Pakistan has the potential to export $5 billion to Turkey, following the Free Trade Agreement (FTA), which is expected to be signed before the end of the current year. According to the study on the feasibility of the proposed Pakistan-Turkey FTA conducted by Pakistan Business Council (PBC), Pakistan and Turkey are not each other's major trading partners, nevertheless, Pakistan's trade with Turkey as a percentage of Pakistan's global trade is higher than vice versa.
Pakistan's exports to Turkey are concentrated in cotton while its imports consist of machinery, electrical/electronic equipment, plastic, chemicals, synthetic staple fibers, and iron/steel. Pakistan benefits from a positive, though sharply declining, bilateral trade balance.
The deterioration in the surplus was set off by the imposition of global safeguard measures by Turkey on its polyethylene terephthalate, and cotton fabric and readymade garment imports in 2011. In addition, Turkey imposed anti-dumping duties on Pakistani split air-conditioners (2011) and yarn of synthetic staple fibers (2014). The study said that the benefits of a bilateral FTA were skewed in favour of Turkey. Turkey's export portfolio fits the import needs of Pakistan better than vice versa; hence, Turkey is more likely to experience increased exports post-FTA. Looking at the potential for both countries to increase their exports to each other, Turkey's export potential is over 2.5 times larger than Pakistan's export potential.
While Pakistan has the potential to export $5 billion to Turkey, with the greatest potential ($329 million) in the product "Instruments and appliances used in medical/surgical/veterinary sciences", Turkey has the potential to export $12.8 billion to Pakistan, with the greatest potential ($346 million) in the product "Motor cars and other motor vehicles. It further stated that Turkey's exports would rise by 32 per cent while Pakistan's exports would only rise by 22 per cent
The study suggested: "Negotiations need to focus on tariff elimination across high potential exports, particularly those in which the exporter has a comparative advantage and the importer does not. It should be emphasised that Turkey's FTA partners Egypt and Jordan enjoy tariffs significantly lower than those currently faced by Pakistan; while the tariffs on Turkish exports, though high, are at par with those on the exports of Pakistan's FTA partners (China, Sri Lanka and Malaysia). Pakistan should also be wary of non-tariff barriers. Tariff elimination alone cannot increase Pakistan's exports to their 2011 level; those exports can be partly recouped if trade remedy provisions are made part of the FTA, it added.
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