ISLAMABAD: After a lapse of around 10 years, Pakistan and Turkey have decided to sign a framework next week to initiate talks on free trade agreement, an official told Dawn on Saturday.
A Turkish delegation will reach Islamabad next week to sign the framework with Pakistani counterpart to break the deadlock. The proposed treaty is scheduled to be implemented from 2017.
Once the framework was signed, the official said, both the sides will start work on identifying tradable items for reduction of customs duties.
Commerce Minister Khurram Dastgir Khan confirmed to Dawn that the framework will become a basis for initiation of talks on FTA between the two countries.
“I have raised this issue with Turkish leadership during my last visit to Ankara,” Dastgir said.
Turkey is part of the European Union Customs Union (EUCU). The EU Generalised System of Preferences Plus (GSP+) scheme, which is effective from Jan 1, 2014 offers duty-free market access to newly selected countries including Pakistan.
Turkey as part of the EUCU offers similar market access to all countries excluding Pakistan and one African country. “I have urged Turkish authorities to remove this anomaly being meted out to Pakistani exporters,” the minister said.
Both the countries had started deliberations on closer trade ties in 2004, but failed to conclude a Preferential Trade Agreement (PTA) because Ankara being member of the EUCU was obligated not to offer duty reduction on industrial goods.Despite limited scope for Pakistani products, Ankara in 2011 imposed 18 per cent additional duty on import of fabrics/made-up textiles and 27pc additional duty on garments from Pakistan.
There was also the quantity-based restriction on exports of rice. Several times this issue was raised with Turkish authorities, but no progress has so far been achieved.
An official source told Dawn that Pakistan will share a list covering 278 tariff lines under the FTA with Turkish authorities.
Turkey, however, will seek opening up of Pakistan’s automotive and pharmaceutical sectors. Ankara hints to share a list of 717 tariff lines for concessions with Islamabad. Making the FTA meaningful, Pakistan will demand abolishing of normal tariff as well as additional duties on export of agriculture and food products to Turkish market. Pakistan is, however, asking for placement of those products on the concessional list which attract over 15pc duty at the import stage.
A trader told Dawn that Pakistan’s livestock sector has the potential to considerably raise exports as its meat was more delicious and cheaper when compared with Turkish meat.
On the other hand, Turkey has expertise in shipping, road infrastructure network and export processing zones which will be helpful in China-Pakistan Economic Corridor and other transit routes.
In the non-tariff areas, there is a potential for elimination of non-tariff barriers for each other, reciprocal participation in trade fairs and exhibitions and organising trade delegation programmes.
Both the sides have the potential to explore possibilities of investment opportunities in defence industry, food processing and packing, automotive industry and auto parts, household appliances, construction material, textiles, leather machinery and finished products, sports goods and surgical instruments.
Published in Dawn, March 6th, 2016
