Pakistan lives in an increasingly uncertain world when it comes to international relationships. In the last week, it has seen the FATF debacle when two of our firmest closest allies broke ranks under the pressure of realpolitik and walked away — leaving Turkey as a sole supporter among the all-weather supporters. Now, a relationship that has seen increasing strains as Turkey demands the return of its nationals working as teachers in Pakistan the screw tightens further as issues around the bilateral Free Trade Agreement (FTA) come to the boil. The commerce ministry is so disgruntled and frustrated that it has asked the government for permission to refer the dispute to the WTO — a considerable upping of the ante.
The issue is around the granting of GSP+ status by Turkey which is seen by Pakistan as an obligation considering that Turkey and the EU are part of a customs union and that Turkey has given GSP+ status to all except Albania and Pakistan. The Turkish refusal stretches back years and there have been seven rounds of FTA talks regarding additional taxes on its products since February 2015 all to no avail.
Turkey has been an important trading partner to which we marketed cotton fabrics, clothing and home textiles, carpets, plastics and man-made fibres and footwear. A diverse range of products which Turkey taxes at 20-50 per cent giving a significant knock to our core industries. Exports to Turkey have dropped by 69 per cent over the years between 2011 and 2017 down to $282m in the current fiscal. Meeting after meeting has passed with no resolution. The Turks have made an offer to reduce tariffs but the timescale for reduction — 11 years in some cases — is understandably unacceptable to Pakistan. There are now suggestions that retaliatory tariffs be imposed on Turkish goods but this has not yet been taken up by the government. A formal trade dispute is now a possibility if the WTO referral goes ahead and one of our very few stalwart supporters becomes a trade adversary. Time to crack the whip on our overseas missions to drum up trade — let the diplomats earn their substantial remunerations.
Published in The Express Tribune, March 4th, 2018.
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