports to the US and vice` versa` and opened up new avenues for local products in the US market. The US Census Bureau recorded exports from US (United States) to Pakistan at $1.76 billion for the period commencing January 2008 to October 2008. The imports of the former from the latter amounted to $3.0 billion for the said period. For the year 2007, the following statistics were available as to the trade relations of these two nations:

Pakistani Exports to US

The aforementioned US agency recorded exports from Pakistan to US at $3.58 billion for the entire 2007. Leading the list of the products were apparel and household goods from cotton which had total earnings amounting to $2.68 billion equivalent to 74.86%. Other noteworthy commodities on the charts were: cotton cloth and fabrics, thread and cordage; apparel and household goods from other textiles; rugs and other textile floor coverings; non-textile apparel and household goods; sporting and camping apparel, footwear and gear; other scientific, medical and hospital equipment; toys, shooting and sporting goods and bicycles; synthetic cloth and fabrics, thread and cordage; and cookware, cutlery, house and garden wares and tools. The last products made it to the top because of sales amounting to $22.51 million which is 63% of the year's total, providing Pakistani exports with a level playing field to compete with LDCs.

The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of the United States, Canada, and Mexico creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada-United States Free Trade Agreement between the U.S. and Canada. In terms of combined purchasing power parity GDP (Gross Domestic Product) of its members, as of 2007 the trade block is the largest in the world and second largest by nominal GDP comparison. Under this trilateral trade agreement all the partners have accorded concessions to each other. For claiming such concessions, Pakistan, or for that matter any other country, has to enter into an agreement with USA. USA has been assisting Pakistan in its trade promotion and expansion activities and programs and will do so until the time that the two countries enter into a NAFTA agreement.

A Free Trade Agreement (FTA) would further promote trade and bilateral relations between the two countries and help resolve Pakistan's economic crisis. It is the subsequent step after the signing of a Bilateral Investment Treaty (BIT) with USA. This shall not only strengthen private sector competitiveness but will also expand Pakistan's integration with regional and global markets. Negotiations on the FTA are underway between the two countries and an agreement is hoped to be reached soon. Rules of origin, SPS (Sanitary and Phytosanitary) measures, dispute resolution mechanisms, valuation etc. need to be carefully examined and analyzed by both countries before its finalization. However, the FTA and BIT would further boost Pakistani exports, protect American investments in the country and also increase investor confidence.

10. Why is gender being prioritized and how will gender empowerment be achieved through the project?

In order to harness the potential of women's entrepreneurship, to expand regional trade and exports it is crucial that gender perspectives be integrated into economic policies and programs. Facilitating and initiating procedural and institutional reforms, the Pakistan Trade Project aims to improve governance and make policies more transparent and gender friendly in order to encourage more women exporters. Thus, gender has been incorporated in all PTP components. Trade also contributes significantly towards economic uplift and social development of a country along with increased employment opportunities. Furthermore economic empowerment of women would also impact future generations bringing in higher economic growth.

The project has adopted a two pronged strategy for gender empowerment; on one hand policy, regulatory, infrastructural, resource and capacity barriers that hamper women from entering into trade would be reduced and on the other hand women's participation in the decision making process is being encouraged. Access to information and resources, capacity building, up gradation of skills and career development are some of the priorities the project is focusing on.

PTP has completed a gender study entitled 'Increasing Women's Participation in Trade'. A series of focus group discussions to assess and analyze challenges and opportunities available to women exporters were carried out in all four provinces. The research findings will assist policy makers and implementers in developing gender friendly trade policies.