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Pakistan, Turkiye to sign PTA today

  • Agreement will be followed by deeper market access in services and investment
Published August 12, 2022
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ISLAMABAD: Pakistan and Turkiye are all set to sign a Preferential Trade Agreement (PTA) on Friday (today) as Turkish Minister for Trade, Mehmet Mus has arrived in Islamabad to seal the commonly known Trade in Goods Pact, which will be followed by deeper market access in services and investment.

Sources in the Ministry of Commerce told Business Recorder that after 14 rounds of bilateral negotiations the agreement has been finalised for signing. The final draft of the agreement has been duly vetted by the Tariff Policy Board and the Ministry of Law and Justice.

According to sources text of the agreement includes comprehensive provisions on bilateral safeguards, balance of payment exceptions, dispute settlement, and periodic review of the agreement. The component of tariff reduction modality was approved by the Tariff Policy Board.

Rules of Origin incorporated in the Agreement were similar to Pakistan already complying with EU’s Rules of Origin under GSP+ regime.

The key highlights of the trade concessions offered by both sides under the Agreement are as follows: (i) Turkiye had offered concessions to Pakistan on 261 Tariff Lines, which include key items of Pakistan’s export interest to Turkiye from both agriculture and the industrial sectors. Concessions on these items would provide Pakistan’s exporters better market access compared to competitors such as India, China, Vietnam, and Malaysia.

Govt likely to sign PTA with Turkey on 12th

Out of these 261 Tariff Lines, the Turkish side was offering immediate zero concessions in around 123 Tariff Lines (Customs Duty for Agriculture Products and Additional Customs Duty for Industrial Products), whereas, in 92 Tariff Lines, duty would be reduced to zero in 5 to 10 years. In 5 Tariff Lines, the Turkish side was offering 50 percent reduction, whereas, in 14 Tariff Lines, it was offering a Tariff Rate Quota; and (ii) Pakistan had offered the Turkish side concessions in 130 Tariff Lines.

Out of 130 Tariff Lines, Pakistan was offering immediate zero duty to Turkiye in only 16 Tariff Lines, whereas in 16 Tariff Lines, Pakistan was offering zero duty in 5 to 10 years. In the remaining Tariff Lines, Pakistan was only offering a Margin of Preference to Turkiye ranging from 20% to 50%. It is important to note that the Turkish Request List was for 300 items; however, Pakistan had kept 170 items in the sensitive list to protect domestic industry.

The bilateral trade between the two countries has been consistently increasing over the years, and stands at $882 million as of FY 2021-22, up by 17.8% from $749.12 million in FY 2020-21. Pakistan’s exports to Turkiye had seen an increase of 33.6%, from $273.58 million in FY 2020-21 to $365.6 million in FY 2021-22.

Both countries have agreed to achieve strategic goal of enhancing bilateral trade to $5 billion in the medium-term. Both countries signed a “Framework Agreement for Establishing a Free Trade Area between Pakistan and the Turkiye” on March 22, 2016. In the agreement, both sides indicated their commitment to gradually establish the Turkiye-Pakistan Free Trade Area covering trade in goods.

Pakistan had been engaged in intensive negotiations for a Trade in Goods Agreement with Turkiye, in consultation with public and private stakeholders in Pakistan. The Agreement on Trade in Goods would be an important break-through in improving economic relations between the two countries and was a key agenda point during the recent visit of Prime Minister Shehbaz Sharif to Turkiye from May 31, 2022 to June 2, 2022.

During this visit, Minister for Commerce of Pakistan and Minister for Trade of Turkiye signed a Joint Ministerial Statement on “Developing Bilateral Trade and Economic Relations between the two countries”, whereby, both sides expressed the resolve to work for increasing bilateral trade to $5 billion in three years, as well as, to expeditiously conclude the Trade in Goods Agreement on the basis of mutual benefit.

Copyright Business Recorder, 2022

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