Lahore - The Sindh Board of Investment (SBI) has raised concern on the Free Trade Agreement (FTA) with Turkey, suggesting that the FTA can deliver better if designed in line with input given by local industry and investors.

In a joint letter written to the Sindh chief minister, Federal Ministries of Commerce & Industries, Federal Board of Investment and TDAP, the SBI stated, “FTAs are meant to boost trade between countries and open markets for your goods, but unfortunately, in Pakistan, all FTAs and PTAs have only resulted in increase in trade deficit. FTA with China led to an increase in trade deficit from $2.9 billion to $4.1 billion, FTA with Malaysia led to an increase in trade deficit from $1.6 billion to $1.9 billion and PTA with Indonesia led to an increase in trade deficit from $800 million to $1 billion approximately.”

Industry stakeholders are also feeling the brunt of the FTA with Turkey and said that prevailing disharmony in the policies would diminish the benefits of the agreement. The automotive and auto parts industry has also apprehensions that the Ministry of Commerce is hastening the signing of the FTA.

FTA with Turkey should be based on mutual benefits for both the countries and should consider existing players who have invested and brought FDI in the country and established their plants along with transfer of technology and providing hundreds of job opportunities, the industry stakeholders said.

“If FTA with Turkey reduces duties on imports of the products which are produced locally then importers may benefit but local investment in setting up plants and producing goods could be harmed. Local industries could roll back their investment and shut down their plants to import goods through FTA thus leaving thousands of people jobless,” they added. “This could discourage FDI and damage industrialisation in the country. It could also discourage other multinational companies planning to invest in country,’ they added.

Ameen Jan, a consultant who has previously worked at McKinsey and the UN, suggested that the FTA should support import of raw material instead of finished goods that are already manufactured in Pakistan, as raw material would encourage local investors to enhance their productivity while taking the benefits of low priced raw material. On the other hand, if the government facilitates import of finished goods it may directly affect production by local industry and investors; as they will leave no space for local manufacturers to produce thus putting at stake thousands of jobs in the country.

He said that industrial policy, trade policy and export promotion policy should be the bedrock of economic growth; trade agreements should support these policies, and not be unrelated to them. One of the keystones of industrial policy must be to harness FDI and technology transfer from abroad which will benefit sustainable job creation and export potential in Pakistan, he added. “If these factors are considered then trade agreements will bring tangible economic benefits to the country,” he stated, and cautioned against trade agreements that are primarily politically motivated.