Pak-Italian Trade Relations By Dr. Noor Ahmed Memon

Most raw materials needed by industry and more than 75% of energy requirements are imported. Over the past decade, Italy has pursued a tight fiscal policy in order to meet the requirements of the Economic and Monetary Unions and has benefited from lower interest and inflation rates.

The current government has enacted numerous short-term reforms aimed at improving competitiveness and long-term growth. Italy has moved slowly, however, on implementing much needed structural reforms, such as lightening the high tax burden and overhauling Italy's rigid labour market and over-generous pension system. Due to the current economic slowdown and opposition from labour unions, the leadership faces a severe economic constraint: the budget has breached the 3% EU deficit ceiling.

Pak-Italian trade

Italy has always attached great importance to the cordial relations with Pakistan which are improving with the passage of time. Italy is one of the top eight trading partners of Pakistan. Over the years, trade between Pakistan and Italy increased significantly and other economic activities have also grown between the two countries.

During the past five years exports and imports between Pakistan and Italy has increased, but the rise in exports has been faster than the imports. The balance of trade had remained in favour of Pakistan, which increased from US $141.4 million in 2003-2004 to US $170.3 million in 2007-2008.

Table-1 shows trade balance between Pakistan and Italy.

Exports from Pakistan to Italy increased from US $454.1 million in 2003-2004 to US $723.6 million in 2007-08, thus showing an average increase of 12% per annum. Cotton fabrics and yarn, readymade garments, towels, hosiery, bed-wear, carpet and rugs, cotton, leather, sports goods and surgical instruments are the major items exported from Pakistan to Italy. Export of textile and other items from Pakistan to Italy is given in Table-2.

Imports from Italy also increased from US$ 312.7 million in 2003-2004 to US$ 553.3 million in 2007-2008, thus showing an average increase of 15% per annum. Textile machinery, general industrial machinery, power generating machinery, petroleum products, transport vehicles, iron and steel, pharmaceutical, acrylic fibre, chemicals and paper and paperboard are the main items imported from Italy.

A number of Italian companies including SECA, FIAT, Piaggio, Ansaldo, GIE Srl and Fochi Energia are operating in Pakistan. Leading textile machinery manufacturers like ITEMA Group are actively marketing their technology in Pakistan.  Import of textile machinery from Italy to Pakistan decreased from Rs 8.10 billion in 2006-2007 to Rs. 5.72 billion in 2007-2008, thus showing decline of  29%. Import of textile machinery (major items) from Italy to Pakistan is given in Table-3.

Italy has strongly supported Pakistan's case for Free Trade Agreement (FTA) with the European Union and given assurance to encourage Italian investment in Pakistan.

Italian Ambassador to Pakistan Vincenzo Prati said that the European countries should consider Pakistan as a major economic and trade partner for the future and European countries and Pakistan should move closer, step-by-step in fostering economic relations.

The Italian ambassador further said that the G8 summit was of vital importance for Pakistan, as G8 expressed its commitment to stand with Pakistan in its fight against terrorism and violent extremists. The G8 summit also welcomed Pakistan’s efforts to meet its commitments under its IMF stand-by arrangement and encouraged the government to continue critical economic reforms, which would allow for sound and transparent fiscal management.

Italians like-minded businessmen from Pakistan have formed Pak-Italian Association (PAKI) to foster economic and cultural initiatives between Pakistan and Italy. Pakistan is involved in promoting trade between Pakistan and Italy and for this purpose a number of Italian companies have been invited to Pakistan to explore trade and investment possibilities.

Recently Trade Development Authority of Pakistan has decided to set up four training institutes in each of the four capitals to provide skilled manpower for the marble and minerals sector in collaboration with the Italian government and with the cooperation of Pakistan Italy Business Forum. This was stated by Syed Mohibullah Shah, CEO of TDAP in a meeting with a delegation of Pakistan Italy Business Forum.

Shah further stated that the Italian Ambassador has also accepted the demand to provide Master Trainers so that the latest technology can be imparted through these institutes. He also assured the delegation that he would continue to maintain the channel of communication with the Italian Ambassador as well as the Pakistani diplomats in Rome to follow up on the proposal to set up the institutes. 

Technical Textiles: Italian Innovation

Innovation, research and technology, these are the key words to success on a market which above all speak Italian: that of technical textiles, fabrics equipped with special characteristics to respond to certain specific needs. The classification used at the Techtextil fair in Frankfurt identifies different types of textiles, each specifically designed for applications ranging from professional activities to sport, the car industry and hygiene and health sectors.

All those industrial textile products not strictly linked to clothing and furnishing are in fact catalogued as technical: yarns for airbags, shoulder pads, filling, fireproof fabrics, but also special fabrics for use in the soil and foundations, roads, tips and waterworks, or as bases for subsequent facing, laminating or soldering. Some traditional products have a high technical content while being used for clothing and thus conditioned by fashion (clothing for sport, mountains and the sea), the peculiarity of technical textiles lies in their intrinsic innovation: they are designed to replace old products­ or to innovate them.

The Italian association of 112 companies whose main objective is the knowledge, development and promotion of technical textiles. This sector is observing a steadily growing turnover, accounting for 10% of the total turnover of Italian Textile machinery industry.