With the announcement of our FM that a high-level delegation will soon leave for Washington for talks on tariffs levied on Pakistan exports, the politicians and higher-ups in ministries along-with their families are already packing their bags for an opportunity to spend their summer in the US.

However, one needs to pre-plan what is likely to be on the table and how to approach the talks. A wiser approach would be not to rush to talks but first learn lessons from one or two developing countries in similar economic/geo-political environment. Critics may argue that we may miss the bus and it is better to strike the iron while it is hot.

The justification for the former approach is that lot is unknown and may start flowing in directly or indirectly in coming months? Given the formula for setting the tariff rates, however crude or imperfect it may be, the question is: Is it dynamic or static?

Once tariffs are negotiated at individual country level, say in 3 months’ time, thereafter will its value change in real time, monthly, bi-annually or yearly, or is it fixed till the next US elections?

Apparently, the tariffs are based on trade data for CY 2023. If tariffs are data-driven, once the trade data for year 2024 is public, what will be the lag before the updated tariffs are released in case it is dynamic? This introduces element of severe volatility in trade, financial flows and investment decisions across the globe.

Ideally, post-negotiations, tariff rate should be treated as fixed till the next US election for reducing volatility. However, from US perspective, it may be fixed for a year, as it leaves US the chance to monitor the commitments and adjust the rate accordingly while keeping the exporters on their toes.

An annual review is insufficient for investment decisions to materialize, if the purpose is to move manufacturing to the US. However, monitoring of imports into USA is possible on a yearly basis. There are two ways to incentivize negotiations.

As these negotiations will be mainly based on ex-ante commitments of........

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