Talking with the media during Pakistan's
Prime Minister Imran Khan's visit to the White House on July 22, 2019, US President Donald Trump said the United States “have a
fantastic trade relationship (with Pakistan). I don’t mean we’ll increase it by 20 per cent. I mean, I think we can quadruple it. I think it could go — I mean, literally, it sounds crazy — you could go 10 times more. You could go 20 times more.” This is good news for Pakistan which has seen its exports stalled over the last 5 years. This has created a serious balance of payments crisis forcing the country to seek yet another
IMF bailout.
US-Pakistan Trade Volume:
So what is the current volume of bilateral US-Pakistan trade? The United States is currently Pakistan's largest export market accounting for 16% of the country's exports. The
United States Office of the Trade Representative (USTR) website says that "Pakistan is currently our 56th largest goods trading partner with $6.6 billion in total (two way) goods trade during 2018. Goods exports totaled $2.9 billion; goods imports totaled $3.7 billion. The U.S. goods trade deficit with Pakistan was $783 million in 2018."
Pakistan's Exports to US:
Pakistan's major exports to the United States are made up of garments and other textiles. In aggregate the apparel and textile industries accounted for 37.8% and 35.1% respectively of all U.S. imports from Pakistan in the 12 months to May 31, according to
S&P Global Market Intelligence. Given Pakistan accounted for just 1.7% of U.S. apparel imports and 8.4% of textiles there may well be room for increased market share, particularly in light of
US-China trade tensions.
Pakistan's garments exports to the United States have jumped 12% in first quarter of 2019 from the same period a year ago, according to USITC Dataweb. This double digit exports growth is being partly attributed to US President Donald's Trump ongoing
trade war with China with the US government imposing 10% to 25% tariffs on certain Chinese goods. Pakistani rupee devaluation has also contributed to the nation's overall competitiveness.
American buyers are diversifying their supplier base away from China, the No. 1 exporter of these goods to the U.S. Already, Bangladesh is close to snatching the trousers-to-towel crown, according to
Bloomberg News. Pakistan, at No. 6 last year, has grown its own shipments to the U.S. by almost 12% this year. It may overtake India, which has seen virtually no improvement.
Major US Importers of Pakistani Apparel:
Who are the largest American importers of apparel and textile products from Pakistan? The largest importer of apparel and textiles from Pakistan in the past 12 months, aside from trade finance houses, has been Levi Strauss with 1,682 TEUs (Twenty Foot Equivalent Unit Containers) shipped. That followed a 101.5% year over year surge in shipments in 2Q. Other importers have also already been expanding their shipments. That was followed by JC Penney with 991 TEUs shipped after a 13.3% rise in 2Q while Adidas shipped 641 TEUs and grew by 9.9%, according to Standard and Poor Global Market Intelligence.
Pakistani Apparel Exporters:
Pakistan's Interloop Limited based in Faisalabad is one of the largest manufacturers and exporters of apparel and textiles. The company recently
raised nearly Rs. 5 billion on Karachi Stock Exchange to expand production of stitched denim designs for its clients including Levi’s and H&M. Interloop's major clients also include Nike, Reebok, Adidas, and Puma, as well as other major clothing retailers like Uniqlo and Target.
Pakistani Export Competitiveness:
Pakistani
apparel exports are becoming more competitive in international markets because Pakistani rupee has declined by almost 25% recently. This has wiped out the currency’s overvaluation adjusted for inflation differences with trading partners, as estimated by the IMF.
Textiles industry is just one the export industries seeing exodus of manufactures and buyers from China. Electronics industry is seeing similar moves.
Engadget is reporting that Google is moving production of its US-bound Nest thermostats and motherboards to Taiwan. The Wall Street Journal has reported that Nintendo is shifting at least some production of its Switch console to Southeast Asia.
Last November, Nomura Securities strategists had said they expected Malaysia, Japan and
Pakistan to be the top 3 beneficiaries of import substitution triggered by US-China trade war escalation. Nomura's analysis is based on detailed study of 7,705 items which will be subject to tariffs and counter tariffs by US and China if the stand-off continues. Nomura developed two indices as part of its research on the subject: NISI (Nomura Import Substitution Index) and NPRI (Nomura Production Relocation Index). This is good news for Pakistan which has seen its exports stalled over the last 5 years. This has created a serious balance of payments crisis forcing the country to seek yet another IMF bailout.
Summary:
President Donald Trump at his July 22, 2019 White House meeting with Prime Minister Imran Khan vowed to at least quadruple trade with Pakistan. It means the bilateral trade between the two countries could grow from the current $6.6 billion to at least $26.4 billion. Pakistan's garments exports to the United States have jumped 12% in first quarter of 2019 from the same period a year ago, according to USITC Dataweb. This double digit exports growth is being partly attributed to US President Donald's Trump ongoing
trade war with China with the US government imposing 10% to 25% tariffs on certain Chinese goods. Pakistani rupee devaluation has also contributed to the nation's overall competitiveness. This is good news for Pakistan which has seen its exports stalled over the last 5 years. It has created a serious balance of payments crisis forcing the country to seek yet another
IMF bailout. Pakistan's Interloop Limited based in Faisalabad is one of the largest manufacturers and exporters of apparel and textiles. The company recently
raised nearly Rs. 5 billion on Karachi Stock Exchange to expand production of stitched denim designs for its clients including Levi’s and H&M. Interloop's major clients also include Nike, Reebok, Adidas, and Puma, as well as other major clothing retailers like Uniqlo and Target.
Here's a discussion recorded prior to the Trump-Imran Summit in Washington:
https://youtu.be/Y6fFRSpuNh0
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