The United Kingdom carries great weight and importance in the world's affairs by virtue of being one of the major industrial and commercial centers. Among one half of Britain's trade goes with its European Community partners, and EU trade ranks as top seven of the top ten British export markets.

The chief trading partners of the UK are the members of the EEC accounting for more than 45% of both total annual imports and exports of the UK. The other important trade partners are Israel, Singapore, Taiwan, and Republic of Korea, Pakistan, India, Australia, New Zealand, Norway, Denmark, Portugal, Switzerland and USSR.

Britain was one of those countries which re-strengthened relation with Pakistan after its joining with international coalition against terrorism. United Kingdom did not only support Pakistan for its economic revival programme but also suggested other European nations to help Pakistan in its endeavour.

Pakistan is among those top 60 markets where British manufacturers and suppliers of goods and services are dominating. British companies enjoy about 2.3% of the total import market in Pakistan during 2006-2007 exported about $699 million worth of goods. Similarly, Pakistan exported goods worth US $ 950 million during the same period to Great Britain.

The UK, with a population of 59 million, is a lucrative market for Pakistani textile products. During the past five years exports and imports have increased, but the rise in exports has been faster than the imports. However, balance of trade had remained in favour of Pakistan, which decreased from US$ 361 million in 2004-05 to US$ 251 million in 2006-2007.

Besides trade, the prospects of expansion in overall economic relations between the two countries are also bright. Pakistan-U.K balance of trade is given in Table-1.

The UK is a lucrative market for Pakistani textile products specially knitwear, cotton garments and synthetic textiles. The main items of exports included bed wear, readymade garments, hosiery, cotton fabrics, towels, cotton yarn, synthetic textiles, carpet and rugs. Besides textile and clothing articles UK imports a variety of other products from Pakistan, which include fish and fish preparation, sports goods, molasses, leather and leather garments, handicrafts, travelling goods, furniture, surgical instruments and footwear. Export from Pakistan to U.K increased from US $893.5 million in 2004-05 to US $950.2 million in 2006-2007. Export of textile and other items from Pakistan to U.K is given in Table-2.

Pakistan’s textile industry has been investing for the last six years in modernization and the improvement of the production base and at the same time skill development has increased at a greater pace. The textile industry has taken post-quota regime as an opportunity and has been preparing them selves to face the challenges. According to the Textile Commissioner's Organisation over the last six years this sector has invested $ 6.0 billion in modernization and higher value addition.

The government has continued to improve and rationalise its import policy with a view to allowing liberal import of industrial raw materials, capital goods and essential consumer goods.

These include usually high imports of machinery, chemicals and other raw materials. Pakistan imported textile machinery, iron and steel, various types of machinery, road vehicles and transport equipment's, chemicals, pharmaceutical and petroleum products are the main items imported from U.K.

The British investments in the pre-independence period were mainly in the public sector and related to infrastructure, like railway, ports, roads and communications and postal services. Private sector British participation in Pakistan industry predates the country's inception. Shell started operations in 1903, ICI established a soda ash works in 1942 and its business has since grown to include PTA, polyester fibre, paints, agro and general chemicals and pharmaceutical.

At present Britain is the second-largest investor in Pakistan after the USA.  About 80 multinational British companies have also made significant contributions to the industrial sector, power generation, oil and gas exploration in the shape of investment and transfer of technology.

The UK has also provided consultancy in dams construction, water supply and irrigation system.  It has also been contributing in the development and promotion of health and education sectors in Pakistan. At present U.K is the third largest overseas investor in Pakistan, the fifth largest trading partner among OECD countries and there are 77 British companies operating in Pakistan.

Several other British companies such as Unilever, Pakistan Tobacco, D H Chemicals, Burmah Oil, Glaxo, Reckitt & Colman, Berger paints also saw early opportunities and benefited, as did the Standard Chartered and ANZ (Lloyds-Grindlays) Banks. The largest contribution to the Pakistan economy resulted from the Bumah Oil Company’s investment, which led to the find of the Sui Gas field at Kashmore. Major British companies have increased their investments in Pakistan in all sectors of the economy. Lasmo Oil, Premier Oil and British Gas are the entrants in the energy sector. National power investment in HUBCO and KAPCO, ICI fibre plant in Lahore and PTA plant in Port Qasim, P&O container terminal at Port Qasim, Lever's ice cream plant at Lahore are other examples of new investments.

Furthermore, British investors have brought with them a package of tangible and intangible assets, including capital management, know-how, skills and access to international markets. The role of British government is also supporting NGOs in Pakistan.

The Commonwealth Development Corporation has an investment portfolio of £200 million, about 8% of their global portfolio investment, which makes Pakistan the largest single country portfolio, supporting over two dozen companies in nearly all sectors of the economy. Government of UK is going to double UK Assistance for Pakistan up to €480 million by 2011. The British Secretary of State recently announced outline of the Country Assistance Plan focusing GOP over the forthcoming five years (2013). This would enable Pakistan to be the second largest recipient of UK aid programme by 2011.

UK assistance will continue to focus on health – including the battle against diseases like TB and polio – and on good governance and earthquake affected areas’ reconstruction. There will now be an additional emphasis on assistance to the border areas as well as on education, with more than €250 million being made available to bring five million children into school and to increase training opportunities for young people.

UK is also committed to helping Pakistan’s efforts in fight against poverty for many years. UK’s aim is to continue to help improve poor people’s lives in key areas, making sure they have access to better healthcare, schools and employment opportunities. As part of its commitment, the UK Government will also provide €50 million to the State Bank of Pakistan to support a new drive to open up financial services to poor people to encourage wealth and job creation by making available loans and access to bank accounts.

An MoU to this effect was signed on behalf of GOP by Governor State Bank of Pakistan, Dr. Shamshad Akhtar and British Secretary of State on behalf of DFID of the UK Government. Through this partnership, the Government of UK has doubled the quantum of its annual assistance up to €160 million for the year 2008-09 and onwards, and the bilateral relations with the United Kingdom are marked with good-will and mutual trust and expected to increase as UK and Pakistan go along.

UK Textile Industry

The textiles and clothing industry is the UK's 9th largest manufacturing sector, and has a turnover of over £10.2 billion in 2006 with £3.5 billion coming from technical textiles. The textile and clothing industry has had to endure enormous upheaval in recent years. Globalization has placed increasing pressure on clothing and textiles firms to remain competitive and retain market share. Over the last 20 years the industry has seen a massive reduction in jobs in the UK. Much of this pain has been the result of opening up to foreign competition and cheaper imports. A textile factory in the UK is to close with the loss of 430 jobs. The Coats Viyella plant makes clothes for one of the UK's leading retailers, Marks & Spencer, a business which itself has suffered a downturn in fortunes. Over the past five years, 45% growth seen in value of textiles and clothing in the UK including technical textiles. However, during the past 30 years dramatic changes have seen in the structure, output, trade pattern and technology of the textile industry. The vastly increased use of synthetic fibres, which account for almost 50% of all fibres used and the rising wage levels and shifts in consumer tastes and styles have also played a major role.

At present EU has 230,000 textile and clothing companies employing 2.7 million people and representing some 200 billion euros. EU textile firms control 31% of the global high-end market. Overall EU textile and clothing imports rise in value by 10.7% in 2006 reaching US $101.7 billion. Imports from Vietnam decreased to 40% during the year 2007 making the fifth biggest supplier of EU by volume. The EU production of non-woven rose 6.5% in 2006 to 5,124 million euro (33% of production into hygiene products) producing a positive of trade balance of some 928 million euros (a 14.4% increase in 10 years).

During the same period European textile industry has gone through a process of structural adjustment in which it has lost more than half of its jobs. The various countries have dealt with this adjustment in different ways depending on their national economic policies. However, in UK, primary textile industry has been relatively more successful in applying survival strategies. Trade in textiles and clothing has been a prominent feature of international trade negotiations. It is a sector, which developing countries focus upon all the time. Many developing countries the textiles sector is second only to agriculture in terms of importance for employment and export earnings. For developed countries, suh as United Kingdom, whilst often seen as a traditional industry, it remains an important sector of the economy.

The global textile and clothing sector trade has grown rapidly in recent years to reach US $530 billion in 2007. Recent years have seen the rapid growth of China (21.9% in case of textile product in 2007) and India's textile exports may cross $40 billion in 2010-11. Indian government is targeting textile exports of around $25 billion for 2008-09. Improving the skills base of the UK textile & clothing industry remains a key issue affecting its competitive future. That is why the government has supported a number of industry-driven initiatives aimed at retraining and developing the skills of existing staff, as well as attracting candidates with higher-level technical skills to meet the new demands of industry. Exhibiting at overseas trade fairs is one of the most effective ways for businesses to test markets, attract customers, appoint agents or distributors, meet wholesalers, carry out research and make sales.

The UK government believes strongly in the arguments for liberalization and free trade, but also recognize the importance of a level playing field for exporters at home and fair trade for the countries of the developing world. u