PBC cautions against signing FTA with Turkey in haste

It could open Pakistan to Turkish imports without a similar rise in exports

KARACHI: Considering Pakistan’s prior, largely unpleasant, experiences in signing free trade agreements (FTAs), the Pakistan Business Council (PBC) has urged the government to carefully negotiate the FTA with Turkey.

Findings of a research on the proposed Pakistan-Turkey FTA, published by the PBC, show that Pakistan must not let emotions dictate this agreement.

Pakistan and Turkey had recently decided to negotiate the FTA on an urgent basis.

None of the major FTAs or Preferential Trade Agreements (PTAs) with China, Malaysia and Indonesia has led to any significant increase in Pakistan’s exports.



“On the contrary, given their smart negotiations, these countries have rather managed to significantly increase exports to Pakistan,” the report said. It noted Pakistan’s exports to Turkey have been declining since 2011 and have never been substantial enough to contribute significantly to the overall trade.

In Pakistan’s current exports to Turkey, cotton, ethyl alcohol, carpets and rice top the list. The potential for Pakistan’s top exports to Turkey is high at $2.4 billion (excluding petroleum products).

Out of this, the 10 highest potential exports to Turkey have a potential value of $754 million, which includes cotton, rice and polyethylene terephthalate products.

Tariff elimination alone may not help to take advantage of this potential, the report noted.“Some of the highest potential export products to Turkey already face low tariffs (0-5%), showing $1.33 billion in potential exports.”

“Pakistan’s negotiating team needs to ensure that concerns regarding Turkey’s non-tariff barriers and especially the liberal use of anti-dumping laws by Turkey are clearly addressed in the FTA,” it stressed.

Pakistan’s exports to Turkey were $391 million in 2014 compared to imports worth $193 million. Turkey was the 10th largest instigator of anti-dumping cases in 2014 and had already initiated anti-dumping cases on major Pakistani exports in the past.

In addition to this, major Pakistani exports are facing special tariffs in Turkey such as safeguard duties and non-tariff barriers such as the Resource Utilisation Support Fund.

The negotiations without keeping in view the interests of the manufacturing sector will lead to nothing but another FTA which opens Pakistan’s domestic markets to Turkish imports without a corresponding increase in exports to Turkey.

PBC is a private sector not-for-profit advocacy platform set up in 2005 by 14 (now 47) of Pakistan’s largest businesses. Its research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness.

Published in The Express Tribune, December 8^th,  2015.

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