FTAs do not work well for Pakistan
The Commerce Minister himself played a role in convincing the Turkish leadership to sign an FTA with Pakistan. Turkey had imposed extraordinary duty on Pakistani textile products due to which Pakistan's exports nose-dived from $900 million to $400 million and efforts made by Islamabad to bring exports to the level of 2011 remained fruitless.
Giving details, the sources said though Pakistan's exports to China increased from a few million dollars to $2.5 billion - with yarn the highest export earner - yet Chinese imports soared to $8 billion. However, bilateral trade figures quoted by China are far different from those cited by Islamabad.
Officials in Commerce Ministry claim that Pakistan is facing a revenue loss of Rs 22 billion per annum due to a trade imbalance, adding that Islamabad could not reap the benefits of Margin of Preferences after China signed FTAs with other countries, especially ASEAN. Pakistan has requested China to open services sector for Pakistan for deeper linkages and greater market access to each other's markets. Commerce Ministry is also considering speeding up engagements in services sector and de-linking services from the goods negotiations.
According to sources, Chinese investments in the Economic Corridor will be channeled through Pakistani banks. It is expected that current account deficit would curtail by 15-20 percent which would be an enormous achievement if an agreement is reached. A Free Trade Agreement with Malaysia has also failed to provide a level-playing field as trade balance remained in favour of Malaysia from day one. Pak- Malaysia trade volume which was in the range of$1.007 billion reached $2.66 billion a couple of years ago.
During July-April 2012-13, Pakistan's exports stood at $0.20 billion against imports of $1.75 billion, totalling $1.95 billion which implies that trade balance was $1.55 billion in favour of Malaysia.
Main reasons for balance of trade in favour of Malaysia are imports of palm oil, rubber and timber. However, Malaysia is still unhappy with the volume of palm oil being imported by Pakistan, saying that its palm oil exports to Pakistan declined from 90 per cent to almost 50 per cent.
Pakistan's exports to Sri Lanka dropped from $347.7 million in 2011 to $300.9 million in 2012. There was some improvement in the following year but it only went as high as $316.4 million whereas our imports from Sri Lanka remain well below $100 million. Sri Lanks has allocated Pakistan a duty-free quota of 6000 MT of Basmati rice and of potatoes of 1000 MT per annum. However, Sri Lanka has raised concerns on a number of occasions on the quality of Pakistani Basmati rice. Pakistan is a key importer of Sri Lankan tea.
According to the private sector, although Pakistan had signed FTAs with Malaysia and Sri Lanka the quantum of garment imports of these countries is not significant; these markets are not providing any sizeable replacement for the EU and the US markets. Pakistan's major exports to Sri Lanka include woven cotton fabrics, cement, sugar, wheat and muslin, medicament mixtures, tubes and pipes of iron and steel, potatoes, rice, cotton yarn, and onions etc.
Sri Lanka's major exports to Pakistan are vegetable products, natural rubber, fiberboard of wood, cashew nuts, coconuts, peppers and capsicum, tea, sewing thread, cereal straws, tyres and scrap of paper or paperboard, etc. In April 2014, Federal Board of Revenue (FBR) announced tariff concessions on the import of 993 items from Sri Lanka under a Free Trade Agreement (FTA).
Source: www.brecorder.com