Pros And Cons Of The New Free Trade Agreement Between Gcc And Pakistan
Globalization of trade gave birth to free trade zones among the countries of the world
. Agreements for free trade are growing trendy in the new world. But economists are divided on the pros and cons of free trade zone. It is observed that free trade zones are beneficial to the countries with strong economies, but they are damaging for the countries with weak or infant or nascent economies. Free trade augments employment and economic activities in the zone and but for indigenous industry it does more harm than good. A country with weaker economy fails to compete with the imports of industrial products at cheaper rates, pouring into the country of weak economy. This causes an economic halt in the areas where the imports flow into.
The same happened in the case of free trade agreement between China and Pakistan. China with strong economy and tremendous manpower overwhelmed Pakistani industries in many fields thus made the workers and small business corporate either to give up their enterprises or adapt their role from producers of the goods to dealer and supplier of the foreign goods. It is estimated that Pakistan suffered loss of 4 billion dollars due to free trade agreement with China. Free trade zone is a need of the present globalized world but the phenomenon must be dealt with good governance and much prudence.
Free trade zones between some countries are working very efficiently, like that of UAE, GCC; European Free Trade Association (EFTA), parallel to European Union and Comprehensive Investment Area (ACIA) of The ASEAN are, too, a good example of prudent leadership and management.
GCC and Pakistan in FTA:
Now, the GCC is going to finalize another free trade agreement with Pakistan in the forthcoming March, 2012. However, the economists and the critics are expressing their reservations on the ongoing agreement. The free trade agreement will benefit GCC in almost all areas of exchange of goods and services but as far as Pakistan is concerned, the country will not be able to take full advantage of the agreement. Since Pakistan runs a weaker economy suffering from energy crisis, it cannot lower the cost of industrial products. It will, therefore, be unable to compete with the influx of the imports from the GCC and lose its sale in the home market, as well as, abroad.
On the other hand GCC will have a good consumer market for its flourishing industry and exports. GCC faces a deficit of manpower, whereas Pakistan has surplus manpower. GCC can utilize this manpower of Pakistan to boost its economy. It can either employ them in their own counties or by establishing production units in Pakistan since the Pakistan can offer cheap labor, thus, it can achieve financial benefits by providing them home employment. Almost 500,000 Pakistanis are already contributing directly or indirectly for the economic development of Qatar. The major bright aspect for Pakistan is that it will have more employment, which will help reduce the rampant unemployment in the country.
However, Pakistan with its
good governance can make most of it.
According to draft estimation, Pakistan hopes to boost its trade form currently 59 billion dollars to 350 billion dollars by the year 2020. The various fields in which collaboration of both parties: Pakistan and GCC has been directed are sectors of renewable energy, software computer parks, textile, cotton, oil and gas, tourism, agriculture and the sector of infrastructure. GCC and Pakistan need to train their work force in the line of executive education to produce the executives to deal the matters with better skills and knowledge.
The most luring is the services sector for both the countries. The labor of Pakistan is already skilled in the many fields, for example, Pakistan has got experience in the crafts of designing and construction of engineering works, which Qatar is already getting benefit from, but in the field of software industry and IT then a lot has to be done to make full advantage of the potential labor. The first priority must obviously be the training of the individuals.
So the GCC and Pakistan should focus on training of labor and executive education of the work force as long term planning to maximize the potential benefits.
The Madinah Institute for Leadership and Entrepreneurship (MILE) brings senior executives and high potential leaders from all over the world for
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by: Anna Williams
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