ISLAMABAD: Thailand has sought a drastic reduction in the tariff on the auto sector under the proposed Free Trade Agreement (FTA), an official told Dawn.

Thailand follows Turkey in demanding market access for the auto sector in Pakistan. In the last round of FTA negotiations held in Islamabad, Thai authorities conveyed that the agreement’s implementation would be linked with access to the auto sector in Pakistan.

To move forward, Pakistan will engage local stakeholders of the auto sector for consultation, the official said. He added that a delegation of the auto sector will also be sent to Bangkok for a meeting with Thai authorities.

“We will facilitate this meeting between the private sectors of the two sides,” the official said. In 2006-07, Pakistan carried out a study for the initiation of a Preferential Trade Agreement (PTA) with Thailand. However, no further progress was made and the study remained on paper only.

The formal negotiation on the FTA began on August 13, 2015 after a lapse of over 10 years. Six rounds of negotiations on the FTA have been held so far.

An official said that both sides have almost finalised the text of the proposed FTA. However, negotiations are still under way on the tariff reduction.

Both sides have already shared the request list for the reduction on duties and taxes. However, the offer lists are yet to be finalised, the official said.

In the first phase, both sides will conclude and strike an agreement on trade in goods. The second phase will include discussions on Intellectual Property Rights (IPRs), competition, services and investment.

According to an official study, Thailand has a comparative advantage in around 1,000 commodities, chiefly electrical and electronic appliances, machinery and component, and automobiles and parts.

Pakistan has a comparative advantage in some 684 commodities, including cotton yarn and woven textiles, readymade garments, leather products, surgical instruments and sports goods. Pakistan can only get market access for its textile and clothing sector after giving market access to Thailand in the auto sector.

In addition, there is potential for boosting intra-industry trade between the two countries in several product segments, most notably knitted or crocheted fabrics, articles of apparel and clothing accessories, made-up textiles and leather products.

Both types of trade can bring benefits to the two countries in terms of enhanced competition and efficiency, lower prices and improved product quality and variety.

The trade volume between Pakistan and Thailand was $952 million for 2015-16. Pakistan’s exports were $107m while imports amounted to $845m.

Published in Dawn, March 10th, 2017