Non-discriminatory market access: Pakistan, India all but sign trade normalisation deal

[KingMamba]

Pakistan is not the only route to Afghanistan .....

Yes I know go use other routes.

 

[kurup]

Yes I know go use other routes.

We already are afaik .

 

[PakPrinciples]

@That Guy Before you post a response I want you to back up everything you say with numbers/figures and from a historical perspective don't give me your opinions on what you think happened.

As a side note I tried to keep all my questions to you in red but only answer them after reading my post thoroughly and if you need to. If possible you need to get acquainted with the terms/concepts I've talked about and I highly recommend Ha Joon-Chang's (possibly the worlds foremost development economist) books particularly "Kicking Away the Ladder: Development Strategy in Historical Perspective" and "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism" as well as various material you can easily reference on the web.

You're arguing for the sake of arguing

In fact, you didn't even read my entire comment, you just nitpicked

Bro, I'm not arguing for the sake of arguing. I see my ancestral land and my people are in danger and there are individuals disseminating incorrect information so I'm doing my best to ensure that Pakistani's are not suckered into believing nonsense that will hurt them in the long run.

Do you honestly think I enjoy sitting around for long periods writing what amounts to paragraphs of information and referencing both written works and charts? Whenever I write anything I make sure I do my absolute best to give them the correct information hence why I reference virtually anything I write so anyone can cross check what I've written. I'm extremely busy but I take the time to write these out because I deeply care about Pakistan.

I read your entire posts hence why I was able to dissect it and write detailed rebuttals to virtually everything you've written. In fact it's obvious that you either didn't read my posts or simply don't understand the terms I'm referencing because I've noticed you're repeating questions I've already answered.

What a bunch of nonsense, you've posted some charts and using correlationed = causation type of argument. Your entire comment is filled with logical fallacies and assumptions, they're also filled with false assumptions.

Where did I make assumptions? I proved everything I said using real life examples, facts and figures.

Tell me if NDMA/MFN to India was so great why has virtually every industry in Pakistan opposed it? The auto sector opposes it, the pharmaceutical sector opposes it, the agricultural sector (which alone employs half the country and generates about a quarter of the GDP) opposes it, etc...

If you don't understand economics then don't comment on this issue otherwise prove me wrong don't just say I'm wrong. You're telling me my argument is full of holes but haven't once explained what those holes are and show me why I'm wrong by backing up your claims from a historical perspective using facts and figures not your personal opinions and assumptions of what took place.

Whether you want to be a cardiologist or a plumber there is a general road map you need to follow in order to accomplish your goal. The same is true for economic development hence the correlation between how virtually all of the most successful economies on this planet have developed under protectionist policies during their early stages of development. Correlation doesn't imply causation but it doesn't mean that it isn't the cause either and you can prove the link if you understand the underlying dynamics that results in the correlation and the eventual outcome (ex. why there is a higher incidence of lung cancer among smokers than non-smokers) which I've already done and you can read more about in Ha Joon-Chang's books.

So virtually every major economy in the world today got to where they are by having employed protectionist policies in their early stages of development only opening up their economies to foreign competition once they industrialized and even then their governments protected local industries with subsidies yet you think Pakistan should take the exact opposite route to become successful? Do you have real life case references for multiple successful economies that succeeded without employing protectionist policies or subsidies to protect local industries after duties and tariffs were lowered/removed? I want to see figures confirming your point of view not your assumptions.

no one is saying that India won't dominate the trade between the two, but it's completely foolish to say that Pakistan wouldn't benefit.

A trade deficit doesn't mean you're losing more money than you're making, a trade deficit refers to you're importing more than you're exporting.

A trade deficit, by definition, occurs when the value how much a country imports is larger than how much a country exports. So by the very definition of the term it means you're losing money
Trade deficit | Define Trade deficit at Dictionary.com

Why would any economist give a damn how many cricket bats Pakistan exports versus how many bags of sugar it imports? For whatever odd reason you think that's how a trade deficit is defined.

Prior to Pakistan signing it's free trade agreement with China the exact same argument was being made that is today used to justify giving MFN/NDMA to India. However, following that free trade agreement our trade deficit with China increased by 53%http://www.dawn.com/news/784965/trade-deficit-with-china-up-53pc
Trade deficit with China up 53pc - DAWN.COM

What benefits have we attained from our trade deficits or will attain from them? Any benefits attained are far outweighed by the negative impacts of MFN/Free Trade on developing economies that is unless they employ massive subsidies. What happens if you spend more than you earn? You eventually go bankrupt and wind up on the streets. That's like saying Afghanistan has benefited from its trade deficit with Pakistan.

Now that you agree with me that the balance of trade will heavily favor India because of the benefits it gained due to an economy of scale, further limitations imposed on our industries due to higher electricity rates and long blackouts and because of huge Indian subsidies into their own industries (particularly the agricultural sector which has been brought before the WTO on many occasions even by Canada) and understand what a trade deficit is how can you support it? Pakistan's industries can easily beat India's but you need to give them time to mature via protection as well as government investments in them. Our nation can outpace any country in the world which it has proven it can do under military rule with only a few simple changes it will do even better with more extensive enforcement of law, tax collection and government lead investment.

The only reason why this is even being discussed is because, like Zardari, the Nawaz government has completely failed to collect tax revenues particularly personal income tax but it's also failed to raise collection efficiency for VAT (we have a collection efficiency of about 25% while even Sri Lanka has a collection efficiency of 45%) and there is a lot of corruption when it comes to collecting corporate taxes. Thus, to get loans from the IMF (which alongside the World Bank has created poverty in Greece and Africa) the group is demanding Pakistan give India MFN status and import electricity from it the same goes for Nawaz' privatization scheme. While development in most successful economies was government lead (ex. China, Japan, South Korea, etc...) Pakistan is doing the exact opposite.

This isn't the early 20th century when a nations economy didn't rely on globalization, it's the 21st century where you have no choice but to trade in order to grow and become competitive.

I'm not anti trade I'm anti bad trade agreements and poor fiscal policy that will hurt Pakistan.

With regards to competition Ha Joon-Chang has a very interesting analogy regarding the bullshit of trade liberalization in developing economies:

"I have a six-year-old son. His name is Jin-Gyu. He lives off me, yet he is quite capable of making a living. I pay for his lodging, food, education, and health care. But millions of children of his age already have jobs. Daniel Defoe figured out in the 18th century that children are able to earn a living from the age of four.


Moreover, working might do Jin-Gyu's character a world of good. Right now he lives in an economic bubble with no sense of the value of money. He has zero appreciation of the efforts his mother and I make on his behalf, subsidising his idle existence and cocooning him from harsh reality. He is over-protected and needs to be exposed to competition, so that he can become a more productive person. Thinking about it, the more competition he is exposed to and the sooner this is done, the better it will be for his future development. It will whip him into a mentality that is ready for hard work. I should make him quit school and get a job. Perhaps I could move to a country where child labour is still tolerated, if not legal, to give him more choice in employment.


I can hear you say I must be mad. Myopic. Cruel. You tell me that I need to protect and nurture the child. If I drive Jin-Gyu into the labour market at the age of six, he may become a savvy shoeshine boy or even a prosperous street hawker, but he will never become a brain surgeon or a nuclear physicist -- that would require at least another dozen years of my protection and investment. You argue that, even from a purely materialistic viewpoint, I would be wiser to invest in my son's education than gloat over the money I save by not sending him to school. After all, if I were right, Oliver Twist would have been better off pick-pocketing for Fagin, rather than being rescued by the misguided Good Samaritan Mr. Brownlow, who deprived the boy of his chance to remain competitive in the labour market.

Yet this absurd line of argument is in essence how free-trade economists justify rapid, large-scale trade liberalisation in developing countries." ​

Ha-Joon Chang, "My Six-year-old Son Should Get a Job: What Is Wrong with the Present Global Economic Order?"

Let's be realistic, Kashmir will probably not be resolved in our life time if progress on the gov to gov front isn't made. It's best to lower tensions and extend good will towards the other to build trust, that is the only way to approach Kashmir.

In all honesty the only way I see the Kashmir issue being resolved is through war especially considering India has never shown once that it can be averted (ex. Pakistan has always been in favor of UNSC Resolution 47 but India has always opposed it).

Anyone who thinks India is ever going to abandon their occupation because we reduce tensions then you're kidding yourself and putting my people and country in jeopardy. Pakistani's aren't going to sit around and watch as our land is occupied and people slaughtered by dirt bag Indians and do nothing.

What would you do if someone killed your mom, continually assaults your family and throws you out of your home? Are you honestly going to tell me you're going to do business with the guy and hope that over time he'll stop beating/murdering your kin and return your home back to you then magically revive your family from the grave? A country is no more than an extension of it's people and the bonds of solidarity that they share which keep it together so when you have members start abandoning their own whether it be for a few dollars or a pat on the back then they're doomed and frankly Pakistan doesn't need those kinds of people nor will true Pakistani's tolerate that bullsh*t.

The US was not protectionist, it was in fact one of the biggest economic hubs in the world from the 20th century on wards. The reason why it became so rich (like I mentioned before) was because it got direct foreign investment into it's industrial base, this is what made the US competitive, same thing with Germany and China. In fact, just mentioning China debunks your entire argument. An even better example, South Korea.

I never argued that FDI was bad what I told you was that FDI accounts for a very small percentage of overall investment within a country and countries develop by investing in themselves not because of FDI. Furthermore, tariffs and duties on imported goods do not limit FDI that would enhance our own industrial production capacity.

FDI and China

How was I debunked? This is why I have asked you time and time again to reference actual data before espousing neoliberal economics lies which you yourself cannot seem to validate with actual numbers/figures.

Here is the chart for FDI inflows as a total % of GDP within China from 1982 to 2012 (since that's all the World Bank had and I'm guessing it's because before 1982 there was little to no actual FDI into China):

Now here is a chart for total gross capital formation as a % of GDP in China (from 1967 to Present):

What do you learn from these charts?

• The highest point FDI inflows ever reached was in 1993 when it accounted for 6.3% of GDP but that represents only about 14% of total gross capital formation within the country. FDI was virtually insignificant prior to the 90s when China was still experiencing well above 11% GDP growth which is why FDI started to pour in to begin with (no one invests in countries with poor economies and poor ROI which is what will happen if Pakistan reduce trade barriers that protect local industries particularly for India because of IMF demands):
  • Here is a chart showing China's phenominal GDP growth even prior to FDI inflows that began to rise in the 90s
    • 
• China was heavily investing in itself prior to FDI inflows actually picking up in the 90s and continued to heavily invest in itself as FDI inflows dropped drastically after 1993 up to 2004.

Furthermore, you've completely ignored FDI outflows as a % of GDP from the country:

Just as inflows peaked in 1993 so did outflows. Furthermore, China's economy continues to develop and grows strong even as FDI outflows continue to rise rapidly and FDI inflows decrease. Why? Because China invests in itself. This is why I keep telling you that though FDI would be great Pakistan's government needs to raise significant tax revenues not only to invest in critical basic services but to also invest money back into local industries (ex. subsidies, loans, etc...) because at the end of the day FDI, even for a country has heavily invested in as China, makes up only a small fraction of total overall investment within a country and FDI only goes to those countries with strong growth and as I've already shown virtually all of the world's most successful economies developed under protectionist policies. IMF loans are not necessary and they're giving Pakistan's government an excuse not to enforce tax laws and start raising the tax to GDP ratio. Furthermore, the IMF is the one demanding Pakistan privatize its industries (when generally development among successful economies was initially government lead) and remove trade barriers that protect local industries at this critical stage of development which will hamper Pakistan's own progress.​

There are also a host of other factors that China has taken to assist it's local industries which I won't get into now because it's honesty ridiculous that I'd have to turn this post into an economics paper to explain things to you that you should have otherwise been able to find out via your own research/investigation.

So my question to you is why would anyone invest in Pakistan when all it's doing is importing from China or India (assuming the NDMA/MFN deal is allowed to go through)? If there is no protection for their investments form competition with neighboring countries that are producing cheaper value added products due to an economy of scale (because they're buying raw materials in larger bulk affording them cheaper rates) with similar per capita incomes (meaning labor costs will even be about the same) why would anyone invest in Pakistan where it actually matters (i.e. increasing industrial capacity/output)? Again trade barriers do not limit FDI inflows when we're talking about raising industrial capacity/output.

I've already explained China now show me figures regarding total FDI as a % of gross capital formation in Germany, the US or South Korea don't just give me your opinions on what you think happened I want to see numbers/figures.

The US was protectionist during it's early stages of development

Below I have posted a chart outlining US customs tax revenue (i.e. duties and tariffs) as an overall percentage of total imports into the country. Do you notice that customs revenue was, particularly during the early years of developing, up to 1000% higher than it has been for the last 50 years? This is protectionism of local industries where you give your own industries an advantage by taxing (with duties and tariffs) imported goods so they're more expensive making domestically produced products cheaper and more attractive to purchase.

Here is a chart that shows you the total tariff rates applied on both dutiable goods and total imports in the US. Tariff rates decreased as a percentage of both total imports and dutiable goods over time as the country industrialized. However, even after being lowered those tariffs were re-imposed in the past during times of economic hardship whether we're talking about the civil war of the 1860s or the Depression of 1920 and later the Great Depression beginning in 1929. This is protectionism.

I honestly can't keep doing this for every country. You need to do some research instead of making statements without a shred of actual proof (i.e. numbers/figures) to back up your claims.

How is Pakistan's industrial base supposed to produce if it isn't getting any money? How is Pakistan suppose to produce energy for it's industries, if it doesn't make any money to support such production?

I already explained how in my previous post. Brosky, if you don't even know something as basic as this why are you commenting on economic matters?

Lets try this again from the top...

A government needs tax collection to pay for basic services (ex. access to health care, access to education, etc...) and invest into industries (which includes electricity generation).

There are direct taxes (ex. personal income tax, property tax, corporate income tax, social security contributions, etc...) and indirect taxes (ex. tariffs, duties, value added taxes, etc...). However, governments also generate revenue from other sources such as government owned industries/businesses, financial aid, etc...

A tax to GDP ratio is a ratio of total tax revenue collected against a countries overall GDP (Gross Domestic Product = total value of goods/services a country produces).

In 2012 the State Bank of Pakistan confirmed that Pakistan collected approximately $25.8 Billion USD in revenue (of which $20.6 Billion was in the form of taxes) but the country spent $43.4 Billion USD with an overall budget deficit of 8.5% of GDP.
http://www.sbp.org.pk/reports/annual/arFY12/Fiscal_Policy.pdf

That means to cover the budget the countries tax to GDP ratio needed to have been about 17% of GDP with non-tax revenue covering the rest. Otherwise the country is borrowing money (which needs to be repaid with interest and if you look at previous budgets more than half the budget goes towards debt servicing) or printing money (which results in inflation).

Now since you live in Canada I'm assuming you have an idea of where the Canadian governments revenue is sourced from but suffice it to say direct taxes (which includes personal income taxes that make up almost half of total revenue collected) overall generate more than half of total government revenue:

Now when you look at Pakistan's budget for 2013-2014 which cites revisions to the 2012-2013 budget estimates you'll see that direct taxes represent only 20% of the governments source of revenue (which is way too small).
http://finance.gov.pk/budget/abs_2013_14.pdf

If correct only 800,000 people (out of a population of about 180 million) have filed their income tax returns that's less than 1% of the total population and of those filing taxes it's apparent, based on reports regarding the countries own politicians, they're not specifying their actual assets or income so don't pay any taxes at all (reportedly less than 2% actually do). This is on top of rampant fraud being reported with regards to corporate income taxes and companies evading paying duties and tariffs (which includes multinationals operating in Pakistan).
800k file income tax returns, statements: FBR – The Express Tribune
Pakistan politicians engulfed by tax evasion storm | World news | The Guardian
Pakistan Customs unearths tax evasion on edible oil imports - thenews.com.pk

The reason why Pakistan has never exceeded a gross capital formation of 22.5% to GDP (when it should be close to 40% to achieve 10+% GDP growth) which includes investment into building power plants for cheap electricity for industry is because of rampant fraud and the governments unwillingness to seriously pursue and prosecute those individuals and companies that evade taxes, falsify income, do not pay duties/tariffs, etc... and recover unpaid revenue.

If a country like Kyrgyzstan has a tax to GDP ratio of 24% with a lower per capita GDP it's obvious that Pakistan can as well. From my own estimates I believe that Pakistan could achieve a 29.5% tax to GDP ratio and if invested properly (I have my own plan on what the money should go towards) I personally estimate the country could easily triple it's GDP every 10 years.

 

[jarves]

@That Guy
In all honesty the only way I see the Kashmir issue being resolved is through war especially considering India has never shown once that it can be averted (ex. Pakistan has always been in favor of UNSC Resolution 47 but India has always opposed it).

Total bullshit!! Go and read more about UNSC resolutions which clearly states that plebiscite will only in happen in Kashmir when Pakistani forces wil retereat from Kashmir which Pakistan hasnt fullfilled due to obvious reasons.

And if you think that Kashmir will be resolved by war then the only thing which is going to happen after is Pakistan losing its part of Kashmir and you may even lose other parts of Pakistan also.

I personally estimate the country could easily triple it's GDP every 10 years.

Can you please shed more light on this??

Btw-Has Pakistan already given MFN status to China??

 

[Contrarian]

@That Guy Before you post a response I want you to back up everything you say with numbers/figures and from a historical perspective don't give me your opinions on what you think happened.

As a side note I tried to keep all my questions to you in red but only answer them after reading my post thoroughly and if you need to. If possible you need to get acquainted with the terms/concepts I've talked about and I highly recommend Ha Joon-Chang's (possibly the worlds foremost development economist) books particularly "Kicking Away the Ladder: Development Strategy in Historical Perspective" and "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism" as well as various material you can easily reference on the web.




Bro, I'm not arguing for the sake of arguing. I see my ancestral land and my people are in danger and there are individuals disseminating incorrect information so I'm doing my best to ensure that Pakistani's are not suckered into believing nonsense that will hurt them in the long run.

Do you honestly think I enjoy sitting around for long periods writing what amounts to paragraphs of information and referencing both written works and charts? Whenever I write anything I make sure I do my absolute best to give them the correct information hence why I reference virtually anything I write so anyone can cross check what I've written. I'm extremely busy but I take the time to write these out because I deeply care about Pakistan.

I read your entire posts hence why I was able to dissect it and write detailed rebuttals to virtually everything you've written. In fact it's obvious that you either didn't read my posts or simply don't understand the terms I'm referencing because I've noticed you're repeating questions I've already answered.



Where did I make assumptions? I proved everything I said using real life examples, facts and figures.

Tell me if NDMA/MFN to India was so great why has virtually every industry in Pakistan opposed it? The auto sector opposes it, the pharmaceutical sector opposes it, the agricultural sector (which alone employs half the country and generates about a quarter of the GDP) opposes it, etc...

If you don't understand economics then don't comment on this issue otherwise prove me wrong don't just say I'm wrong. You're telling me my argument is full of holes but haven't once explained what those holes are and show me why I'm wrong by backing up your claims from a historical perspective using facts and figures not your personal opinions and assumptions of what took place.

Whether you want to be a cardiologist or a plumber there is a general road map you need to follow in order to accomplish your goal. The same is true for economic development hence the correlation between how virtually all of the most successful economies on this planet have developed under protectionist policies during their early stages of development. Correlation doesn't imply causation but it doesn't mean that it isn't the cause either and you can prove the link if you understand the underlying dynamics that results in the correlation and the eventual outcome (ex. why there is a higher incidence of lung cancer among smokers than non-smokers) which I've already done and you can read more about in Ha Joon-Chang's books.

So virtually every major economy in the world today got to where they are by having employed protectionist policies in their early stages of development only opening up their economies to foreign competition once they industrialized and even then their governments protected local industries with subsidies yet you think Pakistan should take the exact opposite route to become successful? Do you have real life case references for multiple successful economies that succeeded without employing protectionist policies or subsidies to protect local industries after duties and tariffs were lowered/removed? I want to see figures confirming your point of view not your assumptions.





A trade deficit, by definition, occurs when the value how much a country imports is larger than how much a country exports. So by the very definition of the term it means you're losing money
Trade deficit | Define Trade deficit at Dictionary.com

Why would any economist give a damn how many cricket bats Pakistan exports versus how many bags of sugar it imports? For whatever odd reason you think that's how a trade deficit is defined.

Prior to Pakistan signing it's free trade agreement with China the exact same argument was being made that is today used to justify giving MFN/NDMA to India. However, following that free trade agreement our trade deficit with China increased by 53%
Trade deficit with China up 53pc - DAWN.COM

What benefits have we attained from our trade deficits or will attain from them? Any benefits attained are far outweighed by the negative impacts of MFN/Free Trade on developing economies that is unless they employ massive subsidies. What happens if you spend more than you earn? You eventually go bankrupt and wind up on the streets. That's like saying Afghanistan has benefited from its trade deficit with Pakistan.

Now that you agree with me that the balance of trade will heavily favor India because of the benefits it gained due to an economy of scale, further limitations imposed on our industries due to higher electricity rates and long blackouts and because of huge Indian subsidies into their own industries (particularly the agricultural sector which has been brought before the WTO on many occasions even by Canada) and understand what a trade deficit is how can you support it? Pakistan's industries can easily beat India's but you need to give them time to mature via protection as well as government investments in them. Our nation can outpace any country in the world which it has proven it can do under military rule with only a few simple changes it will do even better with more extensive enforcement of law, tax collection and government lead investment.

The only reason why this is even being discussed is because, like Zardari, the Nawaz government has completely failed to collect tax revenues particularly personal income tax but it's also failed to raise collection efficiency for VAT (we have a collection efficiency of about 25% while even Sri Lanka has a collection efficiency of 45%) and there is a lot of corruption when it comes to collecting corporate taxes. Thus, to get loans from the IMF (which alongside the World Bank has created poverty in Greece and Africa) the group is demanding Pakistan give India MFN status and import electricity from it the same goes for Nawaz' privatization scheme. While development in most successful economies was government lead (ex. China, Japan, South Korea, etc...) Pakistan is doing the exact opposite.



I'm not anti trade I'm anti bad trade agreements and poor fiscal policy that will hurt Pakistan.

With regards to competition Ha Joon-Chang has a very interesting analogy regarding the bullshit of trade liberalization in developing economies:

"I have a six-year-old son. His name is Jin-Gyu. He lives off me, yet he is quite capable of making a living. I pay for his lodging, food, education, and health care. But millions of children of his age already have jobs. Daniel Defoe figured out in the 18th century that children are able to earn a living from the age of four.

Moreover, working might do Jin-Gyu's character a world of good. Right now he lives in an economic bubble with no sense of the value of money. He has zero appreciation of the efforts his mother and I make on his behalf, subsidising his idle existence and cocooning him from harsh reality. He is over-protected and needs to be exposed to competition, so that he can become a more productive person. Thinking about it, the more competition he is exposed to and the sooner this is done, the better it will be for his future development. It will whip him into a mentality that is ready for hard work. I should make him quit school and get a job. Perhaps I could move to a country where child labour is still tolerated, if not legal, to give him more choice in employment.

I can hear you say I must be mad. Myopic. Cruel. You tell me that I need to protect and nurture the child. If I drive Jin-Gyu into the labour market at the age of six, he may become a savvy shoeshine boy or even a prosperous street hawker, but he will never become a brain surgeon or a nuclear physicist -- that would require at least another dozen years of my protection and investment. You argue that, even from a purely materialistic viewpoint, I would be wiser to invest in my son's education than gloat over the money I save by not sending him to school. After all, if I were right, Oliver Twist would have been better off pick-pocketing for Fagin, rather than being rescued by the misguided Good Samaritan Mr. Brownlow, who deprived the boy of his chance to remain competitive in the labour market.

Yet this absurd line of argument is in essence how free-trade economists justify rapid, large-scale trade liberalisation in developing countries." ​

Ha-Joon Chang, "My Six-year-old Son Should Get a Job: What Is Wrong with the Present Global Economic Order?"



In all honesty the only way I see the Kashmir issue being resolved is through war especially considering India has never shown once that it can be averted (ex. Pakistan has always been in favor of UNSC Resolution 47 but India has always opposed it).

Anyone who thinks India is ever going to abandon their occupation because we reduce tensions then you're kidding yourself and putting my people and country in jeopardy. Pakistani's aren't going to sit around and watch as our land is occupied and people slaughtered by dirt bag Indians and do nothing.

What would you do if someone killed your mom, continually assaults your family and throws you out of your home? Are you honestly going to tell me you're going to do business with the guy and hope that over time he'll stop beating/murdering your kin and return your home back to you then magically revive your family from the grave? A country is no more than an extension of it's people and the bonds of solidarity that they share which keep it together so when you have members start abandoning their own whether it be for a few dollars or a pat on the back then they're doomed and frankly Pakistan doesn't need those kinds of people nor will true Pakistani's tolerate that bullsh*t.



I never argued that FDI was bad what I told you was that FDI accounts for a very small percentage of overall investment within a country and countries develop by investing in themselves not because of FDI. Furthermore, tariffs and duties on imported goods do not limit FDI that would enhance our own industrial production capacity.

FDI and China

How was I debunked? This is why I have asked you time and time again to reference actual data before espousing neoliberal economics lies which you yourself cannot seem to validate with actual numbers/figures.

Here is the chart for FDI inflows as a total % of GDP within China from 1982 to 2012 (since that's all the World Bank had and I'm guessing it's because before 1982 there was little to no actual FDI into China):

Now here is a chart for total gross capital formation as a % of GDP in China (from 1967 to Present):

What do you learn from these charts?

• The highest point FDI inflows ever reached was in 1993 when it accounted for 6.3% of GDP but that represents only about 14% of total gross capital formation within the country. FDI was virtually insignificant prior to the 90s when China was still experiencing well above 11% GDP growth which is why FDI started to pour in to begin with (no one invests in countries with poor economies and poor ROI which is what will happen if Pakistan reduce trade barriers that protect local industries particularly for India because of IMF demands):
  • Here is a chart showing China's phenominal GDP growth even prior to FDI inflows that began to rise in the 90s
    • 
• China was heavily investing in itself prior to FDI inflows actually picking up in the 90s and continued to heavily invest in itself as FDI inflows dropped drastically after 1993 up to 2004.

Furthermore, you've completely ignored FDI outflows as a % of GDP from the country:

Just as inflows peaked in 1993 so did outflows. Furthermore, China's economy continues to develop and grows strong even as FDI outflows continue to rise rapidly and FDI inflows decrease. Why? Because China invests in itself. This is why I keep telling you that though FDI would be great Pakistan's government needs to raise significant tax revenues not only to invest in critical basic services but to also invest money back into local industries (ex. subsidies, loans, etc...) because at the end of the day FDI, even for a country has heavily invested in as China, makes up only a small fraction of total overall investment within a country and FDI only goes to those countries with strong growth and as I've already shown virtually all of the world's most successful economies developed under protectionist policies. IMF loans are not necessary and they're giving Pakistan's government an excuse not to enforce tax laws and start raising the tax to GDP ratio. Furthermore, the IMF is the one demanding Pakistan privatize its industries (when generally development among successful economies was initially government lead) and remove trade barriers that protect local industries at this critical stage of development which will hamper Pakistan's own progress.​

There are also a host of other factors that China has taken to assist it's local industries which I won't get into now because it's honesty ridiculous that I'd have to turn this post into an economics paper to explain things to you that you should have otherwise been able to find out via your own research/investigation.

So my question to you is why would anyone invest in Pakistan when all it's doing is importing from China or India (assuming the NDMA/MFN deal is allowed to go through)? If there is no protection for their investments form competition with neighboring countries that are producing cheaper value added products due to an economy of scale (because they're buying raw materials in larger bulk affording them cheaper rates) with similar per capita incomes (meaning labor costs will even be about the same) why would anyone invest in Pakistan where it actually matters (i.e. increasing industrial capacity/output)? Again trade barriers do not limit FDI inflows when we're talking about raising industrial capacity/output.

I've already explained China now show me figures regarding total FDI as a % of gross capital formation in Germany, the US or South Korea don't just give me your opinions on what you think happened I want to see numbers/figures.

The US was protectionist during it's early stages of development

Below I have posted a chart outlining US customs tax revenue (i.e. duties and tariffs) as an overall percentage of total imports into the country. Do you notice that customs revenue was, particularly during the early years of developing, up to 1000% higher than it has been for the last 50 years? This is protectionism of local industries where you give your own industries an advantage by taxing (with duties and tariffs) imported goods so they're more expensive making domestically produced products cheaper and more attractive to purchase.

Here is a chart that shows you the total tariff rates applied on both dutiable goods and total imports in the US. Tariff rates decreased as a percentage of both total imports and dutiable goods over time as the country industrialized. However, even after being lowered those tariffs were re-imposed in the past during times of economic hardship whether we're talking about the civil war of the 1860s or the Depression of 1920 and later the Great Depression beginning in 1929. This is protectionism.

I honestly can't keep doing this for every country. You need to do some research instead of making statements without a shred of actual proof (i.e. numbers/figures) to back up your claims.



I already explained how in my previous post. Brosky, if you don't even know something as basic as this why are you commenting on economic matters?

Lets try this again from the top...

A government needs tax collection to pay for basic services (ex. access to health care, access to education, etc...) and invest into industries (which includes electricity generation).

There are direct taxes (ex. personal income tax, property tax, corporate income tax, social security contributions, etc...) and indirect taxes (ex. tariffs, duties, value added taxes, etc...). However, governments also generate revenue from other sources such as government owned industries/businesses, financial aid, etc...

A tax to GDP ratio is a ratio of total tax revenue collected against a countries overall GDP (Gross Domestic Product = total value of goods/services a country produces).

In 2012 the State Bank of Pakistan confirmed that Pakistan collected approximately $25.8 Billion USD in revenue (of which $20.6 Billion was in the form of taxes) but the country spent $43.4 Billion USD with an overall budget deficit of 8.5% of GDP.
http://www.sbp.org.pk/reports/annual/arFY12/Fiscal_Policy.pdf

That means to cover the budget the countries tax to GDP ratio needed to have been about 17% of GDP with non-tax revenue covering the rest. Otherwise the country is borrowing money (which needs to be repaid with interest and if you look at previous budgets more than half the budget goes towards debt servicing) or printing money (which results in inflation).

Now since you live in Canada I'm assuming you have an idea of where the Canadian governments revenue is sourced from but suffice it to say direct taxes (which includes personal income taxes that make up almost half of total revenue collected) overall generate more than half of total government revenue:

Now when you look at Pakistan's budget for 2013-2014 which cites revisions to the 2012-2013 budget estimates you'll see that direct taxes represent only 20% of the governments source of revenue (which is way too small).
http://finance.gov.pk/budget/abs_2013_14.pdf

If correct only 800,000 people (out of a population of about 180 million) have filed their income tax returns that's less than 1% of the total population and of those filing taxes it's apparent, based on reports regarding the countries own politicians, they're not specifying their actual assets or income so don't pay any taxes at all (reportedly less than 2% actually do). This is on top of rampant fraud being reported with regards to corporate income taxes and companies evading paying duties and tariffs (which includes multinationals operating in Pakistan).
800k file income tax returns, statements: FBR – The Express Tribune
Pakistan politicians engulfed by tax evasion storm | World news | The Guardian
Pakistan Customs unearths tax evasion on edible oil imports - thenews.com.pk

The reason why Pakistan has never exceeded a gross capital formation of 22.5% to GDP (when it should be close to 40% to achieve 10+% GDP growth) which includes investment into building power plants for cheap electricity for industry is because of rampant fraud and the governments unwillingness to seriously pursue and prosecute those individuals and companies that evade taxes, falsify income, do not pay duties/tariffs, etc... and recover unpaid revenue.

If a country like Kyrgyzstan has a tax to GDP ratio of 24% with a lower per capita GDP it's obvious that Pakistan can as well. From my own estimates I believe that Pakistan could achieve a 29.5% tax to GDP ratio and if invested properly (I have my own plan on what the money should go towards) I personally estimate the country could easily triple it's GDP every 10 years.

1. You have the infant industry argument.
It has been noted by almost all developmental experts that infant industry protection does not work when the industry is constantly protected.
Pakistan has had over 65 years in protecting its industries, its time to let them sink or swim in international waters.

2. India also believed the same arguments that you presented. And under force of IMF loans, India had to liberalize its trading regime - most unwillingly. The results of that were phenomenal and visible globally.

3. Infant industries are always given a notice period after which protectionism would end. Pakistan has already done that in the last 4 years when talks with India started seriously.

4. Your arguments are like thus 'If every player in the Indian cricket team played like Sachin Tendulkar, then we would have a world beating team for ever'.
The truth is that not every country is capable of managing its resources effectively. That even includes India. We have a GCP of over 35%, yet we are barely growing at 5% right now. The reason - ridiculous fiscal management by GoI and handing out non beneficial subsidy doles mindlessly.

So net net - that Pakistan's politicians are not spending national income wisely - does not mean one fine day they wake up and start managing the economy perfectly - there are a hundred different type of pulls and pressures in the govt that they have to cater for as they have to run for elections again.

5. India started growing fast under similar circumstances when IMF forced India to change its trade regime, exactly like how it is forcing Pakistan now.

 

[cloud_9]

Sir,

* urea costs 2-3 times cheaper in India as compared to pakistan . . so the Farmers in Pakistan can be a direct beneficiaries of this thing.

Urea is cheaper because it's subsidised or are you telling us we should subsidise urea exports also

 

[That Guy]

@That Guy Before you post a response I want you to back up everything you say with numbers/figures and from a historical perspective don't give me your opinions on what you think happened.

As a side note I tried to keep all my questions to you in red but only answer them after reading my post thoroughly and if you need to. If possible you need to get acquainted with the terms/concepts I've talked about and I highly recommend Ha Joon-Chang's (possibly the worlds foremost development economist) books particularly "Kicking Away the Ladder: Development Strategy in Historical Perspective" and "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism" as well as various material you can easily reference on the web.




Bro, I'm not arguing for the sake of arguing. I see my ancestral land and my people are in danger and there are individuals disseminating incorrect information so I'm doing my best to ensure that Pakistani's are not suckered into believing nonsense that will hurt them in the long run.

Do you honestly think I enjoy sitting around for long periods writing what amounts to paragraphs of information and referencing both written works and charts? Whenever I write anything I make sure I do my absolute best to give them the correct information hence why I reference virtually anything I write so anyone can cross check what I've written. I'm extremely busy but I take the time to write these out because I deeply care about Pakistan.

I read your entire posts hence why I was able to dissect it and write detailed rebuttals to virtually everything you've written. In fact it's obvious that you either didn't read my posts or simply don't understand the terms I'm referencing because I've noticed you're repeating questions I've already answered.



Where did I make assumptions? I proved everything I said using real life examples, facts and figures.

Tell me if NDMA/MFN to India was so great why has virtually every industry in Pakistan opposed it? The auto sector opposes it, the pharmaceutical sector opposes it, the agricultural sector (which alone employs half the country and generates about a quarter of the GDP) opposes it, etc...

If you don't understand economics then don't comment on this issue otherwise prove me wrong don't just say I'm wrong. You're telling me my argument is full of holes but haven't once explained what those holes are and show me why I'm wrong by backing up your claims from a historical perspective using facts and figures not your personal opinions and assumptions of what took place.

Whether you want to be a cardiologist or a plumber there is a general road map you need to follow in order to accomplish your goal. The same is true for economic development hence the correlation between how virtually all of the most successful economies on this planet have developed under protectionist policies during their early stages of development. Correlation doesn't imply causation but it doesn't mean that it isn't the cause either and you can prove the link if you understand the underlying dynamics that results in the correlation and the eventual outcome (ex. why there is a higher incidence of lung cancer among smokers than non-smokers) which I've already done and you can read more about in Ha Joon-Chang's books.

So virtually every major economy in the world today got to where they are by having employed protectionist policies in their early stages of development only opening up their economies to foreign competition once they industrialized and even then their governments protected local industries with subsidies yet you think Pakistan should take the exact opposite route to become successful? Do you have real life case references for multiple successful economies that succeeded without employing protectionist policies or subsidies to protect local industries after duties and tariffs were lowered/removed? I want to see figures confirming your point of view not your assumptions.





A trade deficit, by definition, occurs when the value how much a country imports is larger than how much a country exports. So by the very definition of the term it means you're losing money
Trade deficit | Define Trade deficit at Dictionary.com

Why would any economist give a damn how many cricket bats Pakistan exports versus how many bags of sugar it imports? For whatever odd reason you think that's how a trade deficit is defined.

Prior to Pakistan signing it's free trade agreement with China the exact same argument was being made that is today used to justify giving MFN/NDMA to India. However, following that free trade agreement our trade deficit with China increased by 53%
Trade deficit with China up 53pc - DAWN.COM

What benefits have we attained from our trade deficits or will attain from them? Any benefits attained are far outweighed by the negative impacts of MFN/Free Trade on developing economies that is unless they employ massive subsidies. What happens if you spend more than you earn? You eventually go bankrupt and wind up on the streets. That's like saying Afghanistan has benefited from its trade deficit with Pakistan.

Now that you agree with me that the balance of trade will heavily favor India because of the benefits it gained due to an economy of scale, further limitations imposed on our industries due to higher electricity rates and long blackouts and because of huge Indian subsidies into their own industries (particularly the agricultural sector which has been brought before the WTO on many occasions even by Canada) and understand what a trade deficit is how can you support it? Pakistan's industries can easily beat India's but you need to give them time to mature via protection as well as government investments in them. Our nation can outpace any country in the world which it has proven it can do under military rule with only a few simple changes it will do even better with more extensive enforcement of law, tax collection and government lead investment.

The only reason why this is even being discussed is because, like Zardari, the Nawaz government has completely failed to collect tax revenues particularly personal income tax but it's also failed to raise collection efficiency for VAT (we have a collection efficiency of about 25% while even Sri Lanka has a collection efficiency of 45%) and there is a lot of corruption when it comes to collecting corporate taxes. Thus, to get loans from the IMF (which alongside the World Bank has created poverty in Greece and Africa) the group is demanding Pakistan give India MFN status and import electricity from it the same goes for Nawaz' privatization scheme. While development in most successful economies was government lead (ex. China, Japan, South Korea, etc...) Pakistan is doing the exact opposite.



I'm not anti trade I'm anti bad trade agreements and poor fiscal policy that will hurt Pakistan.

With regards to competition Ha Joon-Chang has a very interesting analogy regarding the bullshit of trade liberalization in developing economies:

"I have a six-year-old son. His name is Jin-Gyu. He lives off me, yet he is quite capable of making a living. I pay for his lodging, food, education, and health care. But millions of children of his age already have jobs. Daniel Defoe figured out in the 18th century that children are able to earn a living from the age of four.

Moreover, working might do Jin-Gyu's character a world of good. Right now he lives in an economic bubble with no sense of the value of money. He has zero appreciation of the efforts his mother and I make on his behalf, subsidising his idle existence and cocooning him from harsh reality. He is over-protected and needs to be exposed to competition, so that he can become a more productive person. Thinking about it, the more competition he is exposed to and the sooner this is done, the better it will be for his future development. It will whip him into a mentality that is ready for hard work. I should make him quit school and get a job. Perhaps I could move to a country where child labour is still tolerated, if not legal, to give him more choice in employment.

I can hear you say I must be mad. Myopic. Cruel. You tell me that I need to protect and nurture the child. If I drive Jin-Gyu into the labour market at the age of six, he may become a savvy shoeshine boy or even a prosperous street hawker, but he will never become a brain surgeon or a nuclear physicist -- that would require at least another dozen years of my protection and investment. You argue that, even from a purely materialistic viewpoint, I would be wiser to invest in my son's education than gloat over the money I save by not sending him to school. After all, if I were right, Oliver Twist would have been better off pick-pocketing for Fagin, rather than being rescued by the misguided Good Samaritan Mr. Brownlow, who deprived the boy of his chance to remain competitive in the labour market.

Yet this absurd line of argument is in essence how free-trade economists justify rapid, large-scale trade liberalisation in developing countries." ​

Ha-Joon Chang, "My Six-year-old Son Should Get a Job: What Is Wrong with the Present Global Economic Order?"



In all honesty the only way I see the Kashmir issue being resolved is through war especially considering India has never shown once that it can be averted (ex. Pakistan has always been in favor of UNSC Resolution 47 but India has always opposed it).

Anyone who thinks India is ever going to abandon their occupation because we reduce tensions then you're kidding yourself and putting my people and country in jeopardy. Pakistani's aren't going to sit around and watch as our land is occupied and people slaughtered by dirt bag Indians and do nothing.

What would you do if someone killed your mom, continually assaults your family and throws you out of your home? Are you honestly going to tell me you're going to do business with the guy and hope that over time he'll stop beating/murdering your kin and return your home back to you then magically revive your family from the grave? A country is no more than an extension of it's people and the bonds of solidarity that they share which keep it together so when you have members start abandoning their own whether it be for a few dollars or a pat on the back then they're doomed and frankly Pakistan doesn't need those kinds of people nor will true Pakistani's tolerate that bullsh*t.



I never argued that FDI was bad what I told you was that FDI accounts for a very small percentage of overall investment within a country and countries develop by investing in themselves not because of FDI. Furthermore, tariffs and duties on imported goods do not limit FDI that would enhance our own industrial production capacity.

FDI and China

How was I debunked? This is why I have asked you time and time again to reference actual data before espousing neoliberal economics lies which you yourself cannot seem to validate with actual numbers/figures.

Here is the chart for FDI inflows as a total % of GDP within China from 1982 to 2012 (since that's all the World Bank had and I'm guessing it's because before 1982 there was little to no actual FDI into China):

Now here is a chart for total gross capital formation as a % of GDP in China (from 1967 to Present):

What do you learn from these charts?

• The highest point FDI inflows ever reached was in 1993 when it accounted for 6.3% of GDP but that represents only about 14% of total gross capital formation within the country. FDI was virtually insignificant prior to the 90s when China was still experiencing well above 11% GDP growth which is why FDI started to pour in to begin with (no one invests in countries with poor economies and poor ROI which is what will happen if Pakistan reduce trade barriers that protect local industries particularly for India because of IMF demands):
  • Here is a chart showing China's phenominal GDP growth even prior to FDI inflows that began to rise in the 90s
    • 
• China was heavily investing in itself prior to FDI inflows actually picking up in the 90s and continued to heavily invest in itself as FDI inflows dropped drastically after 1993 up to 2004.

Furthermore, you've completely ignored FDI outflows as a % of GDP from the country:

Just as inflows peaked in 1993 so did outflows. Furthermore, China's economy continues to develop and grows strong even as FDI outflows continue to rise rapidly and FDI inflows decrease. Why? Because China invests in itself. This is why I keep telling you that though FDI would be great Pakistan's government needs to raise significant tax revenues not only to invest in critical basic services but to also invest money back into local industries (ex. subsidies, loans, etc...) because at the end of the day FDI, even for a country has heavily invested in as China, makes up only a small fraction of total overall investment within a country and FDI only goes to those countries with strong growth and as I've already shown virtually all of the world's most successful economies developed under protectionist policies. IMF loans are not necessary and they're giving Pakistan's government an excuse not to enforce tax laws and start raising the tax to GDP ratio. Furthermore, the IMF is the one demanding Pakistan privatize its industries (when generally development among successful economies was initially government lead) and remove trade barriers that protect local industries at this critical stage of development which will hamper Pakistan's own progress.​

There are also a host of other factors that China has taken to assist it's local industries which I won't get into now because it's honesty ridiculous that I'd have to turn this post into an economics paper to explain things to you that you should have otherwise been able to find out via your own research/investigation.

So my question to you is why would anyone invest in Pakistan when all it's doing is importing from China or India (assuming the NDMA/MFN deal is allowed to go through)? If there is no protection for their investments form competition with neighboring countries that are producing cheaper value added products due to an economy of scale (because they're buying raw materials in larger bulk affording them cheaper rates) with similar per capita incomes (meaning labor costs will even be about the same) why would anyone invest in Pakistan where it actually matters (i.e. increasing industrial capacity/output)? Again trade barriers do not limit FDI inflows when we're talking about raising industrial capacity/output.

I've already explained China now show me figures regarding total FDI as a % of gross capital formation in Germany, the US or South Korea don't just give me your opinions on what you think happened I want to see numbers/figures.

The US was protectionist during it's early stages of development

Below I have posted a chart outlining US customs tax revenue (i.e. duties and tariffs) as an overall percentage of total imports into the country. Do you notice that customs revenue was, particularly during the early years of developing, up to 1000% higher than it has been for the last 50 years? This is protectionism of local industries where you give your own industries an advantage by taxing (with duties and tariffs) imported goods so they're more expensive making domestically produced products cheaper and more attractive to purchase.

Here is a chart that shows you the total tariff rates applied on both dutiable goods and total imports in the US. Tariff rates decreased as a percentage of both total imports and dutiable goods over time as the country industrialized. However, even after being lowered those tariffs were re-imposed in the past during times of economic hardship whether we're talking about the civil war of the 1860s or the Depression of 1920 and later the Great Depression beginning in 1929. This is protectionism.

I honestly can't keep doing this for every country. You need to do some research instead of making statements without a shred of actual proof (i.e. numbers/figures) to back up your claims.



I already explained how in my previous post. Brosky, if you don't even know something as basic as this why are you commenting on economic matters?

Lets try this again from the top...

A government needs tax collection to pay for basic services (ex. access to health care, access to education, etc...) and invest into industries (which includes electricity generation).

There are direct taxes (ex. personal income tax, property tax, corporate income tax, social security contributions, etc...) and indirect taxes (ex. tariffs, duties, value added taxes, etc...). However, governments also generate revenue from other sources such as government owned industries/businesses, financial aid, etc...

A tax to GDP ratio is a ratio of total tax revenue collected against a countries overall GDP (Gross Domestic Product = total value of goods/services a country produces).

In 2012 the State Bank of Pakistan confirmed that Pakistan collected approximately $25.8 Billion USD in revenue (of which $20.6 Billion was in the form of taxes) but the country spent $43.4 Billion USD with an overall budget deficit of 8.5% of GDP.
http://www.sbp.org.pk/reports/annual/arFY12/Fiscal_Policy.pdf

That means to cover the budget the countries tax to GDP ratio needed to have been about 17% of GDP with non-tax revenue covering the rest. Otherwise the country is borrowing money (which needs to be repaid with interest and if you look at previous budgets more than half the budget goes towards debt servicing) or printing money (which results in inflation).

Now since you live in Canada I'm assuming you have an idea of where the Canadian governments revenue is sourced from but suffice it to say direct taxes (which includes personal income taxes that make up almost half of total revenue collected) overall generate more than half of total government revenue:

Now when you look at Pakistan's budget for 2013-2014 which cites revisions to the 2012-2013 budget estimates you'll see that direct taxes represent only 20% of the governments source of revenue (which is way too small).
http://finance.gov.pk/budget/abs_2013_14.pdf

If correct only 800,000 people (out of a population of about 180 million) have filed their income tax returns that's less than 1% of the total population and of those filing taxes it's apparent, based on reports regarding the countries own politicians, they're not specifying their actual assets or income so don't pay any taxes at all (reportedly less than 2% actually do). This is on top of rampant fraud being reported with regards to corporate income taxes and companies evading paying duties and tariffs (which includes multinationals operating in Pakistan).
800k file income tax returns, statements: FBR – The Express Tribune
Pakistan politicians engulfed by tax evasion storm | World news | The Guardian
Pakistan Customs unearths tax evasion on edible oil imports - thenews.com.pk

The reason why Pakistan has never exceeded a gross capital formation of 22.5% to GDP (when it should be close to 40% to achieve 10+% GDP growth) which includes investment into building power plants for cheap electricity for industry is because of rampant fraud and the governments unwillingness to seriously pursue and prosecute those individuals and companies that evade taxes, falsify income, do not pay duties/tariffs, etc... and recover unpaid revenue.

If a country like Kyrgyzstan has a tax to GDP ratio of 24% with a lower per capita GDP it's obvious that Pakistan can as well. From my own estimates I believe that Pakistan could achieve a 29.5% tax to GDP ratio and if invested properly (I have my own plan on what the money should go towards) I personally estimate the country could easily triple it's GDP every 10 years.

I honestly don't know where to begin, you're connecting random dotes on the map that shouldn't be connected. Your assumptions are baseless, because your "real life examples" don't connect. You say why do local industries oppose the NDMA, it's because they want to protect their interests in their own market. It's called monopolization.

You keep bringing up the same damn examples over and over again, without reading my comments properly, despite the fact that I already showed how it wasn't.

You're seriously paranoid, nothing more. India won't benefit much economically from Pakistan, it's the opposite that will be true. You keep quoting Ha-Joon Chang, despite the fact he's the only economist in the world that exists. There are many different economists that project this to be a good idea, the world bank, the IMF, the IDB all have made arguments for granting MFN status to India because it benefits Pakistan.

The basic fact is that the world bank has addressed two of your biggest concerns

Pakistan’s Most Favored Nation Status to India: A Win-Win for the Region? | End Poverty in South Asia

Two common misconceptions

• Indian goods will flood Pakistani markets and ruin local producers: WTO provisions allow members to impose safeguards restricting imports (for temporary periods) should such imports unfairly or seriously injure domestic producers.

• India and Pakistan’s political tensions will defeat smooth trade efforts: History suggests old enmities can be overcome by trade. Consider the end of the China-Taiwan fray, and the concomitant increase in trade from $8.1 billion in 1991 to $100 billion in 2010, as well as the US-Vietnam bilateral trade agreement in 2001, resulting in the US being the leading investor in Vietnam today.

You bringing up China, but your facts are misleading. Yes, you're correct when you say that China experienced high growth before major FDI came into China, but China was still relatively poor and it's infrustructure was similar to Pakistan's. Once the FDI started to flow into China, massive economic and infrastructural projects and greater wealth started to come into China.

I'm not even going to tell you about just how misleading your Canadian chart is, because it really shouldn't be compared to Pakistan, since their situations are completely different.

You also said that FDI wasn't a bad thing, but that was your entire argument to begin with. Let me remind you, you said and I quote..

Pakistani's must fight this whether it's military or civilian this deal must not be allowed to go through and stopped at all costs.

Pakistan should not have any Free trade, NDMA or MFN agreements with any country let alone India.

You also say that Pakistani industry needs to mature, but if it's local market isn't nvesting, and the government can't afford to invest, how in the hell is Pakistan's industry supposed to mature, when it can't even get the chance to? Face it, getting Indian market can and will lead to greater economic growth, and help Pakistani industries to grow further and actually profit where they were barely surviving before. It will bring in new revenue streams to the government which it can invest locally.

There is another misconception on from your entire argument, you seem to think that Pakistani side is lifting tariffs on Indian goods, but it's not. The NDMA is meant to get rid of major items that were on a negative list that Pakistan refused entry into the country, and lower the import duty imposed on existing imports, no one is getting rid of the tariffs, at least not on vital products. It's also meant to open completely economic trade corridors between India and Pakistan that already exist.

Your entire argument is based on mistrust, misrepresentation, and incomplete information.

1. You have the infant industry argument.
It has been noted by almost all developmental experts that infant industry protection does not work when the industry is constantly protected.
Pakistan has had over 65 years in protecting its industries, its time to let them sink or swim in international waters.

2. India also believed the same arguments that you presented. And under force of IMF loans, India had to liberalize its trading regime - most unwillingly. The results of that were phenomenal and visible globally.

3. Infant industries are always given a notice period after which protectionism would end. Pakistan has already done that in the last 4 years when talks with India started seriously.

4. Your arguments are like thus 'If every player in the Indian cricket team played like Sachin Tendulkar, then we would have a world beating team for ever'.
The truth is that not every country is capable of managing its resources effectively. That even includes India. We have a GCP of over 35%, yet we are barely growing at 5% right now. The reason - ridiculous fiscal management by GoI and handing out non beneficial subsidy doles mindlessly.

So net net - that Pakistan's politicians are not spending national income wisely - does not mean one fine day they wake up and start managing the economy perfectly - there are a hundred different type of pulls and pressures in the govt that they have to cater for as they have to run for elections again.

5. India started growing fast under similar circumstances when IMF forced India to change its trade regime, exactly like how it is forcing Pakistan now.

Korea is the greatest example of this, it went from a mediocre economy to an powerhouse one. It was because the IMF forced Korea to adopted similar conditions that it is forcing Pakistan to adopt. that Korea is where it is at today.

He keeps talking about protectionism, but he doesn't realize that the world economy today doesn't work like it used to in the past.

 

[Creder]

We have no auto-industry just lobbies trying to milk this poor nation for every penny.

Id love to see automobiles up on that list.

 

[ShahidT]

as long as it is equal and fair. not asking for too much, despite being 7 times smaller nation. just be equitable in market access/tariffs, etc. but for that hindus need to give up their miser nature

 

[Chak Bamu]

I have no problem with trade liberalization with India.

1. Kashmir does not matter or figure in this. Enmity with India can not be a factor in trade.
2. Protection to and for Industry is also baseless.
3. Pakistan has negotiated over a very long time and I doubt if anyone can say that our position would be weak.

My ONE and only concern is provision of cheap energy. If we are energy starved then we can not compete and we shall become no more than a market for Indian goods.

So, until we complete IP gas pipeline, Gadani power projects, Neelum-Jehlum project, and commission Chashma III & IV, we should not have free trade with India.

It would be better to wait three years, til 2017, than to cry next year for wrong timing of a basically correct decision.

 

[Contrarian]

Korea is the greatest example of this, it went from a mediocre economy to an powerhouse one. It was because the IMF forced Korea to adopted similar conditions that it is forcing Pakistan to adopt. that Korea is where it is at today.

He keeps talking about protectionism, but he doesn't realize that the world economy today doesn't work like it used to in the past.

Mercantile theory - that PakPriciples propounds has itself evolved now. It is no longer about stopping other's imports, its about exporting what is hard for other countries to.

As a matter of fact - Pakistan's trade deficit with India reduced in percentage terms after trading regime changed from a positive list to a negative list.

Frankly, the only reason I think Pakistan took this long is because many influential Pakistani's were profiting from the re-exporting of Indian goods from UAE to Pakistan after relabeling. They were earning substantial profits without doing anything. It created a very strong lobby for this in Pakistan and few wanted to rock the boat.

That said, you did read my concerns about the deal from the Indian side. I would prefer if the new GoI finalized the deal instead of the current one. Morally, the Govt has no right to enter into any multinational treaty at the absolute end of its tenure, There are barely 20 days left for elections - the mother of all electoral activities in entire Asia! Particularly in a situation where survey after survey indicates the current dispensation will be completely washed away in the coming elections.

My objection stems primarily from this - there is a set precedent for these kind of situations, I dont quite understand why Congress is going against it.

 

[PakPrinciples]

We have no auto-industry just lobbies trying to milk this poor nation for every penny.

Bro, Pakistan does have an auto industry.

Suzuki manufactures cars in Pakistan under Pak Suzuki Motors.

You also have Faw automobiles in conjunction with Al-Haj manufacturing trucks/vans in Pakistan:

However, no company is able to expand operations and transfer more technology and expertise as well as capital equipment, particularly to create parts locally, when Pakistan hasn't protected the auto industry from foreign competition that builds automobiles outside of the country and simply exports them to Pakistan and bypass tariffs and duties.

A very significant company for Pakistan was a completely domestic car manufacturer named Adam Motor Company that designed and manufactured the Revo city car, Boltoro 4x4 Jeep and the Econo/Super Trucks all within Pakistan. Unfortunately, the company went bust because without import barriers to protect it from foreign competition during it's early stages of development and without direct government investment (which included the government reneging on buying their cars for employees instead of expensive foreign built Toyota's and various other foreign name brands) to help it grow and acquire the capital equipment to expand operations (which would have made the car cheaper even though it was already the cheapest in the country when it originally rolled out) and manufacture of spare parts locally or funds to assist with paying for R&D (ex. to develop indigenous motor vehicle engines and better designs) how could it compete against the larger/better established brands?

Adam Revo:

Adam Boltoro 4x4 Jeep:

Adam Super Truck:

Again demonstrating we need import barriers to protect local manufacturers and industries from competition as well as investments into the companies which are supposed to be government led and the byproduct of tax revenue collection but has only happened under military rule.

You say why do local industries oppose the NDMA, it's because they want to protect their interests in their own market. It's called monopolization.

The whole rhetoric for supporting MFN/NDMA to India was that it was beneficial to Pakistan's industries virtually all of whom have come out saying that it wasn't so why give it?

It's a fact that "from the history of trade: protectionism makes you rich"
George Monbiot: One thing is clear from the history of trade: protectionism makes you rich | Comment is free | The Guardian

You're right the purpose of protectionism is to give local industries a monopoly over the domestic economy but the purpose of this is to help build a diverse set of industries and establish a strong industrial base then expand into exports.

You'd have to be an idiot to think Pakistani companies manufacturing locally and providing the large bulk, if not all, of the goods and services Pakistani consumers require is a bad thing.

Furthermore, monopolies formed by domestic industries does not lead to exploitation nor inequality. Domestic governments are always able to impose price controls on goods (ex. the Pakistani government already restricts how much retailers can sell sugar, wheat, etc... for as well as restricting exports of various agricultural products in order to ensure local demand is met first), governments can raise minimum wage laws and/or raise tax rates particularly on company profits which would increase government revenue to invest in further industrialization (which itself raises per capita incomes so consumers can pay for pricier goods) and allows the government provide greater access to basic social services (ex. free health care and education to reduce financial burdens on the population particularly the poor).

Korea is the greatest example of this, it went from a mediocre economy to an powerhouse one. It was because the IMF forced Korea to adopted similar conditions that it is forcing Pakistan to adopt. that Korea is where it is at today.

No, South Korea is a prime example of why protectionism works. This is why I have asked you to read Ha Joon-Chang's books (the man is South Korean). You need to stop commenting on issues you have no understanding of.


Ha-Joon Chang was born in '63 and grew up in South Korea as it emerged out of poverty so he knows better than anyone how it developed into the economy it is today and has an on the ground perspective others do not. South Korea was so protectionist they even taught school children to report anyone who was even seen smoking foreign cigarettes:

"The country’s obsession with economic development was fully reflected in our education. We learned that it was our patriotic duty to report anyone seen smoking foreign cigarettes. The country needed to use every bit of theforeign exchange earned from its exports in order to import machines and other inputs to develop better industries."
(Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, 2007, [pg. xiv])
​

South Korea developed under strict import bans/quotas, tariffs and duties to protect local industries during their initial years of development and prevent the loss of the foreign exchange they earned through exports which they put exclusively towards industrialization. Any and all foreign exchange they earned from their exports was put towards buying capital equipment not amenities like vegetable oil, tea, clothing, etc... which Pakistan is doing. He even describes stories of US military MRI's, which American soldiers considered trash, being regarded a delicacy to South Koreans and even horded by Korean officers to give as gifts because of how poor quality their food was in the 50s and 60s.

Simply look at South Koreas simple mean tariff rate as a % of all products which only goes back to the late 80s.

Here is a chart of South Korea’s simple mean tariff rate as a % of all manufactured goods (again only going back to the very late 80s). Had information been available going back to the 60s and 70s you'd have seen the mean tariff rate been even higher and that doesn't even take into account the fact they had strict import quota's and bans.

Tariff rates (i.e. import barriers) and import bans/quotas decreased over time as the country continued to industrialize but, as I've confirmed for a host of the words most developed economies, they initially very high to protect local industries from foreign competition.

In fact South Korea is actually increasing tariffs on primary products (i.e. primarily agricultural) which are the highest amongst the G-20 countries (India and Brazil come in second and third respectively):

Why?

It's most likely due to South Korea's agricultural productivity having significantly increased and with a declining population they're protecting their own agricultural sector from foreign competition not just to make themselves more self sufficient but also to avoid losing valuable foreign exchange:

FDI has been virtually non-existent in South Korea.

Here is a chart of FDI inflows (i.e. we aren't taking into account outflows) as a % of GDP for South Korea (far less than what went to China):

South Korea like virtually every successful economy today grew by investing in itself and strictly controlling imports limiting them, as much as possible, to solely bringing in capital equipment to advance their own industries (not personal consumption items and other luxuries). These countries did not develop on FDI

As I confirmed before investment money is almost completely sourced internally and comes from both domestic industry (whose profits increase with import barriers and through exports) and from government led investment using tax/non-tax revenues. Pakistan's government has unequivocally failed to do its job when it comes to tax collection and forcing compliance. They have the power (ex. even when Musharraf lowered taxes he was still able to reduce the deficit by forcing increased compliance which lead to increased revenue collection).


The IMF development model seeks to turn Pakistan into a Banana Republic. What they're doing is demanding Pakistan immediately focus on exports and open up its markets to imports (which results in a loss of foreign exchange) before it's built up a strong competitive industrial base and has diversified its economy so it isn't relying on exports of just one or two industries (i.e. textiles and agriculture) and then turning around and importing heavy industrial equipment, electronics, chemicals and pharmaceutical products which are far more valuable and would otherwise lead to massive trade deficits (i.e. you are loosing more foreign exchange than you're earning). Pakistan needs protection of local industry to limit the import of goods that would rob the country of foreign exchange and that isn't going to happen unless there are import barriers (i.e. tariffs and duties) to protect local industries and investments by the government into local manufacturing/industries to rapidly close the gap between us and foreign competition.

All trade is NOT good. Imports are bad and exports are good. Generally the only times Pakistan should be importing is if it needs capital equipment/technology to expand/upgrade its own industrial capacity and assist in diversifying its industries as well as only raw materials we need to create value added products to sell back to the world. However, as far as capital equipment is concerned we can already get cheaper and better products from China and in cases where what they produce isn't sufficient we'd have to source ti from Europe/US anyways like we currently do. Importing personal consumption items (ex. food, clothing, computers for home use, automobiles, etc...) robs the nation of valuable foreign exchange that would otherwise go towards assisting in rapid industrialization and increased self sufficiency (ex. creating our own electronics and heavy industry to service both our needs and for export). The goal is to be able to eventually completely replace all imports.

My ONE and only concern is provision of cheap energy

So, until we complete IP gas pipeline

Cheap electricity comes from domestic investment in electricity production and the money for those investments come from taxes.

Nuclear is probably the best/cheapest of all reliable year round base load energy options but they require significant investment and time so without tax revenue collection Pakistan hasn't been able to invest in the energy source. Natural gas fossil fuel plants are a poor option until Pakistan can take advantage of its own unconventional natural gas deposits.

Pakistan will never get “cheap energy” until it starts collecting taxes and invests in itself as I've been saying this whole time.

The IP pipeline is worthless particularly until:

1. The Pakistani government does its job and raises tax revenues in order to subsidize the cost of electricity produced from the gas (at the price Iran was offering for the gas, about $14/mmbtu which should have increased by now, the final cost of electricity produced would be about USD $0.19 to $0.21/KWh (around what I believe Pakistan already pays IPP's in the country) which would need to be brought down via government subsidies to $0.08/KWh at least for manufacturers and other businesses).
   
   
2. Iran delinks the price of their gas from oil (which they're incapable of doing as I've explained further below)

It's far better for the government to put money towards our unconventional natural gas (tight gas, shale gas and coal bed methane), lignite deposits and shale oil. Our economically recoverable shale gas reserves are more than 5 times larger than the current conventional natural gas deposits and as technology improves we'll be able to unlock even more of our total shale gas deposit. ENI Pakistan has confirmed they can supply our shale gas at $14/mmbtu which is the same as what Iran offered for it's natural gas (however our gas is more economical for reasons I'll state further below). Pakistan has just begun to utilize its tight gas deposits (costs us $6/mmbtu with economically recoverable reserves larger than our conventional natural gas deposits). Coal bed methane deposits estimates put it at almost the same size as our current conventional natural gas deposits and hopefully we will soon start exploiting the large lignite deposits that exist in the country.

There are specific advantages to harvesting domestic unconventional natural gas, particularly shale gas, in comparison to importing from Iran or elsewhere that makes our gas cheaper:

1. Job Creation: Pakistani administrators, rig operators, mechanics/maintenance staff, engineers, etc... all earn salaries from the extraction of our own unconventional natural gas, lignite and shale oil deposits which improves the standard of living of our people and generates revenues for the government in the form of direct taxes (particularly personal income tax) versus no immediate job creation if we were to import our gas from Iran
   
   
2. Royalties: Pakistan should receive about 12.5% of the wellhead value of the gas produced back in the form of royalties
   
   
3. Corporate Income Tax: Up to 40% of ENI's corporate profits from the sale of that gas comes back in the form of taxes
   
   
4. Money generated from lease of land: Land needs to be leased by the company that plans to drill for unconventional natural gas, lignite and shale oil.
   
   
5. Energy security/independence: Energy security is extremely important when it comes to advancing Pakistan's own strategic interests regionally and globally so it's always better if we can utilize our own resources wherever possible.

From what I've read regarding various US shale deposits Pakistan's break even price for shale gas shouldn't be more than $6/mmbtu (No country whether it be Iran, Qatar, Indonesia, etc... is capable of matching that).

Oil/gas prices are not going to drop such that shale gas/oil is made uneconomical at least not into the well foreseeable future until major oil/gas producers diversify their economies (this is why the US can produce shale gas for around $5/mmbtu while a country like Iran links its gas prices to oil since both its economy and government revenue are so heavily dependent on oil/gas sector revenues). The issue here is that the people making comments regarding the infeasibility of shale gas in relation to oil aren't looking at the bigger picture they simply see pricing as a byproduct of trading crude oil and natural gas futures.

• Let's take Saudi Arabia as an example. As per OPEC in 2013 the oil/gas sector accounted for 50% of the countries total GDP of $727.31 billion USD. In 2013 the country produced 9763000 bbl/day of crude oil (or 3563495000 barrels for the year). Now granted they produce some petroleum products (of which about half is exported) from the crude oil produced which differ in pricing from raw crude but for simplicity sake we'll just look at how much crude oil they produce in general (since the bulk of what they export is crude). That means each barrel of crude oil the country produces needs to fetch a price of about $100/bbl in order for the country to maintain it's current standard of living and GDP per capita (or increasingly produce/export value added products like gasoline, diesel, etc...)
  
  
• Take Iran as another example. Though it's a little more difficult to calculate for it considering I found it difficult to locate their budgeting information the oil and gas sector is stated to contribute about 30% of the countries GDP (Iran’s sale of oil and gas alone make up 20% of GDP and 75% of exports as per OPEC). Iranian website themselves confirm that for the fiscal year 1392 their budget required oil price to be at $95/bbl while APICORP states that Iran requires oil prices at $144/bbl (and Saudi Arabia at $98/bbl – close to what I predicted at $100/bbl) to breakeven. Just a quick note at $95/bbl for oil the price for natural gas (based on energy equivalence to a barrel of oil) would need to be set at almost $17/mmbtu (very close to what Qatar and Indonesia price their LNG for which is currently set at between $18 to $19/mmbtu) and that is assuming they aren't subsiding gas for their domestic population which requires higher prices set for the gas/oil that is exported.
  Iran Needs Higher Oil Price for 2013 Budget, Apicorp Says - Bloomberg
  Iranian budget calculated according to revenues of $95 per barrel of oil « Iran Daily Brief
  
  
• You can try the above calculation for any of the OPEC countries, even major non-OPEC oil/gas producers (ex. Russia and Turkmenistan) and you'll come to the same conclusion that none of them are competitive against Pakistan's own domestic unconventional natural gas and oil deposits. Furthermore, as more and more shale is exploited and profits generated, companies are increasingly spending more money on R&D to improve drills, fracking fluids and techniques to harvest more of the available resource making them cheaper and cheaper in comparison to foreign oil/gas.

This is why Pakistans unconventional natural gas and oil deposits are crucial to meeting the countries future energy requirements.

1. Kashmir does not matter or figure in this. Enmity with India can not be a factor in trade.

How does Kashmir not matter or figure into this?

Worthless fiat currency or any worldly treasure is never more valuable then the blood of our countrymen and liberation of our ancestral lands.

What incentive is there for India to end it's occupation of Kashmir and its murder of our people in the occupied territory?

What incentive is there for India to end its policy of building dams on Pakistan's rivers particularly when they're doing so on the occupied territory of Kashmir?

Are you honestly telling me that if someone kills members of your family and forcefully occupies your own house then turns around and offers to do business with you you're going to put out your hand out like a coward, smile and say “yes”?

A country is no more than an extension of it's people and the bonds of solidarity that they share which keep it together to accomplish a goal they're striving for (i.e. a true Islamic Republic).

When the US placed sanctions on Pakistan as it pursued a nuclear deterrent (after bribery and threats weren't enough) the country was unswayed and Z.A. Bhutto stood before the UN in New York to confirm the countries determination citing that the people would rather “eat grass” then to look the other way on Kashmir or abandon our nuclear program. That sacrifice/unwavering resolution made the nation prouder, stronger and safer.

Indian goods will flood Pakistani markets and ruin local producers: WTO provisions allow members to impose safeguards restricting imports (for temporary periods) should such imports unfairly or seriously injure domestic producers.

What safeguards are you referring to?

The only “safeguard” I'm aware of is an NTB (non-tariff barrier) known as anti-dumping practices. Anti-dumping practices do not limit how much cheap shit India can export into Pakistan what it makes unlawful is for India to export a goods into Pakistan at a price lower than what they sell it for in India or below its cost of production.

How does this help?

India provides its industries with large subsidies and it has a market of scale that allows it to produce goods cheaper. Furthermore, our country has laws that protect workers such as set a minimum wage which India has never implemented allowing them to abuse their labourers and produce even cheaper goods.

3. Pakistan has negotiated over a very long time and I doubt if anyone can say that our position would be weak.

The exact same arguments being made in favor of MFN/NDMA to India were being made back between 2005 to 2007 in favor of Free Trade with China and now our trade deficit with them has increased by 53% with none of the proposed benefits ever panning out.

Most politicians don't even pay their taxes and are noted as being morbidly corrupt (there were even cases pending against Zardari and Benazir stemming from charges of money laundering via Swiss banks) not to mention they regularly backtrack on virtually every campaign promise they ever make (because those promises are nothing but lies) yet you honestly think they'll do what's right for Pakistan?

The government is pushing for MFN/NDMA for India because the IMF is demanding we give it to them and to accomplish this they're literally bribing the government with loan guarantees which the country doesn't need. In fact the government can raise more money if they simply collect tax revenue instead of avoiding the issue as they've continued to do. This was never about benefiting Pakistan or our industries and history proves protectionism makes you rich (South Korea did it, the US did it, Britain did it, etc...). This is about the US trying to protect India using the IMF as it has for decades to push its foreign policy agenda on others.

Read my previous posts which more thoroughly covers the dismal state of Pakistani tax revenue collection and unsustainable spending practices unless those tax revenues are collected. Relying on IMF loans or allowing politicians to sell out the country for US “AID” is the worst thing Pakistan can do particularly when those loans and the “AID” come with the kind of conditions they're imposing because they'll seriously damage the economy national interests of the country.

• India and Pakistan’s political tensions will defeat smooth trade efforts: History suggests old enmities can be overcome by trade. Consider the end of the China-Taiwan fray, and the concomitant increase in trade from $8.1 billion in 1991 to $100 billion in 2010, as well as the US-Vietnam bilateral trade agreement in 2001, resulting in the US being the leading investor in Vietnam today.

The tension that exists between China and Taiwan originates from the KMT who ran to Taiwan to setup the government following their defeat in the civil war on the mainland. This isn't a conflict rooted in ethnic or religious tensions between their respective communities not has it been ongoing for decades if not millenniums. However, even with that said recent Taiwanese-Chinese trade deals have actually set off mass protests and violent confrontations including a student seizure of the countries parliament?

Taiwan's issues with China is nothing compared to the hate that exists between Pakistan and India:

1. The main reason Pakistan was even occupied by the British empire is because filthy Hindu animals sided with them and the French against the Muslim rule of the Mughal empire. This robbed Pakistan of almost 90 years of economic development.
   
   
2. Pakistani's aren't going to forget the 1+ million Muslims who were killed just for trying to migrate to Pakistan following our independence from the British Raj/British India.
   
   
3. After independence India and Pakistan have fought three wars and Pakistan has lost too many good men/women to Indian brutality/savagery and that wasn't so a corrupt government can give them trade agreements for their continued aggression.
   
   
4. India currently occupies Pakistani territory (Kashmir) and we haven't forgotten the tens of thousands of our people they've murdered there and continue to kill there (even for something as trivial as cheering on the Pakistani cricket team).
   
   
5. India has and continues to support the BLA and just as they supported Tibetan guerrillas alongside the CIA against China between '59 and '63 and the Mukti Bahini against Pakistan in '71.

US-Vietnam tensions were completely different. The US' main concern with Vietnam centered around the introduction of communism to the country which led to them fighting a single 10 year war while our conflict with these pagan animals in India have been ongoing for centuries and more likely a few millenniums. However, that threat was largely negated following the downfall of the USSR which resulted in the eventual collapse of communism in Vietnam. Warming relations between the two countries follows relations between Vietnam and China souring over regional differences (ex. South China Sea) requiring them to seek a balancing force to try and protect their own interests and the US seeking allies in its continued acts of aggression against China since the late 50's. More over who were the Vietnamese going to export to? Their industry hasn't developed enough to export to regional economies (ex. are they going to export textiles to a country like China which itself has one of the largest textile industries in the world?). Their main export market, based on the industries available to them, was the US and the EU (the same as it was for South Korea in the 50s, 60s and 70s) and the technology they required to industrialize would mainly come from the US/EU.

 

[Alfa-Fighter]

Bro, Pakistan does have an auto industry.

Suzuki manufactures cars in Pakistan under Pak Suzuki Motors.

You also have Faw automobiles in conjunction with Al-Haj manufacturing trucks/vans in Pakistan:

Well buddy , in PAK , Euro-II engines used while in India is moving to EURO-V in 2015. So Pak Auto industry is much backwards in terms of technology.

Bro, Pakistan does have an auto industry.

Taiwan's issues with China is nothing compared to the hate that exists between Pakistan and India:

1. The main reason Pakistan was even occupied by the British empire is because filthy Hindu animals sided with them and the French against the Muslim rule of the Mughal empire. This robbed Pakistan of almost 90 years of economic development.
   
   
2. Pakistani's aren't going to forget the 1+ million Muslims who were killed just for trying to migrate to Pakistan following our independence from the British Raj/British India.
   
   
3. After independence India and Pakistan have fought three wars and Pakistan has lost too many good men/women to Indian brutality/savagery and that wasn't so a corrupt government can give them trade agreements for their continued aggression.
   
   
4. India currently occupies Pakistani territory (Kashmir) and we haven't forgotten the tens of thousands of our people they've murdered there and continue to kill there (even for something as trivial as cheering on the Pakistani cricket team).
   
   
5. India has and continues to support the BLA and just as they supported Tibetan guerrillas alongside the CIA against China between '59 and '63 and the Mukti Bahini against Pakistan in '71.

1) Well The So called PAKISTAN is based on Hindu land , which is given to muslims . Hindu Lands was till Afghanistan , where buddha statue was made even before the Muslim religion was born.

2) Well so called Muslims also killed Hindu and sikh, First muslims killed sikh in train and then sikh/ hindu retaliate.

3) Most of the time PAK is ruled by Army and all war is fought with India by PAK army rule and by PAK army only.

4) BLA support only in imagination , till now no proof is present by PAK govt to world , only by retreating dreams things cannot become true. Proof please.

 

[That Guy]

Bro, Pakistan does have an auto industry.

Suzuki manufactures cars in Pakistan under Pak Suzuki Motors.

You also have Faw automobiles in conjunction with Al-Haj manufacturing trucks/vans in Pakistan:

However, no company is able to expand operations and transfer more technology and expertise as well as capital equipment, particularly to create parts locally, when Pakistan hasn't protected the auto industry from foreign competition that builds automobiles outside of the country and simply exports them to Pakistan and bypass tariffs and duties.

A very significant company for Pakistan was a completely domestic car manufacturer named Adam Motor Company that designed and manufactured the Revo city car, Boltoro 4x4 Jeep and the Econo/Super Trucks all within Pakistan. Unfortunately, the company went bust because without import barriers to protect it from foreign competition during it's early stages of development and without direct government investment (which included the government reneging on buying their cars for employees instead of expensive foreign built Toyota's and various other foreign name brands) to help it grow and acquire the capital equipment to expand operations (which would have made the car cheaper even though it was already the cheapest in the country when it originally rolled out) and manufacture of spare parts locally or funds to assist with paying for R&D (ex. to develop indigenous motor vehicle engines and better designs) how could it compete against the larger/better established brands?

Adam Revo:

Adam Boltoro 4x4 Jeep:

Adam Super Truck:

Again demonstrating we need import barriers to protect local manufacturers and industries from competition as well as investments into the companies which are supposed to be government led and the byproduct of tax revenue collection but has only happened under military rule.



The whole rhetoric for supporting MFN/NDMA to India was that it was beneficial to Pakistan's industries virtually all of whom have come out saying that it wasn't so why give it?

It's a fact that "from the history of trade: protectionism makes you rich"
George Monbiot: One thing is clear from the history of trade: protectionism makes you rich | Comment is free | The Guardian

You're right the purpose of protectionism is to give local industries a monopoly over the domestic economy but the purpose of this is to help build a diverse set of industries and establish a strong industrial base then expand into exports.

You'd have to be an idiot to think Pakistani companies manufacturing locally and providing the large bulk, if not all, of the goods and services Pakistani consumers require is a bad thing.

Furthermore, monopolies formed by domestic industries does not lead to exploitation nor inequality. Domestic governments are always able to impose price controls on goods (ex. the Pakistani government already restricts how much retailers can sell sugar, wheat, etc... for as well as restricting exports of various agricultural products in order to ensure local demand is met first), governments can raise minimum wage laws and/or raise tax rates particularly on company profits which would increase government revenue to invest in further industrialization (which itself raises per capita incomes so consumers can pay for pricier goods) and allows the government provide greater access to basic social services (ex. free health care and education to reduce financial burdens on the population particularly the poor).



No, South Korea is a prime example of why protectionism works. This is why I have asked you to read Ha Joon-Chang's books (the man is South Korean). You need to stop commenting on issues you have no understanding of.


Ha-Joon Chang was born in '63 and grew up in South Korea as it emerged out of poverty so he knows better than anyone how it developed into the economy it is today and has an on the ground perspective others do not. South Korea was so protectionist they even taught school children to report anyone who was even seen smoking foreign cigarettes:

"The country’s obsession with economic development was fully reflected in our education. We learned that it was our patriotic duty to report anyone seen smoking foreign cigarettes. The country needed to use every bit of theforeign exchange earned from its exports in order to import machines and other inputs to develop better industries."
(Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, 2007, [pg. xiv])
​

South Korea developed under strict import bans/quotas, tariffs and duties to protect local industries during their initial years of development and prevent the loss of the foreign exchange they earned through exports which they put exclusively towards industrialization. Any and all foreign exchange they earned from their exports was put towards buying capital equipment not amenities like vegetable oil, tea, clothing, etc... which Pakistan is doing. He even describes stories of US military MRI's, which American soldiers considered trash, being regarded a delicacy to South Koreans and even horded by Korean officers to give as gifts because of how poor quality their food was in the 50s and 60s.

Simply look at South Koreas simple mean tariff rate as a % of all products which only goes back to the late 80s.

Here is a chart of South Korea’s simple mean tariff rate as a % of all manufactured goods (again only going back to the very late 80s). Had information been available going back to the 60s and 70s you'd have seen the mean tariff rate been even higher and that doesn't even take into account the fact they had strict import quota's and bans.

Tariff rates (i.e. import barriers) and import bans/quotas decreased over time as the country continued to industrialize but, as I've confirmed for a host of the words most developed economies, they initially very high to protect local industries from foreign competition.

In fact South Korea is actually increasing tariffs on primary products (i.e. primarily agricultural) which are the highest amongst the G-20 countries (India and Brazil come in second and third respectively):

Why?

It's most likely due to South Korea's agricultural productivity having significantly increased and with a declining population they're protecting their own agricultural sector from foreign competition not just to make themselves more self sufficient but also to avoid losing valuable foreign exchange:

FDI has been virtually non-existent in South Korea.

Here is a chart of FDI inflows (i.e. we aren't taking into account outflows) as a % of GDP for South Korea (far less than what went to China):

South Korea like virtually every successful economy today grew by investing in itself and strictly controlling imports limiting them, as much as possible, to solely bringing in capital equipment to advance their own industries (not personal consumption items and other luxuries). These countries did not develop on FDI

As I confirmed before investment money is almost completely sourced internally and comes from both domestic industry (whose profits increase with import barriers and through exports) and from government led investment using tax/non-tax revenues. Pakistan's government has unequivocally failed to do its job when it comes to tax collection and forcing compliance. They have the power (ex. even when Musharraf lowered taxes he was still able to reduce the deficit by forcing increased compliance which lead to increased revenue collection).


The IMF development model seeks to turn Pakistan into a Banana Republic. What they're doing is demanding Pakistan immediately focus on exports and open up its markets to imports (which results in a loss of foreign exchange) before it's built up a strong competitive industrial base and has diversified its economy so it isn't relying on exports of just one or two industries (i.e. textiles and agriculture) and then turning around and importing heavy industrial equipment, electronics, chemicals and pharmaceutical products which are far more valuable and would otherwise lead to massive trade deficits (i.e. you are loosing more foreign exchange than you're earning). Pakistan needs protection of local industry to limit the import of goods that would rob the country of foreign exchange and that isn't going to happen unless there are import barriers (i.e. tariffs and duties) to protect local industries and investments by the government into local manufacturing/industries to rapidly close the gap between us and foreign competition.

All trade is NOT good. Imports are bad and exports are good. Generally the only times Pakistan should be importing is if it needs capital equipment/technology to expand/upgrade its own industrial capacity and assist in diversifying its industries as well as only raw materials we need to create value added products to sell back to the world. However, as far as capital equipment is concerned we can already get cheaper and better products from China and in cases where what they produce isn't sufficient we'd have to source ti from Europe/US anyways like we currently do. Importing personal consumption items (ex. food, clothing, computers for home use, automobiles, etc...) robs the nation of valuable foreign exchange that would otherwise go towards assisting in rapid industrialization and increased self sufficiency (ex. creating our own electronics and heavy industry to service both our needs and for export). The goal is to be able to eventually completely replace all imports.




Cheap electricity comes from domestic investment in electricity production and the money for those investments come from taxes.

Nuclear is probably the best/cheapest of all reliable year round base load energy options but they require significant investment and time so without tax revenue collection Pakistan hasn't been able to invest in the energy source. Natural gas fossil fuel plants are a poor option until Pakistan can take advantage of its own unconventional natural gas deposits.

Pakistan will never get “cheap energy” until it starts collecting taxes and invests in itself as I've been saying this whole time.

The IP pipeline is worthless particularly until:

1. The Pakistani government does its job and raises tax revenues in order to subsidize the cost of electricity produced from the gas (at the price Iran was offering for the gas, about $14/mmbtu which should have increased by now, the final cost of electricity produced would be about USD $0.19 to $0.21/KWh (around what I believe Pakistan already pays IPP's in the country) which would need to be brought down via government subsidies to $0.08/KWh at least for manufacturers and other businesses).
   
   
2. Iran delinks the price of their gas from oil (which they're incapable of doing as I've explained further below)

It's far better for the government to put money towards our unconventional natural gas (tight gas, shale gas and coal bed methane), lignite deposits and shale oil. Our economically recoverable shale gas reserves are more than 5 times larger than the current conventional natural gas deposits and as technology improves we'll be able to unlock even more of our total shale gas deposit. ENI Pakistan has confirmed they can supply our shale gas at $14/mmbtu which is the same as what Iran offered for it's natural gas (however our gas is more economical for reasons I'll state further below). Pakistan has just begun to utilize its tight gas deposits (costs us $6/mmbtu with economically recoverable reserves larger than our conventional natural gas deposits). Coal bed methane deposits estimates put it at almost the same size as our current conventional natural gas deposits and hopefully we will soon start exploiting the large lignite deposits that exist in the country.

There are specific advantages to harvesting domestic unconventional natural gas, particularly shale gas, in comparison to importing from Iran or elsewhere that makes our gas cheaper:

1. Job Creation: Pakistani administrators, rig operators, mechanics/maintenance staff, engineers, etc... all earn salaries from the extraction of our own unconventional natural gas, lignite and shale oil deposits which improves the standard of living of our people and generates revenues for the government in the form of direct taxes (particularly personal income tax) versus no immediate job creation if we were to import our gas from Iran
   
   
2. Royalties: Pakistan should receive about 12.5% of the wellhead value of the gas produced back in the form of royalties
   
   
3. Corporate Income Tax: Up to 40% of ENI's corporate profits from the sale of that gas comes back in the form of taxes
   
   
4. Money generated from lease of land: Land needs to be leased by the company that plans to drill for unconventional natural gas, lignite and shale oil.
   
   
5. Energy security/independence: Energy security is extremely important when it comes to advancing Pakistan's own strategic interests regionally and globally so it's always better if we can utilize our own resources wherever possible.

From what I've read regarding various US shale deposits Pakistan's break even price for shale gas shouldn't be more than $6/mmbtu (No country whether it be Iran, Qatar, Indonesia, etc... is capable of matching that).

Oil/gas prices are not going to drop such that shale gas/oil is made uneconomical at least not into the well foreseeable future until major oil/gas producers diversify their economies (this is why the US can produce shale gas for around $5/mmbtu while a country like Iran links its gas prices to oil since both its economy and government revenue are so heavily dependent on oil/gas sector revenues). The issue here is that the people making comments regarding the infeasibility of shale gas in relation to oil aren't looking at the bigger picture they simply see pricing as a byproduct of trading crude oil and natural gas futures.

• Let's take Saudi Arabia as an example. As per OPEC in 2013 the oil/gas sector accounted for 50% of the countries total GDP of $727.31 billion USD. In 2013 the country produced 9763000 bbl/day of crude oil (or 3563495000 barrels for the year). Now granted they produce some petroleum products (of which about half is exported) from the crude oil produced which differ in pricing from raw crude but for simplicity sake we'll just look at how much crude oil they produce in general (since the bulk of what they export is crude). That means each barrel of crude oil the country produces needs to fetch a price of about $100/bbl in order for the country to maintain it's current standard of living and GDP per capita (or increasingly produce/export value added products like gasoline, diesel, etc...)
  
  
• Take Iran as another example. Though it's a little more difficult to calculate for it considering I found it difficult to locate their budgeting information the oil and gas sector is stated to contribute about 30% of the countries GDP (Iran’s sale of oil and gas alone make up 20% of GDP and 75% of exports as per OPEC). Iranian website themselves confirm that for the fiscal year 1392 their budget required oil price to be at $95/bbl while APICORP states that Iran requires oil prices at $144/bbl (and Saudi Arabia at $98/bbl – close to what I predicted at $100/bbl) to breakeven. Just a quick note at $95/bbl for oil the price for natural gas (based on energy equivalence to a barrel of oil) would need to be set at almost $17/mmbtu (very close to what Qatar and Indonesia price their LNG for which is currently set at between $18 to $19/mmbtu) and that is assuming they aren't subsiding gas for their domestic population which requires higher prices set for the gas/oil that is exported.
  Iran Needs Higher Oil Price for 2013 Budget, Apicorp Says - Bloomberg
  Iranian budget calculated according to revenues of $95 per barrel of oil « Iran Daily Brief
  
  
• You can try the above calculation for any of the OPEC countries, even major non-OPEC oil/gas producers (ex. Russia and Turkmenistan) and you'll come to the same conclusion that none of them are competitive against Pakistan's own domestic unconventional natural gas and oil deposits. Furthermore, as more and more shale is exploited and profits generated, companies are increasingly spending more money on R&D to improve drills, fracking fluids and techniques to harvest more of the available resource making them cheaper and cheaper in comparison to foreign oil/gas.

This is why Pakistans unconventional natural gas and oil deposits are crucial to meeting the countries future energy requirements.



How does Kashmir not matter or figure into this?

Worthless fiat currency or any worldly treasure is never more valuable then the blood of our countrymen and liberation of our ancestral lands.

What incentive is there for India to end it's occupation of Kashmir and its murder of our people in the occupied territory?

What incentive is there for India to end its policy of building dams on Pakistan's rivers particularly when they're doing so on the occupied territory of Kashmir?

Are you honestly telling me that if someone kills members of your family and forcefully occupies your own house then turns around and offers to do business with you you're going to put out your hand out like a coward, smile and say “yes”?

A country is no more than an extension of it's people and the bonds of solidarity that they share which keep it together to accomplish a goal they're striving for (i.e. a true Islamic Republic).

When the US placed sanctions on Pakistan as it pursued a nuclear deterrent (after bribery and threats weren't enough) the country was unswayed and Z.A. Bhutto stood before the UN in New York to confirm the countries determination citing that the people would rather “eat grass” then to look the other way on Kashmir or abandon our nuclear program. That sacrifice/unwavering resolution made the nation prouder, stronger and safer.



What safeguards are you referring to?

The only “safeguard” I'm aware of is an NTB (non-tariff barrier) known as anti-dumping practices. Anti-dumping practices do not limit how much cheap shit India can export into Pakistan what it makes unlawful is for India to export a goods into Pakistan at a price lower than what they sell it for in India or below its cost of production.

How does this help?

India provides its industries with large subsidies and it has a market of scale that allows it to produce goods cheaper. Furthermore, our country has laws that protect workers such as set a minimum wage which India has never implemented allowing them to abuse their labourers and produce even cheaper goods.



The exact same arguments being made in favor of MFN/NDMA to India were being made back between 2005 to 2007 in favor of Free Trade with China and now our trade deficit with them has increased by 53% with none of the proposed benefits ever panning out.

Most politicians don't even pay their taxes and are noted as being morbidly corrupt (there were even cases pending against Zardari and Benazir stemming from charges of money laundering via Swiss banks) not to mention they regularly backtrack on virtually every campaign promise they ever make (because those promises are nothing but lies) yet you honestly think they'll do what's right for Pakistan?

The government is pushing for MFN/NDMA for India because the IMF is demanding we give it to them and to accomplish this they're literally bribing the government with loan guarantees which the country doesn't need. In fact the government can raise more money if they simply collect tax revenue instead of avoiding the issue as they've continued to do. This was never about benefiting Pakistan or our industries and history proves protectionism makes you rich (South Korea did it, the US did it, Britain did it, etc...). This is about the US trying to protect India using the IMF as it has for decades to push its foreign policy agenda on others.

Read my previous posts which more thoroughly covers the dismal state of Pakistani tax revenue collection and unsustainable spending practices unless those tax revenues are collected. Relying on IMF loans or allowing politicians to sell out the country for US “AID” is the worst thing Pakistan can do particularly when those loans and the “AID” come with the kind of conditions they're imposing because they'll seriously damage the economy national interests of the country.



The tension that exists between China and Taiwan originates from the KMT who ran to Taiwan to setup the government following their defeat in the civil war on the mainland. This isn't a conflict rooted in ethnic or religious tensions between their respective communities not has it been ongoing for decades if not millenniums. However, even with that said recent Taiwanese-Chinese trade deals have actually set off mass protests and violent confrontations including a student seizure of the countries parliament?

Taiwan's issues with China is nothing compared to the hate that exists between Pakistan and India:

1. The main reason Pakistan was even occupied by the British empire is because filthy Hindu animals sided with them and the French against the Muslim rule of the Mughal empire. This robbed Pakistan of almost 90 years of economic development.
   
   
2. Pakistani's aren't going to forget the 1+ million Muslims who were killed just for trying to migrate to Pakistan following our independence from the British Raj/British India.
   
   
3. After independence India and Pakistan have fought three wars and Pakistan has lost too many good men/women to Indian brutality/savagery and that wasn't so a corrupt government can give them trade agreements for their continued aggression.
   
   
4. India currently occupies Pakistani territory (Kashmir) and we haven't forgotten the tens of thousands of our people they've murdered there and continue to kill there (even for something as trivial as cheering on the Pakistani cricket team).
   
   
5. India has and continues to support the BLA and just as they supported Tibetan guerrillas alongside the CIA against China between '59 and '63 and the Mukti Bahini against Pakistan in '71.

US-Vietnam tensions were completely different. The US' main concern with Vietnam centered around the introduction of communism to the country which led to them fighting a single 10 year war while our conflict with these pagan animals in India have been ongoing for centuries and more likely a few millenniums. However, that threat was largely negated following the downfall of the USSR which resulted in the eventual collapse of communism in Vietnam. Warming relations between the two countries follows relations between Vietnam and China souring over regional differences (ex. South China Sea) requiring them to seek a balancing force to try and protect their own interests and the US seeking allies in its continued acts of aggression against China since the late 50's. More over who were the Vietnamese going to export to? Their industry hasn't developed enough to export to regional economies (ex. are they going to export textiles to a country like China which itself has one of the largest textile industries in the world?). Their main export market, based on the industries available to them, was the US and the EU (the same as it was for South Korea in the 50s, 60s and 70s) and the technology they required to industrialize would mainly come from the US/EU.

Yeah, you replied to a comment 3 months after. I really have no more interest in this topic, so I'm not going to bother giving a proper reply, mostly because it doesn't matter. All I'll say is that you're wrong, and you keep repeating the same tired old arguments, even though I and many others have already addressed them.