MUSHTAQ GHUMMAN

ISLAMABAD: The Ministry of Commerce (MoC) has sought proposals from all the concerned ministries to devise a joint strategy to deal with United States (US) reciprocal trade and tariffs as a delegation led by Commerce Ministry is to visit Washington in this regard, well informed sources told Business Recorder.

The United States has imposed a 29 per cent reciprocal tariff on imports from Pakistan, driven by its $2.99 billion trade deficit with Pakistan.

The United States is a critical market for Pakistan’s exports, particularly for textiles and apparel. In 2024, total exports to the US stood at $5.12 billion, of which $3.93 billion, or 76.7 per cent, were textile and apparel.

Commerce Ministry, sources said, has cited reference to the directives of Prime Minister Shehbaz Sharif, whereby, a working group has been constituted under the convener-ship of the Secretary Commerce, Jawad Paul. and Steering Committee under the leadership of the federal finance minister.

Commerce Ministry is actively coordinating with various Ministries, Departments and relevant private stakeholders to devise a unified strategy to engage with US authorities.

The Commerce Ministry is of the view that in this context, all line ministries and departments have been requested to share their ongoing discussions, proposals and relevant inputs with the Ministry of Commerce and to avoid and direct communication or engagement with US counterparts (both the US and US Embassy in Islamabad) unless the proposals have been reviewed and cleared by the MoC (Working Group and Steering Committee). This process is vital to ensure coherence and alignment in Pakistan’s diplomatic and trade efforts.

According to the Commerce Ministry, a delegation under the leadership of Secretary Commerce will soon be engaging with the US authorities for consultation and negotiations.

“It is essential that any issues or concerns related to the concerned ministries be channelled through the Ministry of Commerce for proper coordination and representation during these discussions,” said the Commerce Ministry.

It has further stated that understanding of relevant stakeholders in ensuring a unified and strategic approach in all matters related to US engagements is necessary.

Meanwhile, Commerce Minister Jam Kamal Khan held a meeting with high-level exporters to discuss strategy on US tariff policies. Representatives from various sectors including textiles, garments, leather, surgical, rice, fruits and vegetables participated in the meeting.

According to an official statement, the private sector appreciated dynamic role of Commerce Ministry with respect to US.

Talking to the delegation, the Commerce Minister stated that a comprehensive strategy is being prepared for trade cooperation with US in which private sector will play important role in export strategy. They extended full cooperation with government.

“Our Trade and Investment Officers (TIOs) and diplomats are in constant contact in the US,” said Commerce Ministry, assigned to coordinate with the private sector so that their concerns are taken care of for the unified strategy to be adopted with respect to the US.

The All Pakistan Textile Manufacturers Association (ATPMA) is of the view that beyond addressing the specific concerns highlighted by the United States, Pakistan can take targeted steps to modestly increase imports from the US without undermining its trade balance. Pakistan’s $3 billion trade surplus with the US represents just 0.25 per cent of the US global trade deficit, but it is an economic lifeline for Pakistan, supporting external stability and employment in key sectors. In this context, limited but strategic import substitution favouring US imports can be pursued to support a more balanced trade relationship and ease tariff pressures, while remaining within Pakistan’s foreign exchange constraints.

The APTMA says that two areas offer feasible options: (i) US cotton which is already duty-free and can substitute imports from Brazil/ Afghanistan. To enable demand, EFS anomalies disadvantaging local yarn must be resolved; and (ii) allowing direct imports of LNG by the textile sector would reduce energy costs and support US exports, without harming Pakistan’s trade position. Regulatory approval is required.

The 2025 National Trade Estimates Report on Foreign Trade Barriers says that the US companies cite corruption and a weak judicial system as substantial disincentives to foreign investment in Pakistan. Pakistan’s federal anticorruption agency, the National Accountability Bureau (NAB), provides a legal framework to combat corruption. However, business and civil society stakeholders have expressed reservations about the body’s effectiveness and perceived politicization. The NAB’s broad exercise of its remit to investigate government operations and business dealings have led to a number of cases where it reopened established policies and targeted reputable businesses, potentially dissuading foreign investors and making officials reticent to exercise authority.

Pakistan drafted an Electronic Commerce Policy Framework in August 2019, with the aim of increasing exports and strengthening the digital economy. The framework, adopted in January 2022 contains some restrictive requirements. For example, the policy contains licensing, registration and local presence requirements, as well as, broad restrictions on cross-border data flows.

Pakistan has repeatedly suspended access to mobile data and certain online services in major cities in response to planned protests, large-scale demonstrations, and other perceived unrest. These suspensions undermine a free and open Internet and impede trade in the digital economy by restricting access to information and services and disrupting commercial operations. The United States continues to monitor the impact of these events on US trade and investment, including services exports.

US food and consumer product exporters have expressed concerns regarding a lack of uniformity in customs valuation in Pakistan that negatively affects the US stakeholders.

Similarly, in the machinery and materials sectors, there are reports that customs officials have erroneously assessed the customs value of goods based on a set of minimum values rather than the declared transaction value. US companies have reported being adversely affected by Customs Rules 389 and 391.

Customs Rule 389 requires the placement of a physical invoice and packing list in the shipping container, while Customs Rule 391 places the responsibility of including such documents, and liability for failure to comply, on the owner of the goods and the carrier.