Australia enjoys a long-standing relationship built on strong people-to-people links

The Islamic Republic of Pakistan is situated between Central Asia and the Persian Gulf, at the strategically important mouth of the Strait of Hormuz. Pakistan shares its borders with China, India, Afghanistan and Iran.

Formed following the partition with India in 1947, Muslim-majority Pakistan is today the world’s fifth most populous country and projects an active voice in the South Asia region and within the Islamic world.

Pakistan counts China as a security, trade and regional partner. The territorial dispute over Kashmir continues to challenge its relationship with India.

Pakistan continues to host a significant Afghan refugee community (around 1.4 million registered under the UN Refugee Agency and at least 1.3 million unregistered Afghan migrants).

Bilateral relationship

Australia enjoys long-standing and growing ties with Pakistan, underpinned by deepening people-to-people links. Diplomatic relations were established after Pakistan’s 1947 partition from India, and Australia has maintained a resident mission in the country since 1948.

The Australian Government engages with Pakistan in the areas of security cooperation (including defence and law enforcement training), human rights, economic reform and development, including through an active program of official level dialogue and engagement.

People-to-people links

Australia and Pakistan enjoy a common heritage and shared interests. Our strong people-to-people links centre on an active and successful 90,000-strong Pakistani community in Australia that continues to enrich Australia through academia, cultural exchange, commerce and sport.

Australia hosts a sizeable Pakistani international student cohort, including those on long-term scholarships under the Australia Awards program to support Pakistan to achieve sustainable development with particular focus on the empowerment of women and girls, water security, agriculture, infrastructure and inclusive economic development.

Both countries are members of the Commonwealth and are federations with bicameral legislatures.

Development cooperation

Australia has a longstanding development assistance relationship with Pakistan. Our 70-year development cooperation has contributed to building Pakistan's long-term economic prosperity, stability and resilience, and maintained a focus on gender equality and water security across a broad range of investments.

Following the end of the bilateral program in 2019-20 Australia has continued to invest in Pakistan through regional and global ODA funds, targeting the most vulnerable in areas where we can have the greatest impact.

Economic and trade relations

Australia-Pakistan two-way trade in goods and services was worth $1.81 billion in 2021. Australia's major goods exports to Pakistan are pulses and oilseed, along with coal and fertilizer.

Education services exports to Pakistan were worth a substantial $5750 million in 2021. Around 12,000 Pakistani students are enrolled to study in Australia as of July 2021. Major imports from Pakistan are textiles and clothing.

The Australia and Pakistan Joint Trade Committee (JTC), which met most recently in Islamabad in 2019, is the primary forum for discussing bilateral trade and investment.

Both countries are exploring avenues to expand trade and investment, particularly in education and agribusiness. Austrade has a locally engaged Business Development Manager in Islamabad. Country management for Pakistan is the responsibility of Austrade's Dubai-based Regional Senior Trade and Investment Commissioner.

There are reasonable prospects for growth in trade and investment, particularly in:

education (tertiary, vocational and corporate training);

agribusiness (dairy, livestock, and crop production);

processed foods; and

IT and communications products and services.

Future sectors that may provide opportunities for Australian trade and investment include:

clean energy technologies (including clean coal, wind and renewables); and water management.

Security cooperation

The Pakistan-Australia Joint Working Group on Border Management and Transnational Crime Cooperation fosters cooperation to combat transnational crime, such as terrorism and terrorist financing, and illegal migration. Australia engages with Pakistan on regional security issues and on arms control and non-proliferation.

The Australian Federal Police has a decades-long relationship with Pakistan law enforcement and cooperation between our agencies continues to disrupt transnational crime. Through the provision of training programs and specialist equipment, Australia builds Pakistan’s capacity to counter serious and organised crime.

The unique and long-standing relationship between the Australian Defence Force and Quetta Command and Staff College, dating back to 1907, underpins the Australia-Pakistan defence relationship. Pakistan has been a partner on joint maritime security in the Western Indian Ocean, to combat piracy and smuggling through the Combined Task Forces. In addition to a student at Quetta, the Australian Defence Force sends a student to the National Defence University in Islamabad, and Defence personnel periodically attend specialised courses in Pakistan.

Many of the Pakistan military's senior officers have visited Australia for Talks, and some for training earlier in their careers. Australia and Pakistan hold regular Chief-to-Chief dialogues. Since 2010, there have been regular 1.5 track dialogues that bring together senior leaders from respective militaries, government agencies and think tanks to discuss issues of mutual interest.

Economic overview

Pakistan has the second largest economy in South Asia, after India. Pakistan entered into a USD6 billion loan program with the International Monetary Fund (IMF) under its Extended Fund Facility in 2019 (trade imbalances, foreign debt, budget deficits and low reserves had carried Pakistan to the IMF on 21 previous occasions). The IMF program includes structural reforms to address macroeconomic stability, particularly reforms in the tax and power sectors. The IMF program was put on hold for a period in March 2020 due to the COVID-19 pandemic. It remains in effect; the sixth review is underway (as at October 2021). Pakistan’s economy contracted by 0.5 per cent in 2020 due to COVID-19 containment measures. There are recent signs of recovery – GDP growth in fiscal year 2021 was projected at 3.9 per cent and the economy is forecast to grow by 4 per cent in fiscal year 2022.

Pakistan's economy is made up of the services sector (62%), industry/manufacturing (19%) and agriculture (19%) (2021 figures). While declining as a proportion of GDP, agriculture still contributes one-fifth of Pakistan's wealth and more than half the population depends directly or indirectly on agriculture for their livelihoods. Manufacturing is concentrated around the Karachi-Hyderabad region and Lahore.

China is Pakistan's main economic partner, accounting for 47 percent of FDI inflows (March-July 2021). The China Pakistan Economic Corridor (CPEC) comprises an estimated USD62 billion in infrastructure investment, including the establishment of nine special economic zones by 2030.

Trade

In 2020-21, Pakistan's goods exports totalled US25.6 billion, half the value of its goods imports (USD53.8 billion). Pakistan's major commodity exports in 2020-21 were textiles, leather and sporting goods, rice and chemicals. Pakistan's major imports were petroleum and related products, machinery and transport equipment, agricultural and other chemicals and food.

The United States remains Pakistan's top destination for goods exports, followed by China and the UK. The top import countries are China, the UAE, and the United States.

While Pakistan runs a persistent trade deficit, it has other sources of capital inflows. In particular, Pakistan received USD31 billion in remittances from overseas Pakistanis in 2021-22, a 6.1 percent increase on the preceding year, however in late 2022 the flow of remittances started to decline.

Human rights

The Australian Government remains concerned about the human rights situation in Pakistan, including the use of capital punishment, the impact of Pakistan’s blasphemy laws, the rights of women and girls, the treatment of ethnic, religious and sexual minorities, and freedom of expression. Australia has raised its universal opposition to the death penalty, continues to promote inter-faith harmony and has consistently urged the Pakistan Government to address human rights concerns through both bilateral and multilateral representations.

Pillar 1 – health security

Australia is providing emergency assistance to respond to immediate COVID-19 health security challenges. For example, through the Asian Development Bank, we have helped strengthen COVID-19 surveillance and testing system at the national and provincial laboratories. Longer-term humanitarian assistance is improving hygiene, maternal and reproductive health outcomes, and broader health system preparedness. We will continue to support programs that improve critical health services such as nutrition, sustainable water and sanitation. Australia will contribute to routine immunisation and polio surveillance through Gavi, The Vaccine Alliance and the Global Polio Eradication Initiative (GPEI).

Pillar 2 – stability

Australia will focus on providing humanitarian relief and livelihood support, addressing gender inequality and improving governance to support long-term stability in the region - which is vulnerable to the impacts of climate change and external geopolitical factors.. Australia’s assistance includes support for vulnerable Afghan refugee and host communities and provides essential services such as for maternal health. In Pakistan we will concentrate on Balochistan and on the fragile former tribal areas in KP.

Pillar 3 – economic recovery

Australia will advocate in support of free trade and sound policy settings that promote inclusive growth and sustainable recovery from the impacts of the floods and high food inflation, on the heels of the nascent economic recovery from the pandemic. We will work in regions and sectors where we can deliver the greatest benefits for disadvantaged and marginalised groups, particularly women and girls. We will encourage Pakistan to build on recent successes in water cooperation. Through ACIAR, Australia is providing expertise to improve the productivity of food systems.

Australia will continue to work alongside partners in Pakistan to improve economic recovery. We will explore opportunities for two-way trade diversification following the restrictions brought on by the COVID-19 pandemic.

Copyright Business Recorder, 2024