Pak-Spanish Economic and Trade Relations
by Dr. Noor Ahmed Memon

Spain has been transformed in the last three decades into a nation with a diversified economy with strong manufacturing and service sectors. At present Spain is also Europe's fourth large manufacturing country after Germany, France and Italy. The principal growth areas include tourism, insurance, property development, electronics and financial services. Tourism is one of Spain's most important industries, especially in Andalucia, earning about 4% of the GDP and employing some 10% of the workforce, both directly and indirectly. Spain's mixed capitalist economy supports a GDP that on a per capita basis is 80% that of the four leading West European economies.

The country is also the world's largest producer of olive oil, fourth largest of dried fruit and the sixth largest of citrus fruits. Spain's vineyards are the largest in the world and some 60% larger than France's, although it's only the fourth highest producer of wine-grapes and ranks third in wine production. Other important crops include barley, wheat, maze, rice, potatoes, sugar-beet, peppers, avocados, tomatoes, tobacco, hops, oil bearing fruits and cork.

Today the economy of Spain is the fifth largest in Europe, accounting for around 9% of EU output. Per capita income, at 78% of the EU average is among the lowest in the EU, although it is well ahead of Ireland, Portugal and Greece. Spain's main trading partners are France, Germany and Italy for exports and Germany, France and Italy for imports.

Trade between Pakistan and Spain

Over the years of friendly ties trade between Pakistan and Spain has increased significantly and other economic activities have also grown between the two countries. During the past six years exports and imports between Pakistan and Spain has increased but the rise in exports has been faster than the imports. The balance of trade had remained in favour of Pakistan. Exports from Pakistan to Spain increased from US $173.8 million in 2001-02 to US $415.5 ­­million in 2005-2006. However during 2006-07 export decreased to 82%. Table-1 shows Pak-Spain trade balance.

Cotton fabrics, readymade garments, towels, hosiery, bed-wear, made-up textiles, carpet and rugs are the major items exported from Pakistan to Spain. Export of textile and other items from Pakistan to Spain is given in Table-2.

The Government has continued to improve and rationalise its import policy with a view to allowing liberal import of industrial raw materials, capital goods and essential consumer goods. These include usually high imports of machinery, chemicals and other raw materials. Textile machinery, chemicals, pharmaceutical products, textile fiber/waste and transport equipments are the main items imported from Spain.

Pakistan, an attractive market for textile machinery manufacturers all over the world, has become a focal point of the suppliers in view of the massive balancing, modernisation and replacements (BMR) taking place under "Textile Vision 2005" programme.

Since last six years, Pakistan textile industry has made US $ 6 billion investments in expansion and BMR and it is heartening to note that all the investment had been in production of value-added textile products for exports. Import of textile machinery from Spain to Pakistan decreased from Rs. 446 million in 2003-2004 to Rs. 266 million in 2006-2007, thus showing decline of 40%. Categories-wise import of textile machinery from Spain to Pakistan is given in Table-3 .

Pakistan and Spain agreed to step up their cooperation against terrorism and human trafficking during talks in Madrid between the leaders of the two nations. Both parties agreed to promote cooperation in the field of combating illegal immigration and human trafficking, said a joint statement issued after the talks between President Pervez Musharraf and Spanish Prime Minister Jose Luis Rodriguez Zapatero. In order to boost economic and trade relations, the two nations agreed to set up joint working groups made up of high officials who will meet regularly.

Ambassador of Spain Jose Maria Robles Fraga has said that his country would extend all-out support to Pakistan for lifting of anti-dumping duty on bed linen by the EU. He said that there was great scope for cooperation in various industrial sectors between Spain and Pakistan. Joint ventures could be launched in pharmaceutical, electrical appliances, food items, engineering goods, agro-based products, mineral and mineral-based products and power generation sectors. Spain had the technology to construct dams besides being the biggest user of renewable sources of energy. Both the countries could join hands for transfer of technology in these sectors.

Spanish Textile Machinery

The European Union has emerged as a one large scale exporter of textile machinery in the international scenario. Some other countable and creditable manufacturers and exporters of textile machinery include Italy, Germany and Spain.

Spain has secured its place by the 11th rank world-wide in terms of textile machinery manufacturing. Diversification and innovation played a major role in the retainable position of Spain.

Spanish textile machinery industry has flourished with the structure of small and medium sized companies. These companies are still facing very tough competition with the world leaders to achieve the international standards of price, design, quality and service.

Weaving machine spare parts, knitting, sewing, accessories and spinning are the different categories included under the textile machinery sector of Spain. 90% of this sector of textile machinery of Spain is occupied by small and medium scale companies which have strength of less than 50 employees. Now-a-days maximum number of companies is outsourcing the manufacturers of parts for the workshops designed for special purposes. Some companies have specialization in product research and development and innovations and some have in machine assembly phases.

The textile machinery sector restructuring being undertaken by Europe is becoming more specialized and concentrating production in the manufacture of high-tech fabrics. Technical textile has grown more in the last decade. Major change is seen in “traditional textiles” so changes play major roles in products also like modifying or diversifying products of machinery. The related sectors for this are agriculture, hygiene and medicine, chemicals, packing and packaging and automotive industry.

During the year 2006 Spanish textile and clothing machinery exports totaled €175 million. In 2006 Spanish exports accounted for 70% of total sales, making the sector’s exports highly significant.

The top five destinations for Spanish exports were Turkey, Italy, India, Portugal and Morocco. These counties accounted for 32% of Spanish textile and clothing machinery exports. In the last five years, Spanish sales of textile and clothing machinery have increased to Turkey, India, Morocco and China. Sales to Germany have remained stable while other countries have declined due to economic factors.

As a whole, Europe is the leading manufacturer of textile machinery in the world both in terms of sales and the number of companies as well as for the quality and technology of its products.

The extensive research & development and innovations had led Spain in the global market in the technical textiles. The investment by this sector is €2.30 billion in research and development projects and 4.60 billion in new facilities and capital goods. The production in different regions of Spain is 3% in Valencia, 64% in Catalonia and 33% in Madrid of total sales. There are only two companies in Madrid though its contribution is of 32%.

Dyeing and finishing is a very much important sub sector of Spain. This dyeing and finishing sector consists of 32 companies and is the leading sector of country. The other sector which follows it is a spinning machinery section with 20 companies. Each sub sector has a potential for new innovations in the Technology. The main innovations in the sub sector are as follow:

Dyeing machinery: with the new innovations machines are operated by computers and especially in ink jet printing and paste printing. Due to this digitalization more speed and precision is seen. Technological fine-tuning is seen in the area of processes and concept. Maximum efficiency is achieved by using minimum number of reactive agents and with the use of minimum water and minimum effects on the cellulose.