Pakistan to review all preferential trade agreements
Pakistan's commerce minister Khurram Dastgir Khan chairing a meeting to review latest trade figures. Courtesy: PID
Stung by a rash of trade deals that has aggravated the country's balance of trade, the Pakistani government has decided to review all such existing preferential pacts through which Pakistan conducts its trade on preferable terms with other countries on bilateral basis.
The review will be conducted through multiple means of stakeholders' consultations and analysis of trade data available. The decision was taken at a high level meeting headed by Commerce Minister Khurram Dastgir Khan, an official statement said.
Pakistan's trade balance deteriorated further following signing of preferential trade agreements with China, Malaysia and Indonesia. The data compiled by the ministry shows that Pakistan's exports did not grow in comparison to imports from these countries.
The decision to review PTAs will help provide clear guidelines to the policy makers on which the country will negotiate further trade agreements.
Pakistan is signatory to Free Trade Agreements (FTA) with China, Sri Lanka and Malaysia and Preferential Trade Agreements (PTAs) with Iran, Indonesia and Mauritius. These agreements were signed in the previous decade thus provide a sufficient time frame to assess the efficacy of these agreements.
Now Pakistan is in the process of negotiating FTAs with Thailand, Turkey, South Korea and Iran, which will broaden the trading opportunities for Pakistani businessmen, the minister said.
The meeting noted that Pakistan's trading partners have negotiated bilateral and multilateral trade pacts with other countries thus securing greater market access. It also observed that the demand for enhanced market access should arise from the domestic industry.
Dastgir Khan said trade agreements compel local industries to modernise and diversify in order to compete in the international market besides providing better choice of products to the local people. Pakistani industries should also expand and remodel themselves at the international standards, he added.
In this connection, Pakistan and China have already held several rounds to revise the FTA which was implemented in July 2007. China entered into several bilateral and regional FTAs, which blunt Pakistan's edge in the biggest market in the world.
Pakistan has urged China to revive preferential treatment to 'Made in Pakistan' under the second phase of the FTA.
The FTA with China has backfired on Pakistan with the country suffering a 93 per cent loss of revenue because of the tax waiver on imports, while China took and 7 per cent hit. In absolute terms, the revenue loss for Pakistan is estimated at around Rs 30.577 billion in case of the Pakistan-China FTA alone in year 2015-16.