GCC to get tariff concessions similar to US deal

Pakistan is set to extend duty and tariff concessions to Gulf countries under a free trade agreement (FTA), similar to ones that the United States has offered Islamabad in a recent tariff deal.

The government intends to sign an FTA with member states of the Gulf Cooperation Council (GCC), keeping in view Pakistan's position in relation to the US trade agreement. In a recent meeting, the cabinet was told that the GCC resumed negotiations in May 2024 following agreements with other countries, including Turkey, which led to several revisions.

It was agreed to freeze the additional customs duty and the regulatory duty at fiscal year 2022-23 levels for all tariff lines and include a Most Favoured Nation (MFN) clause to ensure that any preferential treatment extended to other countries, more favourable than the additional customs duty and regulatory duty concessions, would also apply under the Pakistan-GCC FTA. In terms of additional customs duty, Pakistan will provide concessions to the GCC on 202 tariff lines. The Tariff Policy Board approved the concessions in April 2025.

The Commerce Division informed the cabinet about the salient features of a draft agreement. Both sides provided tariff concessions to each other in goods trade, based on reciprocity and parity. The contracting parties agreed to minimise non-tariff barriers through the mutual recognition of standards and by easing procedural requirements. The GCC was providing concessions or market access for 95.8% of Pakistan's global exports and 94.8% of Pakistan's exports to the GCC in 2023-24.

Similarly, Pakistan was providing concessions or market access for 38% of GCC exports to Pakistan and 73% of the GCC's global exports. Both sides were granting market access to each other in transport, IT, telecommunications, business services, financial services, construction, recreational activities, repair and maintenance services. Pakistan-Saudi Arabia and Pakistan-Qatar Bilateral Investment Treaties were annexed to the draft agreement.

The government has formed a committee to review the proposed Pakistan-GCC FTA to safeguard Islamabad's position under the US agreement. The body will suggest improvements in rules of origin, propose measures to reduce Pakistan's trade imbalance with GCC states, quantify the revenue impact of concessions, and recommend safeguards against potential dumping by GCC members.

Now that Islamabad and Washington have signed a deal, the government plans to conclude the FTA with GCC states in line with the duties agreed in the Pakistan-US tariff pact. The government feels it will have to extend the same concessions to the GCC which the US has offered to Pakistan.

Cabinet members emphasised that once the FTA was signed, the Commerce Division must ensure that projected export targets were achieved, since Pakistan already had a large trade imbalance with the GCC due to oil and gas imports. The cabinet noted that provisions relating to the rules of origin and the role of the tariff commission in ensuring anti-dumping safeguards required careful attention.

The cabinet was informed that in FY 2022-23, Pakistan's exports to the GCC were $2.37 billion, which increased to $2.83 billion in FY 2023-24. Pakistan's imports from the GCC in FY23 were $16.24 billion, which decreased to $15.68 billion in FY24.

The Commerce Division recalled that an Economic Cooperation Framework Agreement had been signed with the GCC in 2004, forming the basis for FTA negotiations. The first and second rounds of negotiations were held in 2006 and 2008, respectively.

Negotiations were suspended by the GCC in 2009. In January 2021, the GCC Secretariat invited Pakistan to resume FTA talks and a joint review meeting was held in March 2021. It was agreed to constitute a technical negotiating team and sub-groups for different chapters of the FTA.

The GCC Secretariat shared a new FTA draft in February 2022, which was finalised in the third round of negotiations in May and June 2022, the fourth round in September 2022 and multiple meetings held online from October 2022 to September 2023. The final round was held in Riyadh in September 2023.