Both these figures suggest a low level of participation in global trade, which policymakers have

However, the values collapsed in 2000, when Pakistan was hit by international sanctions following the nuclear missile tests in 1998 and the change of the government in 1999. Exports as a percentage of GDP decreased to below 10% in 2000, while imports plummeted to the 12% mark around this period.

The low levels of trade as a percentage of GDP, accompanied by poor economic performance, have renewed the call for export-led growth. In comparison, the global average of exports as a percentage of GDP was 19.4% in 1992, which increased to 23.4% in 2000 and surpassed 30% in 2022.

The MENAAP region, which now includes Pakistan, has reported higher values, mainly due to the high proportion of oil-exporting countries. Pakistan has typically set one of the highest tariff rates in the region on its imports as gauged by the Most Favoured Nation (MFN) tariff rates applied on imports – rates applied on imports from World Trade Organisation (WTO) members with which it does not have a preferential trading agreement.

Although this did drop to 8.4% in 2023, it was still higher than that applied by larger comparators such as India, Thailand, Vietnam and Indonesia. Considering the level of accessions into free-trade agreements (FTAs) as borrowed from CEPII's gravity dataset, Pakistan had zero percentage of its imports covered by regional trade agreements (RTAs) in 1996, similar to Bangladesh and India.

However, it is important to note that India has recently aggressively pursued FTAs with the EU and other countries, likely increasing the coverage of RTAs on its imports. The consequences of high tariffs and low accession rates into RTAs have had an adverse impact on the economy.

This lack of investment is driven by poor trade policies, which are heavily dependent on tariffs and other instruments of trade protection. Pakistan is reshaping its trading strategies with the National Tariff Policy 2025-2030 as it not only streamlines its customs duty slabs but also makes them less complex and lowers the cost of doing business, mostly for smaller businesses that cannot access the concessions offered to established traders.

With the reshaping of the trade policy and its framework, the discussion must now shift towards solving several of the non-tariff structural and policy-related challenges that keep exports low. THE WRITER IS AN ASSISTANT PROFESSOR OF ECONOMICS AND RESEARCH FELLOW AT CBER, IBA