Turkey offers duty relief on 261 tariff lines

Concession will provide Pakistan’s exporters with better market access

ISLAMABAD:

Turkey has offered concessions on 261 tariff lines to Pakistan under the Trade in Goods Agreement with the objective of achieving annual bilateral trade value of $5 billion.

The development came in the wake of Prime Minister Shehbaz Sharif’s visit to Turkey about two months ago. Pakistan and Turkey had been in talks for the past several years to ink a trade agreement, but Turkish businessmen were not in favour of the move.

Now, Ankara has offered concessions to Islamabad on 261 tariff lines, which include key items of Pakistan’s export interest from both the agriculture and industrial sectors.

Officials of the commerce ministry said tariff concessions on those items would provide Pakistan’s exporters with better market access compared to major competitors such as India, China, Vietnam and Malaysia.

Of the 261 tariff lines, Turkey has offered immediate zero duties on around 123 tariff lines (customs duty on agricultural products and additional customs duty on industrial products). However, for 92 tariff lines, the duties will be reduced to zero over a period of 5-10 years.

In the case of five tariff lines, Ankara is offering 50% reduction in duties, whereas for 14 tariff lines, it is offering tariff rate quota.

In response, Pakistan has offered to Turkey concessions on 130 tariff lines. Of these, Islamabad is offering immediate zero duties on only 16 tariff lines and for another 16 tariff lines, the duties will be slashed to zero over a period of 5-10 years.

In the remaining tariff lines, Pakistan has offered Margin of Preference ranging from 20% to 50%.

Earlier, Turkey had requested duty concessions on 300 tariff lines, however, Pakistan kept 170 goods in its sensitive list to protect the domestic industry.

The Commerce Division, in a recent meeting, briefed the cabinet that Pakistan and Turkey had historically enjoyed warm and cordial relations, encompassing political, cultural and security domains. However, the economic and trade engagement with Turkey had remained an area that required concrete steps to improve bilateral relations.

To improve the economic and trade partnership, both countries signed the “Framework Agreement for Establishing a Free Trade Area between Pakistan and Turkey” on March 22, 2016.

In the agreement, both sides reflected their commitment to gradually establish the Turkey-Pakistan Free Trade Area covering trade in goods. Keeping that in view, the commerce ministry told the cabinet that Pakistan had been engaged in intensive negotiations for the Trade in Goods Agreement with Turkey, in consultation with the public and private-sector stakeholders.

The agreement would be an important breakthrough in economic relations between the two countries and was a key point of discussion during the visit of PM Shehbaz to Turkey from May 31 to June 2, 2022.

The agreement had been finalised for signing after 14 rounds of negotiations. Its final draft was examined by the Tariff Policy Board and the Ministry of Law and Justice.

Bilateral trade between the two countries had been consistently on the rise over the years and it stood at $882 million in financial year 2021-22, up 17.8% from $749.12 million in FY21. In total trade, Pakistan’s exports to Turkey went up 33.6%.

The Trade in Goods Agreement will be followed by deeper market access to services and investment. The agreement will also help in achieving the strategic goal of $5 billion worth of bilateral trade over the medium term.

Minister of commerce pointed out that the agreement had been concluded within the given timelines.

The cabinet considered a summary titled “Trade in Goods Agreement between Turkey and Pakistan” and gave its approval.

Published in The Express Tribune, July 28^th, 2022.

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