Pakistan, Turkiye sign preferential trade agreement

  • Pact to allow both countries greater access to each other’s markets
Published August 12, 2022

Pakistan and Turkiye signed on Friday the preferential trade agreement (PTA) or Trade in Goods Pact, allowing in principle both countries greater access to each other’s markets.

The PTA was signed by Turkish Minister for Trade Mehmet Mus and Federal Minister of Commerce of Pakistan Naveed Qamar in Islamabad.

Speaking on the occasion, Prime Minister Shehbaz Sharif said “it is a great moment and a milestone for our historical and brotherly relations” with Turkiye.

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“This has been a subject of discussion for past many years and finally it has been achieved due to untiring efforts of both sides,” he said, while appreciating the vision and leadership of Turkiye President Tayyip Erdogan.

PM Shehbaz also stressed that the Trade in Goods Pact would open new vistas of opportunities for both countries given that their “potential is unlimited and capacity is beyond anyone’s imagination.”

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“The signing of PTA would help the two sides grow to new heights in terms of enhanced trade and investment,” he said. “We had been longing for this moment. We want to let the world know that we mean business,” PM Shehbaz said.

In a tweet, PM Shehbaz said that the agreement will be pivotal in achieving the initial trade target of $5 billion.

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

According to sources, the 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.

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Rules of Origin incorporated in the agreement are similar to the ones that Pakistan is already complying with EU’s Rules of Origin under the GSP+ regime.

Under the agreement, Turkiye has offered concessions to Pakistan on 261 tariff lines, which include key export items of Pakistan from both agriculture and the industrial sectors.

Moreover, concessions on these items would provide local exporters better market access compared to competitors such as India, China, Vietnam, and Malaysia.

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.

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.

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.


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