While there has been much debate on the ongoing implications of Pakistan’s commitments to the World Trade Organization (WTO), well-founded research on market and policy based responses has been in short supply. To understand the dynamics and need for such a research, certain key issues need to be discussed with a focus on the ‘firm’.

This article focuses on South – South trade, public sector dynamics and private sector responses. The most relevant issues will be highlighted by an overlap among various sectors of the social economy and cross cutting nature within the fabric of regional dynamics. Naturally, the role of civil society will be to identify shocks and conduct research to ensure that the vast majority of ‘households’ are benefiting from such development, thereby alleviating poverty within as large a segment of the population as possible.

South-South Trade Issues
Trade is between firms and not countries. The inherent beauty of increasing South-South trade is to create a business environment where firms and sectors of similar size, socio economic background and need may interact, integrate and negotiate with each other, without fearing price and terms of reference bullying by a larger MNC/TNC. The following potential drivers need to be addressed to create such an environment:

• Which sectors within the South will provide the most opportunity for synergy and value added goods and services to South-South trade?
• How will business strategy and public policy making dynamics need to be oriented to make this happen? (Resources allocated to WTO negotiation vs. resources allocated to RTAs at the sectoral levels)
• How can such trade be made sustainable so as not to deplete the resources available to any one firm and avoid unnecessary de industrialization and shifts in sectoral composition and structure?
• How do the short, medium and long-term benefits appear at each sectoral and livelihood level? Naturally, more attention needs to be paid to the needs and regional issues of local trading blocks and industrial consortia.
• How will disagreement and conflict resolution be resolved between these firms to keep the threat of intra regional trade wars from surfacing?
• How will the opening up of regional markets to sectors and micro economies familiar to all nations within the South, Middle and East Asian regions yield benefits to farms and firms in bettering their competitive advantages and positioning themselves for future, wider scale market openings through the WTO?
• How will geo economic positioning provide sustainable market based hubs of activity as like-minded nations with similar geo economic situations and cultural contexts find commonality in working and trading together, to penetrate larger markets rather than go it alone?
• What sectors of what firms may find it of most benefit to engage in value addition with each other’s products and services? Is this a viable strategy to consolidating marketing efforts to focus on specific segments of foreign markets, or is this an ‘anti diversification’ of resources? Will this positively impact government lobbying efforts for a common agenda within the South as their manufacturing and exporting business units will be integrated and focusing on the same markets?

Developing nations will need to position the network of RTAs formed, so that they are not simply limited to being Standard and Differential Treatment avenues for poor nations, but bodies for the collective economic participation of smaller firms and sectors, leveling the playing field of mismatched sectorally sizes larger TNCs with far greater lobbying strength.

Inside the WTO, the policy issues regarding the G-20+ and South-South trade involve governments addressing the following:

• How do we keep the G-20+ together? What are the short to long-term linkages and common positions?
• How to solve disputes within the block and maintain a continued position of solidarity?
• Transparency of dealings within south blocks? Move from rhetoric to reason – well founded policy recommendations and gains need to be seen by policymakers to prompt the furthering of alliances.
• How will the battle between Brazil and other MERCOSUR economies in Latin America play out with US efforts towards continental economic integration vis a vis the Free Trade Agreement of the Americas.
• How do we get into ASEAN and ARF despite conflicts within SAARC?
• SCO as a viable option?

Continued regional conflict, which has resulted in Pakistan’s being rejected from the recently ASEAN’s lifting of the moratorium on membership outside of the AP region, will have to be quelled by both stability on the political front as well as local economic development and diversification. A study of benefits and contributions that Pakistan’s textiles and agricultural sectors can make to regional trade could serve as a ‘carrot’ to access a wider range of South based markets and trading networks such as the ARF and ASEAN.

Government Strategy
The government position on trade issues and interaction with firms on the international and regional front will have to be increased for the political economic health of Pakistan’s entire labor surplus economy to benefit. The following needs and issues will require addressing on both domestic and international fronts if gains are to be made.

• How active can foreign-based embassies, high commissions, consulates and business associations be made to facilitate the entry of Pakistani produce and services into Northern and Southern markets?
• Who are participating the most within foreign trade missions and how is this contributing to the inclusion of small and medium enterprises in the global marketplace?
• What are the empirics of this model showing and how has government machinery adapted to include small and medium sized firms and farmers to participate in regional and global trade?
• How are procurement patterns by government supporting or hindering stability within the small and medium sized farms and firm sectors?
• Are there any case studies that exist to date that show gains and benefits in these areas?
• How are government bodies responding to the threat of biotechnology and gene technology from technology growth oriented governments abroad? Has corporate farming been identified as a sustainable strength or is it a ‘me too’ strategy to global competition? How can regionalism help in addressing the issues of farmer solidarity?
• How are regional lessons learned being incorporated into Pakistan’s national economic policy (Software programming, Telecommunications services, light manufacturing) and what evidence is there of their successes?

With regard to stabilizing the political economy of the region, the government can play a role in redirecting funds otherwise dedicated to military spending to diversifying sustainable livelihood bases and economic diversification efforts. The actual synergy and collective trading clout that would be increased by trading and integrating various sectors with India has been analyzed through illegal trade and distributor re routing through other market hubs. Opening of markets could formalize a lot of the illegal trade (estimated at $4 Billion $ per year) between India and Pakistan that makes its way to each party through Dubai and Singapore. Cost savings could then be captured by distributors and manufacturers rather than by middlemen in Dubai and Singapore, estimated at $2 Billion $ per year. There is a plethora of statistics that indicate the economic benefits, but the policy implications and proxy alliances that could result through WTO negotiations along with other intangibles of economic sharing and cooperation are immeasurable and should be considered.

The Private Sector Response
Until the needs and realities of the average Pakistan firm (agriculture, manufacturing or services based) are understood by business strategists and policy makers, diversification and sustainable economic development efforts will continue to cater to a select few within Pakistan’s industrial bourgeoisie.

Years of political instability have taken a toll on Pakistan’s business culture, now dominated by foreign firms and ownership. Monopolistic behavior and a lack of realized benefits from competition policy formulation have raised market barriers for the majority of Pakistan’s entrepreneurs while lowering them for a select few. To stand up to foreign competition and strategically position themselves as solid and reliable value adding components of the regional and international marketplace, firms will have to revolutionize the way they view themselves. The adoption of an outside looking in perspective as opposed to an insulated view, which business operators have enjoyed in the past, will have to be embraced.

Where are the real competitive advantages that Pakistani firms have with their counterparts and rivals in the regional and international marketplace? How does each sector fare in terms of resisting foreign buyout, mergers and the strategic moves of larger regional players? How can firms better leverage their labor surplus pools to provide lower cost goods with higher value and quality indexes?

What markets are established enough that locally managed and monitored quality and environmental standards can be piloted with a vision to grow them into adjacent sectors?

Is there a case/benefit to organizing standards efforts at the regional sectoral levels whereby regional sectors can be galvanized around ‘South-South standards’ as nested within ‘South-South trade’? How sustainable are the comparative advantages of Pakistan’s sunset industries? What is the ratio of subsidization and support that is given to these sectors and firms as compared to sunrise sectors and industries?

How are regional lessons learned being copied and replicated by firms with the capital asset bases and resources on the domestic front? (Software programming, Telecommunications services, light manufacturing) and what evidence is there of their success? What are the hurdles/barriers to success? How are different sectors organizing around patenting of intellectual property rights across sectors to protect indigenous knowledge? What efforts are being made to take this to the WIPO and recognize it regionally? Is there room for cost and resource savings through ‘South-South patenting’ through geographical indicators? How are vendor-based networks of businesses vs. home-based industrial development affecting profit flows in and out of the country? How is private sector lobbying and advocacy representing all aspects of various sectors (ownership and labor) and where are the gaps to enabling them to present their needs and concerns on an international level?

At the level of the firm, the tasks and hurdles to successful participation and engagement within global trade regimes present themselves in real economic terms. At the bilateral level, the differences between firm strength are as plain as measuring balance sheets. Within the US, corporate interests continue to. In terms of monetary political contributions, the textile industry is not so far behind the steel producers, which received controversial protection from the administration last year. In the last electoral cycle, textile companies and workers gave $1.5 million to candidates and political parties (63 percent of that to Republicans), while the steel industry gave about $2.1 million (64 percent to Republicans), according to the Center for Responsive Politics, a nonprofit research group. While South firms, particularly in Pakistan, will contribute to political advocacy ‘in kind’, the mechanics alone, that support the political business relationships within the US, show how far behind developing nations are. This builds the case for collective advocacy, trading and networking to build the capacity of southern firms to do more within the global marketplace.

Critics and opponents of neo liberal globalization have been portrayed by members of media and OECD circles as being weak in argument, emotionally charged and empirically unfounded. Given the real political situation within the world today, some may even link anti globalization opponents with terrorist organizations. While it will be challenging to present south based alternatives to such an adversary driven environment, the survival of southern firms and their economies depends upon it. A main contributor to solidarity between members of civil society and government negotiators will be a sophisticated and in depth examination of the nuances and benefits of South-South cooperation and how it may best suit the needs of all firms, states and households involved.