Pakistan and the European Common Market Address at the Lahore Chamber of Commerce and Industry, September 21, 1962

I am very happy to have had this opportunity of meeting you. Your Chamber is one of the most important trade bodies in the whole country and Lahore also is the nerve centre of industrial skills and initiative. In fact I wish I could have spent more time with you but pressure of business has forced me to just snatch a day to meet you at the earliest. However, I hope I shall be able to spend more time in Lahore both to meet you individually and to visit some of the industrial units in this area.

I am afraid I do not agree with your observation implying that the economy of the country today is more oriented towards trade than industry. On the other hand, our import policy is heavily biased in favor of industry. Our tariff policy also aims to protect indigenous industry within reasonable limits. The imports for industry take the major share of the foreign exchange allocation to the private sector. On the other hand, it is difficult to shut off completely imports of consumer items through trade. A degree of competition has to be ensured in allowing a quantum of consumer goods through trade and this should not be grudged by the indigenous industry. On the other hand, the time has come when industry must try to function efficiently in a competitive market and make up, by its own efficiency and the improvement of its own skill, what it may gradually come to lose in the way of Government and tariff protection. Sheltered markets for our industry cannot be preserved for very long. So far as imports are concerned it has been the policy to gradually reduce imports of items being locally manufactured. Where goods are allowed to be imported at all, sufficient tariff protection is afforded for local industry to function unimpeded and unhampered. In fact, liberalization of imports and the adoption of the system of OGL (open general license) for various items has been more in favour of industry than trade. Most of the luxury items are coming on bonus vouchers and even the bulk of earnings under the bonus scheme is used for the import of capital goods. It is time; however, that industry paid its own way by exporting its products, and also made its contribution to a healthy balance of payment situation. I agree with you when you say that the export bonus scheme will not for all times keep you in the foreign markets. This is all the more reason why you should make efforts right now to maintain the foreign markets in which the bonus scheme helps you to secure a foothold.

Your apprehensions regarding the European Common Market are understandable. We are doing all we can to secure from the advanced European countries a fair deal for a developing nation like Pakistan. The dictates of the times have compelled Western European countries to make new arrangements. The European Common Market has undoubtedly brought about a great degree of prosperity and well-being for the six European countries that have merged their resources together and circumstances are now compelling Great Britain also to apply for membership of the Community. I believe it is only a matter of time and of negotiations for the United Kingdom to enter the European Community. We wish Europe well; we wish all people well and in the prosperity of Europe perhaps we may find the prosperity of other people as well. However, there are certain inherent contradictions in the process of the formation of the European Common Market. We had always been taught that free trade and the removal of tariff barriers is the best promotion for trade, industry and for economic development. Today, we see a reversal of that process and a policy of protectionism has been adopted which will entail serious restrictions on exports from developing countries. Developing economies require foreign exchange for industrialization. If these protective walls are to be erected, if there are to be quantitative restrictions on imports or rather the export of goods from developing countries, we will face serious problems.

Every government is most seriously concerned with the issue and our Government in particular is most earnestly and most anxiously concerned with it because for us the earning of foreign exchange is the most important and the most vital object of our trade.

We will have to do whatever we can in order to muster and mobilize our economy on a war footing in order to meet this challenge. We have had to face very important and serious challenges in the past and I am confident that the spirit and the resilience of this country and the people of this country will overcome this crisis as well. But a crisis it undoubtedly is and it is all the more incumbent upon us to put our resources together and to do everything possible to overcome it.

We have been told time and again that tea, which is a valuable foreign exchange earner of Pakistan, will be allowed import without any duty. Well, that may be because tea is an important commodity for the U.K. and by imposing a duty it may raise an internal problem, but as I said what we want is not just tea; we want tea and sympathy. If the approach had been more sympathetic and if the realization of our problems had been more humane, perhaps there could have been a better arrangement for Asian countries and particularly for Pakistan; India and Ceylon. As the French community has managed to protect certain interests, so also the interests of these countries would have been protected, if perhaps the negotiations had been conducted earlier at a time when the European Community was in its embryonic stage. At that time the United Kingdom may have secured better terms, it may have been in a better bargaining position, but today the going is good as far as the Six are concerned and, if the earlier negotiations had been clinched, it may have been better for all concerned. But now it is a matter of the past. It is .a question of history and we cannot go back. Every country has its own interests. We have to protect our own interests and, as I have said, I am certain that we will be able to overcome the difficulties. We wish nobody ill will. On the contrary we will be happy to see Great Britain getting benefits from her entry into the Common Market, but at the same time I think that the full problem and the full magnitude of our difficulties has not really been understood although I do not see why, because the association of the United Kingdom with the subcontinent has been so old, so familiar for the last 200 years that these problems are very well known and ought to have been better appreciated.

So far as the European Community is concerned, it is a question of the past, but in the case of future developments, I do hope and pray that a more sympathetic and a mere humane approach will be found to the problems of our poverty-stricken people who are going through a very difficult and challenging time.