Daily Times

ISLAMABAD: Due to enormous losses in the existing preferential trade pacts with foreign countries, the Ministry of Commerce has decided to review all existing preferential trade pacts through which Pakistan conducts its trade on preferable terms with other countries on bilateral basis.

The review would be conducted after Eid through multiple means of stakeholders’ consultations and analysis of available trade data. Sources told the scribe that the Ministry of Commerce has decided to review the trade pacts with China, Sri Lanka, Malaysia, Iran, Indonesia, Mauritius and other countries as trade deficit is increasing day by day.

The Ministry of Commerce data has shown that Pakistan’s exports did not grow in comparison to imports from these countries. Pakistan already had a trade deficit with these countries but the preferential trade treaty makes the trade imbalance even worse.

Pakistan and China would continue negotiations to revise the free trade agreement (FTA), which was implemented in July 2007. In the case of the Pakistan-China FTA, this disparity is in the range of 93 percent for Pakistan (revenue loss because of the tax waivers on imports) and 7 percent for China. In absolute terms, the revenue loss for Pakistan is estimated at around Rs 30.577 billion for the year of 2015-16 in the perspective of the Pakistan-China FTA.

Pakistan and Malaysia had signed a comprehensive FTA on November 8, 2007, which became effective from January 1, 2008. Pakistan’s exports to Malaysia stood at $125.82 million in 2008-09, as against imports of $1.718 billion from Malaysia, reflecting a trade deficit of $1.592 billion. The bilateral trade deficit with Malaysia reached to $2 billion in the year 2014-15. In case of the Pakistan-Malaysia FTA, the revenue cost of exemptions to Pakistan is estimated at Rs1.674 billion in the year 2015-16.

Pakistan and Indonesia signed PTA on February 3, 2012. The PTA became operational in September 2013. Pakistan’s exports to Indonesia were $48.3 million in 2008-09, while imports stood at $842.7 million, reflecting a bilateral trade deficit of $794.4 million. But the trade deficit with Indonesia reached to $1.5 billion in the year 2014-15. Pakistan had to incur revenue loss enormously because of ascendancy of PTA to Rs3.932 billion in 2015-16.

No tangible growth was witnessed in exports to countries like Iran, Mauritius, Sri Lanka but Pakistan suffered a revenue loss to the tune of Rs1.250 billion in the year 2015-16.

Pakistan is signatory to FTA with China, Sri Lanka and Malaysia and preferential trade agreement (PTA) with Iran, Indonesia and Mauritius. These agreements were signed in the previous decade thus providing 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 would broaden the trading opportunities for Pakistani businessmen.