The FATF (finical action task force) is a global watchdog created at the G7 summit held in France in 1989. the function of FTAF is to combat money laundering and terrorist financing by implementing a series of legislative measures among 200 countries that are under FATF jurisdiction. FATF compromise of 39 members representing major finical hubs around the globe. FATF is headed by a president, recently Dr. Marcus Pleyer of Germany, and a vice president Elisa de Anda Madrazo of Mexico serving from 1 July 2020 to 30 June 2021. They are selected by the Plenary among its 39 members. The FATF has jurisdiction to implement sanctions on the countries lacking commitment in bringing legislative changes to combat money laundering and terror financing. Countries with a high rate of money laundering and terror financing and poor legislative structure to prevent them are put in increased surveillance list also called grey list, While those countries which show no commitments in bringing legislative changes to minimize money laundering and terrorist financing are pushed into the blacklist which is High-Risk Jurisdictions subject to a Call for Action. Being on the grey list decreases a country's chances of getting foreign aid, loan services, and foreign investments, whereas a country on the blacklist is finically isolated from the rest of the world. Currently, only Iran and South Korea are enlisted in the FATF blacklist whereas, 12 countries are enlisted in the FATF grey list as of 21 February 2020, including Albania, the Bahamas, Barbados, Botswana, Cambodia, Ghana, Iceland, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Pakistan, Panama, Syria, Uganda, Yemen, and Zimbabwe.
Tuesday, 12 January 2021
finical action task force (FATF)
Pakistan was also enlisted in the grey list in June 2018 and was given a task for improvement at 27 points in the legislative system by the end of the year 2019. This date was extended further to September 2020 due to the Coronavirus pandemic (COVID-19). This was not the first time for Pakistan, it was also enlisted in the grey list in 2008 and from 2012 to 2015. According to the FATF report, Pakistan was able to implement 21 out of 27 action points. FATF has appreciated Pakistan's commitment to reforms against money laundering and terror financing and the extended deadline to February 2021, urging Pakistan to work on the remaining 6 task points. The decisions on enlisting a country into grey or blacklist are done by Plenary among its members. Decisions of the FATF members are also influenced by their relationship with the country. Likewise, the decision about Pakistan was also influenced by its relation with members of FATF such as India, Israel, Malaysia, china, turkey and Saudi Arabia, etc. Pakistan usually faces great opposition from India and Israel, while Malaysia, China, and turkey usually favor Pakistan. For Pakistan execution of the remaining 6 Task points is very important in preventing it from falling into the blacklist and also for getting out from the grey list. this will also have a positive impact on countries' economic situation
China-Pakistan Economic Corridor (CPEC)
The China-Pakistan Economic Corridor (CPEC) is a framework for regional connectivity through building various infrastructure, power, and economical projects connecting Pakistan's western border with Indian Oceans. CPEC is a 47 billion US$ agreement, signed by Pakistan and China in 2003. The main projects in these agreements are the construction of Highways, train tracks, ports, and installing fiber optics, for improving connectivity through Pakistan while providing opportunities for foreign trade and investment. Despite being such an important developmental program, CPEC face delays due to slow legislative process, lack of coordination with provinces and security issue especially terrorist attacks in tribal areas. CPEC authority works by Cooperation Committee co-chaired by the minister and vice-chairman. There are 9 working joint groups representing 9 different departments in CPEC, these departments are planning, energy, transport, SEZs, Gwadar, security, international cooperation, social and economic development, and agriculture departments. Currently, Asim Saleem Bajwa is chairman and Asad Rafi Chandna is additional secretary of CPEC authority
Major Projects
Highways
Under the authority of CPEC, extensive highways connecting Khunjerab from the western border to Gwadar near the Indian ocean are planned. The construction of highways connecting Multan to Faisalabad, Khuzdar to Sukkur, and Surab to Gwadar are under construction. Whereas in the next phase highways from Thakot to Burhan and from Multan to Sukkur will be completed on a priority basis. There are also some other highway projects which would be completed on a priority basis. These projects will improve Pakistan's road map and will also give China access to the Indian ocean and broadening trade opportunities for both countries.
Railway Tracks
China has also agreed on the construction of railway tracks under the CPEC agreement. A new line from Peshawar to Torkham, from Quetta to Kotla, and from Gwadar to Jacobabad will be constructed. While old tracks such as ML1 and ML2 will be reconstructed and upgraded in electrification, communication, and overhaul of the tracks. This will not only improve connectivity but also rejuvenate domestic and foreign trade.
Optical fiber
Another milestone in the CPEC agreement is the establishment of an optical fiber network from Khunjrab to Punjab. 56% of the optical fiber line will be Gilgit, 35% in KPK, 5.8% in Punjab, and 2.2% in the federal capital. The total length of the optical fiber line will be 820 km and will help Gilgit which usually faces connectivity and communication problems in connecting to the rest of Pakistan and eventually the world.
Other projects
CEPEC has also the initiative of bringing trade and other developmental opportunities for Pakistan by the development of different ports, energy sectors (coal and hydro), Gwadar International airport, social sectors, scientific societies, and 9 SEZs (social-economic zones). The SEZs are special areas having different economical laws with respect to other parts of countries that favor foreign and local investments due to low taxations and other economic opportunities. Under CEPEC Pakistan will construct 9 SEZs for which Pakistan has submitted its feasibility report and has started development on some SEZs. The proposed SEZs are located in Nowshera, Dhabeji, Bostan, Faisalabad, Islamabad, Port Qassim, AJK, KPK, and Gilgit Baltistan. The projects like the development of Gwadar port and airport will also help Pakistan strengthen its foreign trade.
A complete list of developmental projects can be found on http://cpec.gov.pk/.../upl.../psdp-projects/CPEC-2018-19.pdf
European Union (EU)
The European Union was created after the second world war in 1958 under name of the European economic community. Initially, it started with an aim to increase cooperation between 6 countries; Belgium, Germany, France, Italy, Luxembourg, and the Netherlands. Since then 22 other countries have also joined this huge market and the union which started only on an economic basis has established itself as an organization with its policies spanning from climate, environment, and health to external relations and security, justice, and migration, due to its widened jurisdictions its name, EEC was changed to EU (European Union) in 1993. The union as for now compromises 27 countries as the United Kingdom left the EU on 31 January 2020.
The EU has helped European countries in improving their living standards, economic situation, and by maintaining stability throughout Europe. EU has launched it a single European currency, 19 countries now use Euro as their currency and enjoy its benefits. Moreover, the citizens of European countries under the EU enjoy visa-free traveling and free trade throughout the continent with the facility of living or working in any country in the EU.
Institutional structure
European Union constitutes 15 institutes the complete list and description of these institutes can be found on https://europa.eu/europea.../about-eu/institutions-bodies_en. Whereas 4 basic structural institutes are discussed here.
European parliament
The parliament work as a co-legislator, sharing its power with the council to adopt or amend the legislation however parliament can’t initiate legislation. It also decides on the EU budget and supervises the work of the commission and other EU institutes. The parliament is headed by a president who is elected for a renewable term of 2.5 years. Parliament constitutes 705 members elected directly by universal suffrage from 27 member states for 5 years. These seats are allocated in accordance with the population of a member country. The MEPs are grouped based on political affiliation rather than their nationality but every MEP is not necessarily affiliated to a political group. There is currently 7 political group in the European parliament. A political group is made of a minimum of 23 members and a member cannot be part of more than one party. Parliament also consists of 20 committees consisting of 25 to 81 MEPS. These committees are responsible for preparatory work for plenary sittings.
European council
European Council is composed of government representatives or heads of states of EU countries, a president is elected among its member as representative of the council for one time renewable 2.5 years. The European Council determines the EU's overall direction, political stance, foreign and security policies and also deals with complex issues that cannot be resolved at lower levels, but don’t have any legislative power. Council meetings are held 4 times a year but the additional meeting can be requested by its president on urgent issues.
European commission
the European Commission is composed of 27 commissioners one from each country. The College of Commissioners is composed of the President of the Commission, eight Vice-Presidents, including three Executive Vice-Presidents, the High Representative of the Union for Foreign Affairs and Security Policy, and 18 Commissioners, each responsible for a portfolio. The president of the commission is chosen through elections in the European parliament. The European Commission acts as a legislative body by proposing new laws. The commission also manages EU policies, fund allocation, and enforcing EU law, while it also represents the EU internationally. The decisions in the EU commission are done by the census.
Council of the European Union
The council of the European union not be misunderstood as the European council. Its role is representing EU member governments, adopting EU laws, and coordinating EU policies. The council of European union constitute of government ministers from each EU country, these ministers are not permanent but selected with relevance to the policy to be discussed. Each EU country holds its presidency for 6 months on a rotatory basis. EU ministers hold a public meeting to discuss or vote on draft legislative acts which require a qualified majority to be passed, that is 55% of countries representing at least 65% of the total EU population, whereas to block a decision 4 countries are required representing at least 35% of the total EU population.
EU Member countries
euro area member countries
Austria January 1, 1995
Belgium March 25, 1957
Cyprus May 1, 2004
Estonia May 1, 2004
Finland January 1, 1995
France March 25, 1957
Germany March 25, 1957
Greece January 1, 1981
Ireland January 1, 1973
Italy March 25, 1957
Latvia May 1, 2004
Lithuania May 1, 2004
Luxembourg March 25, 1957
Malta May 1, 2004
The Netherland March 25, 1957
Portugal January 1, 1986
Slovenia May 1, 2004
Slovakia May 1, 2004
Spain January 1, 1986
Non-euro area member countries
Bulgaria January 1, 2007
Croatia July 1, 2013
Czechia May 1, 2004
Hungary May 1, 2004
Poland May 1, 2004
Romania January 1, 2007
Sweden January 1, 1995
Economic Cooperation Organization (ECO)
Economic Cooperation Organization is a regional organization, created in 1992 in the aftermath of the collapse of the Soviet Union. ECO encompasses countries from Europe, Caucuses and Central Asia, Middle East and South Asia serving as an economic corridor connecting Russia to the Persian Gulf and China to Europe to develop a sustainable economic development among its member states. The economic cooperation Organization currently consists of 10 member countries, these member countries are Afghanistan, Azerbaijan, Iran Kazakhstan, Kyrgyz Republic, Pakistan, Tajikistan, Turkey, Turkmenistan, and Uzbekistan.
Overview
Nevertheless, ECO was a huge step forward to strengthen economic development and trade among its member countries. The ECO symbolize a region acting as a bridge from the Indian Ocean to the Persian Gulf linking one country to another through highways, rail track and connecting the region to the world through the Indian ocean. Above all, these countries also share a historical and cultural affinity. Despite being an organization with such potentials it has not come up to its expectations. The intra trade among member country of ECO as per 2005 was 6% which increased only to 1% till 2010, while it was recorded 20% in 2015 as compared to intra trade of EU which was recorded 65%. These statistics show a low overall performance of ECO, that needs improvement to a great extent. The political instability in the region, internal and external conflicts, terrorist activities, and lack of will in political leaders of member states are some of the reasons for ECOs' poor performance in the region. In order to ensure that ECO work to its full potential, its member states shall show a high level of political will and make necessary amendments that ensure an increase in intra-trade and increased support among its member states.
Trade potential
In addition to sizeable human resources, ECO Countries possess significant natural resources. Pakistan has a strong textile base and the 5th largest milk producer, Iran and Azerbaijan, Kazakhstan, and Turkmenistan have Oil & Gas reserves while Afghanistan is enriched with precious and semi-precious gems and famous for hand-woven carpets. Uzbekistan has gold and mineral resources. Kyrgyzstan is naturally endowed with Uranium and precious metal. Tajikistan is blessed by nature with minerals and Turkey is one of the largest exporters of transport equipment.
ECO organs
Summits
According to Article IV of the Treaty of Izmir, the head of the state meat biennially or more often if necessary. In these meetings the objectives and progress in implementation of different ECO projects are reviewed, moreover, views regarding regional and global issues of common interest are also discussed among member states.
Council of ministers
The highest decision-making body of ECO is the council of ministers which compromises foreign affair minister of member countries. The meeting of the council of ministers is held in regular, informal, and extraordinary sessions. The council of the minister may also hold meetings with other relevant ministers in the formulation of plans and projects.
The main responsibilities of the council of ministers are decisions on policies, strategies, work programs, the appointment of senior management, the establishment of subsidiary committees, and approval of the annual budget and audit reports.
The council of permanent representatives
The council of permanent Representatives is a standing inter-governmental body responsible for pushing forward the policies charted by the council of ministers and also make necessary preparation for the implementation of the decision taken by the council of ministers. This council constitutes permanent representatives of member states. These member states meet as often as necessary under the chairpersonship of the representative of the member state holding the chairpersonship of the council ministers.
Regional planning council
This is the main technical planning body in ECO. The regional planning compromises of heads of planning organization of member states and experts from the national sectoral ministries and agencies. The annual meetings are convened before a regular meeting of the council of ministers under the present chairpersonship of the council of ministers of ECO. The main responsibilities of the regional planning council are preparing a method of action for realizing the objectives. Its annual meetings are normally held in the ECO headquarter in Tehran.
International Monetary Fund (IMF)
The international monetary fund is an organization, established in 1944 after the end of the second world war. It was created to overcome the economic crises around the globe due to the second world war and to prevent any crisis such as the great depression that occurred in 1929 and lasted till the late 1930s considered one of the greatest global market crashes in the 20th century. It is the worldwide biggest lending organization which is run collectively with its member countries. Whereas, it offers open membership to the countries which accept the IMFs statutes.
Overview
IMF works through the surveillance system by monitoring its member country policies as well as national, regional, and global economic and financial developments to maintain stability and prevent the crisis in the international monetary system. It also provides alternate policies that can help in stabilizing a country's economies, preventing financial crises such as the great depressions of the 1930s to repeat and ensuring better economic conditions, Currently, IMF has 190 members out of which 24-member state heads executive director representing member countries. Whereas the board of governors is the highest decision-making body of IMF, consisting of one governor and one alternate governor for all member states which is usually appointed by member state and is usually the minister of finance. All power of IMF is vested in the board of governess. A specific quota and voting shares are given to the member states that are assigned based on their relative position in the world economy. The parameters that describe a member countries quota are economic variability (15%), GDP (50%), international reserves (5%), and openness to the global economy (30%). Each member is obliged to provide financial resources based on its quota. Each member’s state has to pay its subscription-based on its quota in full upon joining the fund. up to 25 % is paid in SDR and 75% percent can be paid in its currency. SDR are special drawing rights that were created by IMF in 1969 whose value is determined from a weighted basket of major currencies, including the U.S. dollar, the euro, Japanese yen, Chinese yuan, and British pound. SDR basket comprises of the currencies of "members or monetary unions whose exports had the largest value over five years, and have been determined by the IMF to be free. the current value of 1SDR IS equal to $1.41733. usable. Each country gets financial support in the form of loans according to its quota. A member can borrow up to 145% to 435% of their quota based on terms and interest rates. Currently, 10 countries united states, the UK, France, Germany, Japan, Italy, Russia, India, China, and brazil share the largest voting quota of IMF.
Members Voting percentage of Millions of SDR
- US 16.6 82,994.2
- UK 4.07 20,155.1
- France 4.03 20,155.1
- Germany 5.37 26,634.4
- Japan 6.21 30,820.5
- Italy 3.02 15,070.0
- Russia 2.59 12,903.7
- India 2.63 13,114.4
- China 6.08 30,482.9
- brazil 2.22 11,042.0
- Pakistan 0.43 2,031.0
Pakistan and IMF
Pakistan signed its first agreement with IMF in 1958 by securing special drawing rights of 25 million under standby agreement in the government of General Ayyub Khan. Since then Pakistan has secured 22 loans in its 61 years and current debt of US$5.765 billion to the International Monetary Fund. Whereas Pakistan has reserved a subscription of 2,031.0 million of SDR which makes about 0.46 additional voting rights of Pakistan in IMF. From 1958 to 2019 47% of loans were secured by the people party Pakistan government, 35% were secure by Pakistan Muslim league-Nawaz, and 18% by the dictators.
World Trade Organization (WTO)
The World Trade Organization is a global organization for trade agreements and negotiations between nations to ensure better, smooth, and free trade as possible. The events like the great depression and post-world war II effects around the globe led to the General Agreement on Tariffs and Trade (GATT) signed between 23 governments in 1947. This was a legal agreement, tending to minimize barriers in international trade by reducing tariffs and subsidies while preserving significant regulations. After 47 years in 1995, GATT was eventually shaped into a more uniform structure by the creation of the World Trade Organization.
The WTO has currently over 160 members representing 98% of world trade. The Ministerial Conference is the highest decision-making body of the WTO which consists of a representative from member countries and makes decisions through the census. It also heads the general council and various other committees. WTO also has an Appellate Body that consists of a dispute settlement panel, composed of 7 experts selected by the nature of the dispute. The dispute settlement mechanism provides enforceable means for members to resolve a dispute under WTO obligations and has processed about 600 trade disputes between governments among its member countries.
WTO in future
The WTO despite being the largest global organization for facilitating trade agreements, has not been able to achieve any substantial goals in establishing an ideal global trade system that caters to new problems and compete with extensive advancements over the years in the trading system. The US who once played an important role in shaping the international trade system and had constitutional authority over WTO, now shows a lack of trust in the WTO, accusing it of making a discriminatory decision and taking sides. Considering these issues the US has vetoed the appointment of judges in the appellate body which has played a key role in settling the trade disputes among its member countries, without a functioning appellate body, the dispute resolution system will no longer have the quorum needed to hear cases. Moreover, WTO's failure to establish an agreement during the Doha round of trade talks was another setback for the organization. The Doha round of trade talks for the period of 2001-2006 was an attempt at a multilateral trade agreement. It would have been between every member of the World Trade Organization (WTO). It was launched at the Doha, Qatar WTO meeting in November 2001, to be finished by January 2005, but the deadline was pushed back to 2006. The talks were finally suspended in June 2006, because the United States and the European Union refused to reduce agricultural subsidies.
WTO and Pakistan
Pakistan is also a member of the WTO since 1 January 1995. The main exports of Pakistan are textile articles, cotton, apparel; knit and non-knit, cereals, leather, stones, fruits, and nuts. Whereas Pakistan imports majorly consist of petroleum and its by-products such as plastic, besides, Pakistan also imports industrial machinery, electrical machinery, chemicals, motor vehicle, and its parts, etc. the total exports of Pakistan are estimated $23,748,680,252 and the imports are estimated $50,063,059,560. The exports of Pakistan contribute to 10.12% of the GDP whereas the import constitutes of 20.32% of the GDP as of 2019. Pakistan had trade deficit of $26,314,379,308 in 2019 as compared to 1,640,000,000 in 1995. These statistics show Pakistan trade deficit has increased to 24,674,379,308 since Pakistan joined WTO, however, these figures don’t depict the role of WTO in the trade of Pakistan rather it shows overall trade progress that is dependent on multiple factors, most importantly domestic industry in which no significant growth has been recorded since last 2 decades. However, WTO has benefited Pakistan by smoothening its trade system through negotiating its trade deals and solving trade disputes. Currently, Pakistan is involved in 5 dispute cases as a complaint, 4 cases as respondent, and is 3rd party in 13 dispute cases.
conclusion
WTO has played a significant role in improving the global trade system by introducing low tariff trade deals and platform for settling disputes and negotiating trade terms. It has also helped in increasing and smoothening trade among its member countries including Pakistan. However, to overcome its trade deficiencies, Pakistan has to increase its domestic productions and lower its imports, progressing to a self-sustainable country.
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