ISLAMABAD: Pakistan and Turkiye have signed a preferential trade agreement (PTA) to boost trade in certain products between the two countries.

Since the signing of a framework agreement on March 22, 2016, both sides have held 14 rounds of bilateral negotiations to identify those products for trade which are not affecting each other’s interests.

The PTA will come into effect from January 1, 2023. The concessions will be offered in three phases — immediately, up to five years and up to 10 years.

Turkish Trade Minister Dr Mehmet Mus and Minister for Commerce Naveed Qamar signed the agreement at a ceremony in the presence of Prime Minister Shehbaz Sharif.

Under the agreement, the Turkish side has offered concessions on a total of 261 tariff lines. Pakistan’s exports value of these tariff lines stand at $5.1 billion or 16 per cent of the total exports, while Turkish global imports in these products amount to $7.6bn. Now it depends on Pakistani exporters how they exploit the narrow margin availability in these products.

Duty will be reduced to zero per cent on 123 tariff lines, including five agricultural and 118 industrial products. The current exports value of these products is $714 million, while Turkish global imports of these products stand at $3.920bn.

Customs duty on average is 2-3pc. However, additional customs duty is 20pc for industrial products, which will be reduced. This is one area having potential to increase exports of non-traditional products.

Turkiye will reduce duty to zero per cent on 92 tariff lines during a period between five and 10 years. Pakistan’s exports value of these products is $1.608bn, while Turkish global imports stand at $2.084bn.

Turkiye has offered a margin of preferences and tariff rate quota on agriculture products to Pakistan. The categories of products which will get benefit from the concessions are: leather, footwear, glass and ceramics, articles of base metal, plastics and rubber, furniture, mattresses and lamps, sports and engineering goods, chemicals and cosmetics, agriculture products and processed agriculture.

In response to that, Pakistan has offered concessions to Turkiye on 130 tariff lines. The total exports value of these products is $23bn or 12pc of its total global exports. Pakistan’s global imports of these products stand at $6bn.

Pakistan will reduce duty to zero per cent on 16 tariff lines for Turkiye. Pakistan’ global imports of these tariff lines stand at $1.224bn, while Turkish global exports of these products are $2.486bn. Duty will be reduced to zero per cent in five to 10 years on 16 tariff lines. Turkish global exports of these tariff lines stand at $2.123bn, while Pakistan’s imports of these products are $684m.

Pakistan will exempt duty for Turkiye immediate on cocoa powder, acrylic filament and staple fibre, nonwoven man-made filament, black tea, modems, wire condensers, flavours for food industry, machine for reception and transmission, enzymes and gum base.

In five years, the duty will be exempted on chocolate crumbs, active yeast, flavouring powders, animal feed, laboratory reagents, clamps of steel, copper wire 6mm, pressure reducing valves and slide fasteners. In 10 years, duty will be reduced on clips, brackets of iron and steel, mounting, fitting for furniture, parts of sorting, screening, grinding machines, apparatus for transmission of voice, etc.

Published in Dawn, August 13th, 2022

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