Trump's tariff plan has sent shockwaves around the world. The WTO warns of a 0.2 per cent shrinkage of global trade, as opposed to a growth forecast of 2.7 per cent before the new tariff policy.
TRADE POLICIES
Trump's tariff plan has sent shockwaves around the world. The WTO warns of a 0.2 per cent shrinkage of global trade, as opposed to a growth forecast of 2.7 per cent before the new tariff policy.
However, while the US resorts to alleviating trade barriers, Pakistan is moving towards trade liberalisation. In line with this stance, Pakistan has opted to propose a zero-tariff bilateral trade agreement with Washington and introduced a National Trade Policy 2025-30, which aims to liberalise trade by lowering the maximum customs duty CD) to 15 per cent and eliminating additional customs duties (ACD) and regulatory duties (RD).
Therefore, with the US being a major export destination for Pakistani goods and Pakistan lacking the economic prowess to sustain a $564 million export loss, trade liberalisation policies are a welcome step from an economic point of view. It highlights negotiatory policy responses as critical to mitigating the 29 per cent tariff imposed by the U.S. in retaliation for Pakistan’s $3 billion trade surplus, which would cost Pakistan only approximately $85 million in tariff revenue.
However, where economic growth is a critical aspect, we as a severely food insecure country with 20.7 per cent of our population suffering from malnutrition, 40 per cent of children under 5 suffering from stunting, and our economy losing 3.0 per cent of our GDP to malnutrition cannot forgo food security when formulating trade policies with the US, because the food trade strategy is considered an effective tool in mitigating food insecurity. Trade regulations like tariffs, customs duties and NTBs act as a barrier to limit processed and unhealthy foods from entering the country. But at the same time, trade also ensures the availability and affordability of healthy food items to meet consumer requirements.
Pakistan is currently the 28th largest export market for US foods and agricultural-related products. The top food imports from the US consist of tree nuts, pulses and processed foods. Currently, Pakistan imposes high tariffs and additional regulatory duties on these products, except for pulses.
A quick perusal of high-end stores in urban centres with an affluent customer base tells us that they stock US food products such as dairy, cereals, preserved food items, sauces, chocolates, chips, drinks and many more. However, the critical part is that many households within Pakistan buy groceries from ‘kiryana’ stores where local, reasonably priced alternatives are available. Imported items are not included in an average Pakistani's diet.
A significant portion of food imports from the US are from American restaurant franchises in Pakistan, establishments primarily frequented by the upper-middle and upper classes. Thus, most products imported by Pakistan from the US do not cater to a significant population segment. So, these lowered prices and increased quantity due to trade liberalisation policies would not add any value to Pakistan’s food landscape, and a lower price would only impact the already affluent people, for whom the cost of a healthy diet is already affordable.
However, we cannot turn a blind eye to the phenomenon of nutrition transition -- our youth’s dietary pattern is evolving from their native dietary habits to consuming more fast foods and processed foods and trade liberalisation would entail easy and affordable access of processed foods into Pakistani market and can threaten the acceleration of ‘nutrition transition’ as people would be tempted to purchase imported items that were once out of their reach, placing immense responsibility on food regulation authorities within Pakistan to ensure increased imports do not worsen the already exacerbated food insecurity.
As trade is a major pillar of food security, Pakistan should opt for a multidimensional approach by exploring various strategies to strengthen the country’s economic position in the global arena and combat food insecurity
In Pakistan Pure Food Laws (PFL) regulates processed foods but these regulations mostly deal with additives and food preservatives, however where these are of utmost importance, Government should also work towards limiting the excessive use of problematic nutrients like trans fats, sodium and sugar in processed foods, as these contribute to the rise in non-communicable diseases (NCDs). And we should couple this with labelling, an effective tool, as it provides consumers with the instant knowledge needed to make informed purchases. Also, with food trade on the rise in Pakistan, labelling should be harmonised to ensure smooth and healthy trade, as it would help diversify Pakistan’s trade portfolio.
However, pulses stand out because they are a staple in the Pakistani diet across all socio-economic backgrounds. They are considered affordable and healthier alternatives to animal protein, rich in vitamins and fibre. Pakistan's pulse consumption far exceeds its domestic production. The import of pulses has already increased 12.95 per cent compared to the previous fiscal year. And current import taxes on pulses are already modest.
This heavy reliance on imports provides a silver lining in the current US tariff conundrum, creating potential trade opportunities for US exporters to fill Pakistan’s demand gap. A zero-tariff agreement on the table would make Pakistan's pulse market more inviting to US exporters, who can help balance the US trade deficit. This also opens a window to overcome food insecurity by increasing the availability and affordability of pulses.
But it would be unwise to put all your eggs in one basket, as Pakistan would become vulnerable to external shocks such as geopolitical tensions (Ukraine-Russia war, Pakistan-India tensions, etc), climate change-induced supply disruptions, or shifts in US trade policy (in case they find a new, more lucrative market). Moreover, food imports also risk pushing local businesses out and taking over the market. Thus, the impact is known to be non-linear, with the local producers often suffering disproportionately.
So, Pakistan needs to balance food imports and domestic production, stabilising the availability and affordability of food products. The threats to the food security landscape do not end here; trade liberalisation threatens the dumping of GMO crops in Pakistan. GMOs are considered a threat to local biodiversity, may contribute to health issues, and place an additional burden on the environment.
However, where there is a will, there is a way: NTBs can be used to restrict the dumping of GMO crops in Pakistan. Pakistan has an extensive set of SOPs in place for importing GMOs to ensure safe and regulated GMO imports. Apart from the existing SOPs, Pakistan needs to implement biosafety NTBs, like mandatory labelling if GMO content is greater than 0.9 per cent. Instead of a blanket ban, the government should work towards introducing quotas on the import of GMO soya bean, that is only a certain amount should be allowed into the country, and the rest of the demand should be covered through non-GMO crops and followed by strict adherence to proper documentation that would trace the GMO variety used.
Thus, as trade is a major pillar of food security, Pakistan should opt for a multidimensional approach by exploring various strategies -- including tariff negotiation, trade diversification, the promotion of value-added products and investment in local processing industries -- to strengthen Pakistan’s economic position in the global arena and combat food insecurity.
The writer is associated with the Sustainable Development Policy Institute (SDPI). The views expressed by her are her own and do not necessarily reflect SDPI’s official stance.
