No free trade deal signed since 2013

ISLAMABAD –  The incumbent government has failed to sign any free trade agreement (FTA) with any country since June 2013, indicating its non-seriousness in enhancing trade with other countries.

The government is currently negotiating free trade agreements (FTAs) with Thailand, Korea and Turkey. Meanwhile, Pakistan is also negotiating the second phase of the FTA with China. However, the government has not able to sign FTA with any country.

“The government is negotiating with several countries on FTAs, in which two agreements can be signed next year,” said an official of the ministry of commerce. He further said that government will not sign any FTA that does not safeguard the country’s interests. “Pakistan’s trade balance deteriorated after signing the previous trade agreements with China, Malaysia and Indonesia due to ineffective, ill-planned negotiations of the ministry of commerce with other countries,” he added.

According to the official documents, the Cabinet accorded approval to initiate negotiations on Pak-Thailand FTA in its meeting on 24th August, 2015. Eight rounds of negotiations have been held so far. Both sides have completed the text of the agreement, shared their respective initial request lists and tariff reduction modalities. Efforts are being made to conclude free trade agreement by next year 2018.

Similarly, Pakistan is in process of negotiating comprehensive free trade agreement (FTA) with Turkey to remove barriers to its exports in Turkish market. This FTA covers trade in goods, trade in services and chapter on investment. So far, seven rounds of negotiations have been held. However, Turkish government is reluctant to sign FTA with Pakistan due to resistance from its textile sector. Pakistan wants 10 percent duty free exports to Turkey, which is not acceptable to them.

Meanwhile, Pakistan and Korea also failed to sign FTA. Both sides have concluded a feasibility to explore the possibility of a free trade agreement between the two countries. The government of Pakistan is also negotiating 2nd phase of the FTA with China. The focus is on exchanging concessions in such areas where the strengths of the two countries complement each other, thereby encouraging intra-industry trade. Since the signing of FTA with China back in 2006, Pakistan managed to avail only five percent of the concessional lines, while Chinese imports enjoyed 57 percent of tariff concessions. As per the original plan, the second phase was supposed to be implemented from Jan 1, 2014. Both countries started negotiations for the second phase in 2011. Both the countries held 8th round of negotiations of the 2nd phase of FTA, but failed to sign it.

Pakistan has signed a PTA with Indonesia in 2013. Trade deficit between the two countries has widened in favour of Indonesia during the said period, as import of palm oil shifted from Malaysia to Indonesia. Pakistan is presently conducting a review of the PTA with Indonesian side and efforts are at hand to rectify the widening trade deficit.

It is worth mentioning here that Pakistan Business Council, a business advocacy group, in its report noted that Pakistan’s economy failed to benefit from any of the six bilateral trade agreements over the past one decade with the country struggling to get tariff incentives from its trading partners. The country has so far signed free and preferential trade agreements with six countries, including China, Malaysia, Sri Lanka, Iran, Mauritius and Indonesia.

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