Free Trade Agreements Of Pakistan
Free trade is a policy followed by some international markets in which countries’ governments do not restrict imports from, or exports to, other countries. Pakistan has free trade agreements with many countries to flourish its exports as well as imports to meet its local requirements. Following are the free trade agreement of Pakistan with other countries.
i. China Pakistan FTA (CPFTA)
China-Pakistan Free Trade Agreement (CPFTA) on trade in goods was signed on 24th November 2006 and implemented from 1st July 2007. FTA on Trade in Services was signed on 21st February 2009 and is operational from 10th October 2009. The FTA covers more than 7000 tariff lines at the 8-digit level of the HS code. Pakistan-China volume of trade, which was in the region of US$ 4 billion in the year 2006-07, reached an all-time high at US$ 13.77 billion in 2015-16. Pakistan’s exports have increased by almost 200 percent (US$ 575 million in FY2007 to 1690 million in FY2016). China’s exports to Pakistan have increased to almost 250 percent (US$ 3.5 million in FY2007 to 12.1 billion in FY2016).
ii. Malaysia- Pakistan FTA (MPCEPA)
A Comprehensive Free Trade Agreement (FTA) for a Closer Economic Partnership between Pakistan and Malaysia was signed on 08-11-2007 at Kuala Lumpur. It is operational since 1st January 2008. The tariff reduction commitments involved the elimination of tariffs on 43.2% of Pakistan’s imports from Malaysia and 78% of Malaysia’s imports from Pakistan. In 2007-08, Pakistan-Malaysia bilateral trade was US$ 1238.808 million with Pakistan’s exports amounting to US$ 81.323 million. In the same year, Pakistan‘s imports from Malaysia were US$ 1157 million. After the implementation of the Agreement, Pakistan’s exports to Malaysia increased to US$ 188 million and imports decreased to US$ 814 million.
iii. Pakistan -Sri Lanka FTA (PSFTA)
Pakistan and Sri Lanka signed a Free Trade Agreement in 2002 which became operational in June 2005. Under the FTA, concessions that are granted, the list of Pakistan contains 206 items of 100% concession. Sri Lanka has granted 163 access to Pakistani rice and potatoes subject to a Tariff Rate Quota. Under this FTA, tariff preferences offered to Pakistan, though less in number, have resulted in an increase in Pakistan’s exports. After the signing of the FTA, Pakistan’s bilateral trade with Sri Lanka increased from US $ 200 million in 2004-05 to US $321.71 million in 2015-16. Pakistan’s exports in the corresponding period have also increased from US$ 155.83 million to US$ 247.11 million.
South Asian Free Trade Area (SAFTA)
The SAARC Preferential Trading Arrangement (SAPTA) was signed in April 1993. Subsequently, the 16th Session of the Council of Ministers of SAARC (at New Delhi, in December 1995) agreed to establish a South Asian Free Trade Area. The Agreement on South Asian Free Trade Area (SAFTA) was signed during the 12th SAARC Summit held in Islamabad on 6th January 2004. The Tariff Liberalization Programme (TLP) under SAFTA was finalized during the first meeting of the SAFTA Committee of Experts (COE) held in Dhaka, in April 2006. The first two phases of the TLP under SAFTA have been implemented by all countries.
Impact of TLP on Pakistan’s Trade with SAARC Region
Pakistan’s trade in the SAARC region has increased substantially due to TLP. In FY 2003-04, Pakistan’s total export to the SAARC region was US$ 886 million which increased to US$ 1,564 million in FY 2006-07 (in the first year of SAFTA’s implementation). During FY 2015-16, Pakistan’s exports to the SAARC region were US$ 2690.23 Million. Pakistan’s total imports from the SAARC region have increased from US$ 527 million in 2003-04 to US$ 2318.49 million in 2015-16.
(Source: Ministry of Commerce). Read more
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