ISLAMABAD: Pakistan’s trade balance deteriorated further following signing of preferential trade agreements with China, Malaysia and Indonesia, a source in the Ministry of Commerce told Dawn on Thursday.
The source attributed the trend to ‘ineffective, ill-planned negotiations’ of the Ministry of Commerce with trading partners in the region.
Official data compiled by the ministry shows that Pakistan’s exports did not grow in comparison to imports from these countries. “Pakistan already had trade deficit with these countries but the preferential trade treaty aggravated the trade imbalance,” the source informed.
Pakistan-China volume of trade, which was in the region of $4.1 billion in the year 2006-07 before signing the free trade agreement (FTA), reached all time high in 2012-13, amounting to $9.2bn, reflecting an increase of 124 per cent.
Instead of plugging the loopholes in the treaty, the relevant ministry held the first meeting on the second phase of China-Pak FTA in March 2011. The two sides agreed to develop a road map for moving ahead in the second phase, and to finalise the tariff reduction modality aiming at further deepening of tariff concessions.
On this issue, the second meeting was held on November 14-15, 2013.
Pakistan’s exports to China were $0.6bn in the year 2006-07, while imports stood at $3.5bn, with a bilateral trade deficit of $2.9bn. Currently Pakistan’s exports to China reached $2.6bn, while imports jumped to all time high of $6.6bn, reflecting a bilateral trade deficit of $4bn.
As a result of this treaty, a trade expert says Pakistan has diverted imports from efficient to an inefficient source.
Pakistan and Malaysia have signed comprehensive FTA on November 8, 2007, which became effective from January 1, 2008.
Pakistan’s exports to Malaysia stood at $125.82m in 2008-09, as against imports of $1.718bn from Malaysia, reflecting a trade deficit of $1.592bn. The bilateral trade deficit with Malaysia reached to $1.863bn as exports reached to $237.025 m, while imports stood at $2.10bn in the year 2012-13.
Both countries have held two meetings so far to review further deepening of the trade treaty.
Pakistan and Indonesia have signed preferential trade agreement (PTA) on February 3, 2012. The PTA became operational in September, 2013.
An official said the enforcement of PTA, being the first step under the comprehensive economic partnership agreement will be followed by negotiations on bilateral FTA as per commitments already agreed between the two sides.
Pakistan’s exports to Indonesia were $48.3 million in 2008-09, while imports stood at $842.7m, reflecting a bilateral trade deficit at $$794.4m. But the trade deficit with Indonesia reached to $1.099bn in 20012-13 following the signing of the PTA as exports stood at $196.421m while imports from Indonesia stood at $1.296bn.
Published in Dawn, November 7th, 2014