Pakistan, Thailand finalising draft of free trade accord

Islamabad wants to give same concessions to Bangkok as offered to Beijing


Peer Muhammad February 05, 2016
Islamabad wants to give same concessions to Bangkok as offered to Beijing. PHOTO: REUTERS

ISLAMABAD: Pakistan wants to extend all those concessions to Thailand under a proposed free trade agreement (FTA) that are already available to China in a similar arrangement.

“Pakistan and Thailand have held many brainstorming sessions at official and ministerial levels since last year and currently the draft of FTA is being finalised,” said a senior officer in the Ministry of Commerce.

Free Trade Agreement with Thailand may not benefit Pakistan

“After finalising the text, the list of trade items under the FTA will be exchanged,” he added.

At present, Pakistan’s imports from Thailand are worth $843 million with exports amounting to $125 million. Both countries have an ambitious plan to boost bilateral trade to $5 billion annually.

“Pakistan wants to be part of Asean (Association of Southeast Asian Nations) to become a vibrant economy in future. It has already signed FTA with Malaysia and discussions with Indonesia are under way for reaching an accord,” said the officer.

“Within the Asean bloc, Thailand is a key player in the global value chain, especially in automobiles, electrical appliances and electronics,” said the official. “Facilitating cross-border movement of goods and services between the two countries will encourage the original equipment manufacturers to base their operations in Pakistan to take advantage of cheap labour.”

On the other hand, Pakistan could take benefit of Thailand’s technological edge in high-end product design and manufacturing.

Pakistan, Thailand agree on terms of reference

As the two sides have agreed to double the volume of bilateral trade by 2018, a joint trade committee will be constituted for government-to-government consultation and a joint business council will be set up for interaction between private sectors of the two sides.

It was further decided by the ministries of commerce of both sides to commission feasibility studies for the FTA.

The official said potential also existed for boosting intra-industry trade in several product segments most notably knitted or crocheted fabrics, articles of apparel, accessories and leather products.

“Both types of trades could bring benefits for the two countries in terms of enhanced competition and efficiency, lower prices and improved product quality and variety.”

According to a study conducted to highlight the trade potential between the two sides, Thailand had comparative advantage in more than 1,000 commodities, which constituted around 21% of Pakistan’s total imports worth $45 billion.

Pakistan, on the other hand, had comparative advantage in 684 commodities that constituted about 3% of Thailand’s total imports worth $225 billion.

Trade-ties: Pakistan, Thailand to pen FTA

“Past few decades have shown a phenomenal rise in global production-sharing arrangements due to technological advancements that have made geographical fragmentation of production activities an increasingly viable option,” noted the official, adding Asia had emerged as a global hub of manufacturing with increasing integration of east and Southeast Asian economies in the global production networks.

“Pakistan due to its geographical location, better connectivity with Central Asia, reasonable physical infrastructure, state-of-the-art telecommunication services and well-developed finance and insurance sectors is better positioned to become part of the global manufacturing chain,” he said.

Published in The Express Tribune, February 6th, 2016.

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