Pakistan gears up for more trade deals with Central Asian states

ISLAMABAD: Pakistan has adopted a diversified modus operandi to improve its export outlook and initiated the ‘Look Central Asian States policy’ to capture more markets.

“After inking a preferential trade agreement (PTA) with Uzbekistan, trade agreements with Kazakhstan and Kyrgyzstan are also on cards,” Federal Commerce Minister Naveed Qamar stated this in an interview with The News.

Also “Look Africa policy” adopted in the previous tenure will continue as it has started giving dividends to Pakistan in terms of making inroads into the vast markets of African countries. The minister said that Kazakhstan is a rich country and a trade agreement with it will benefit Pakistan. “Also with Kyrgyzstan, the trade deal is nearing completion.”

Talking about Uzbekistan, which is in a preferential trade agreement (PTA) with Pakistan, the minister said that Uzbekistan is very rich in gold reserves, gems, and precious stones, and the authorities in Uzbekistan want Joint Ventures with Pakistani entrepreneurs in making jewellery out of them and other finished products for sale to the whole world. The Central Asian States are also very strong in the production of cotton.

To a question, Qamar responded that the commerce ministry officials are working on the trans-shipment policy but it will give dividends once the Gwadar Port is fully operational and is connected with all parts of the country. He said that wheat, which was earlier planned to be imported through Gwadar, is not being brought into the country via Gwadar because of its lack of connectivity for smooth transportation to various parts of the country. He said once the Khuzdar-Ratodero Road artery is constructed, speedy movement of consignments from Gwadar will be possible.

Transshipment is when cargo or a container is moved from one vessel to another while in transit to its final destination. However, the transshipment policy can prove a game changer in terms of making Gwadar Port a hub of economic activities.

The minister said that after the catastrophic flood, the cotton production estimates have tumbled to 6 million bales, Pakistan’s textile industry needs 14 million bales for its export products. He said that Pakistan’s textile industry has to import cotton of $2-3 billion.

Qamar hoped that Pakistan would succeed in ensuring the continuation of GSP Plus facility from EU countries for exports. The EU market is of paramount importance for Pakistan. The GSP Plus facility has a major role in exports to the EU countries.

Mentioning trade with Afghanistan, the minister mentioned that this is the first time the bilateral trade has gone in favour of Kabul, mainly because of the import of coal on a large scale. Pakistan badly needs coal for cheaper power electric generation in the country. According to the data, Afghanistan is the captive market of Pakistan but its exports to the land-locked country have substantially dwindled to just about $857 in 2021-22 million from $2.6 billion in 2010-11. When this fact was brought to his notice, he said that exports to Afghanistan has declined over the years, however, the trade would pick momentum with the passage of time once the new regime in Afghanistan is accepted by the whole world.

To a question, Qamar said that the new Afghanistan-Pakistan Transit Trade Agreement (APTTA) has not been signed as it would be tantamount to accepting the new regime in Kabul. However, trade under the agreed agreement is underway with the landlocked country. The overall trade with Afghanistan is improving as the four border points for trade that include Torkham, Chaman, Kharlachi, and Ghulam Khan are currently open for bilateral trade with Kabul. “This shows that the trade is improving.”

When his attention was drawn to the fact that China is dumping filament yarn at cheaper rates in Pakistan, which is detrimental to the country’s textile industry, the minister said the government has imposed a five percent regulatory duty on filament yarn coming from China and addressed the issue temporarily. Now the issue will be resolved through anti-dumping laws once both parties (importers of filament yarn and local industry’s representatives) will seek a decision.

The minister said that Free Trade Agreement-1 with China considerably damaged Pakistan in terms of not increasing exports to the Chinese market and increasing imports from China in a big way. So the trade agreement was renegotiated which was renamed as FTA-2 to make the trade between the two countries balanced, but still there is a room for refining the free trade agreement. Pakistan may ask authorities in China to further negotiate FTA-2.

The minister said that under the Phase-II of the China-Pakistan Free Trade Agreement (CPFTA) that is being implemented from January 1, 2020, during FY(21-22), the exports to China remained at a level of US$3.06 billion with an increase of 32% over the last year i.e. US$2.33 billion (FY20-21), which was a remarkable growth. The imports remained at a level of US$20.5 billion with an increase of 35.5% increase from the previous year i.e. US$15.1 billion (FY20-21).

However, trade agreement with Indonesia has caused an increase in imports to a large extent in bilateral trade and the government is making its mind to renegotiate the trade deal to ensure a win-win situation.

“If we look at bilateral trade data with Indonesia of the last seven years, the trade balance is heavily tilted towards Indonesia in the range of $666 million to $890 million.” The minister stressed pro-agriculture policies to wriggle the country out of its economic crisis arguing that most of the country’s industry is linked with agriculture one way or the other. He said the export industry, textile, leather, carpet and other many local industries are linked with agriculture. He said Pakistan will have to import 3 million tons of wheat other than cotton.