Henry Kissinger once said the art of diplomacy is not to outsmart the other side but to convince them of either common interests or disadvantages. In the face of the many contemporary changes in international politics, diplomats are called upon to position themselves in the new global governance mechanisms that have taken shape. Trade, environment, culture, different forms of security, health, and immigration are now an integral part of their activities
Of course, the foremost among these activities is maintaining sustainable economic growth for any country through trade, especially a developing one. In this context, diplomacy plays a major role by building alliances, forging partnerships, and negotiating trade agreements to ensure a country's economic growth and competitiveness. Diplomats are now expected to take on an important role in negotiating trade agreements, resolving trade disputes, and fostering economic ties that stimulate their countries' economic progress.
According to Islamabad Policy Research Institute, there is a growing recognition that economic diplomacy can play a significant role in achieving Pakistan’s external economic interests. However, the current efforts aimed at economic diplomacy do not significantly impact achieving Pakistan’s external economic interests optimally. There are individual success stories that do not translate into institutional capacity and effectiveness. Therefore, a comprehensive reform of economic diplomacy is required to attain maximum impact from this foreign policy tool.
Former Prime Minister of Pakistan, Imran Khan, constituted an ‘Economic Outreach Apex Committee’ in September 2020 to promote economic diplomacy. The first meeting of the Economic Diplomacy Outreach Program in October 2020 laid out a detailed economic outreach roadmap for input and assessment of the ministries concerned. However, the existing institutional arrangement in Pakistan for pursuing economic diplomacy is marked by isolated efforts such as lack of coordination, inefficient resources, political interference, limited participation of the private sector, and lack of capacity across ministries concerned and diplomatic missions abroad which undermine their ability to create a strong economic leverage for Pakistan in international relations.
Thus, since then Pakistan has failed to redefine its foreign policy with a focus on the economic dimension, which has a direct impact on the country’s growth and prosperity. When considering the economic aspect of foreign policy, three main areas can influence Pakistan’s development strategy: trade promotion, investment policy, and economic, financial, and commercial negotiations.
Touqir Hussain, a former Pakistani diplomat, now a Visiting Senior Research Fellow at the Institute of South Asian Studies, National University of Singapore, correctly observes, “The best days of our foreign policy are long gone as the policy has increasingly been made less out of concern for national interest and more by the leadership’s own priorities and pursuit of political power.”
Pakistan’s foreign policy has overlooked the importance of revising its diplomatic approach to expand trade and business, which are crucial for achieving economic growth
It is time for Pakistan to revisit its foreign policy to focus on expanding trade agreements and attracting Foreign Direct Investments (FDIs) for sustainable economic growth. To achieve this, the Foreign and Commerce Ministries should jointly prepare a strategy to activate foreign missions and market Pakistani products effectively.
Recent data from the State Bank of Pakistan (SBP) reveals that net FDI declined by 17.1% in the first eight months of the current fiscal year (FY24), dropping to just $820.6 million. This further emphasises the need for stronger economic diplomacy.
The concept of the "Global Village" has led to a global trading system, making it essential to periodically review trade agreements to ensure they are balanced and properly enforced. The China–Pakistan Free Trade Agreement is one example. Additionally, Pakistan should use diplomatic channels to gain support from South Asian countries to secure membership in ASEAN, a prominent organisation recognised as a global powerhouse and a central hub for cooperation in the Asia-Pacific. The Pakistan envoy to the EU can also explore the European Union to expand its market for Pakistani goods. Building strong diplomatic relations with other nations is essential for mutual growth and progress, especially for a developing country like Pakistan.
Regrettably, Pakistan has yet to become part of BRICS (Brazil, Russia, India, China, and South Africa), even though the group is closely linked to China, which conceived it as part of its Belt and Road Initiative to expand its global economic reach. Given that BRICS is no longer a group of equals, it is time for Pakistan to seek China's help in becoming a member of this influential organisation.
Historically, Pakistan’s foreign policy has overlooked the importance of revising its diplomatic approach to expand trade and business, which are crucial for achieving economic growth. Embassies, through their trade missions, should work to strengthen Pakistan’s trade, economic, and investment relationships with their host countries. This includes enhancing Pakistan’s reputation as a reliable trading partner, identifying market access for Pakistani products, attracting FDI, and promoting Pakistani goods. Unfortunately, Pakistan’s missions have failed to deliver on these goals.
According to the Ministry of Commerce, Trade Officers stationed abroad are responsible for increasing Pakistan's foreign exchange earnings by promoting and facilitating the expansion of the country's exports, both visible and invisible, in the regions where they are assigned. Their primary duty is to identify and create opportunities for Pakistan’s exportable goods and services, ensuring that relevant parties in Pakistan are promptly informed of these opportunities.
However, these missions have failed to develop strategies for expanding into new markets. They have also struggled to foster a better understanding of the Pakistani market by maintaining regular contact with potential partners, both through communication technologies and in-person visits. In short, trade missions have not effectively contributed to generating increased sales in foreign markets or strengthening business relationships between partners.
So, the way forward is to create a specialised economic and trade cadre, composed of experts from the Commerce and Trade group and experienced professionals from renowned corporations. They should be given comprehensive training in international law, economics, finance, and negotiation skills. They should also be trained in networking, lobbying, trade delegation management, and branding Pakistan as an attractive investment destination. This will help Pakistan compete globally and become a rising economic powerhouse.