Trade and surplus are terms not very often used in tandem when we talk about Pakistan but as they say, exceptions are everywhere -Pakistans bilateral trade with Turkey stands out as one. The recent negotiations between Pakistan and Turkey commerce ministries and also on the highest level signal a rosy picture in bilateral trade balance.
Turkey is the seventeenth largest economy of the world, while Pakistan is thirty places south but still manages a sizeable trade surplus with former which is contrary to latters trade imbalances with larger economies.
Before going further, let us revisit the rich history of Pakistan and Turkey economic relationship. Although, both are being the founding members of the D-8 organisation, they have never reaped the desired fruits of achieving the optimum potential of trade. Pakistan then entered into a Preferential Trade Agreement (PTA) with Turkey but it met the same fate as that of D-8.
With Turkeys other major trade partners entering into Free Trade agreements (FTAs), it became inevitable for Pakistan to register its case as a free trade partner to optimise the export potential and also to be competitive with other exporting nations who have already signed FTA with Turkey.
Although, the agreement has not been inked yet, both sides are committed to implement the FTA in the months to come. This would help Pakistani exporters to have wider access in the Turkish market as tariffs, quota and preferences on most, if not all, goods and services would be eliminated in phases. Also, to strengthen the relationship, both countries have agreed upon lifting the visa requirement for the traders and businessmen to engage in smooth trade activities.
Some may argue the efficacy of this proposed FTA to Pakistan, when in the same columns adverse implications of FTA for Pakistan were are being discussed. But in the earlier discussed case of China,case of open trade with China that was discussed earlier which would have bitter implications for our country because we already are in huge trade deficit with the Asian giant.
But Turkeys case is different as Pakistans exports to Turkey have grown double the pace than the imports which have grown by 8 percent over the last five years. This ever increasing trade surplus makes the agreement a much needed one as Turkey lies tenth on Pakistans major exporting countries.
Given that Pakistans major exports to Turkey comprise of cotton, textile and rice, the timing of the FTA to be implemented also becomes vital as so far no other country in the region enjoys free access in Turkish markets. Following the development here, the Indian economic managers have also reportedly started working on getting into an FTA with Turkey which could be a vital blow to Pakistans exports being identical to that of India. Therefore, it is imperative for us to materialise this FTA soon to have the first mover advantage.
The current bilateral trade between the two nations stands at a mere $550 million, which both the countries vow to enhance it to a substantial $2 billion in three years. This no doubt is easier said than done and requires tangible concrete steps. The latest textile and trade policies if implemented in true spirits could do a world of good in achieving the ambitious target.
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