Egypt is the third-largest country in the African continent in terms of population. Egypt, promotes itself as a “hub” for the African & Middle Eastern markets. As part of this vision, it has introduced Free Zones within Egypt and signed a number of trade agreements with regional blocs and western countries. These trade agreements and concessions allow companies based in Egypt to enjoy preferential market access. Egypt’s Suez Canal is considered to be the world’s largest and busiest canal without any locks, this facilitates seaborne trade between Europe and Asia. In 2020, revenues from the Suez Canal were at their highest in the canal’s history and amounted to US$ 5.8 billion. This was a 2 percent increase over 2019.

Bilateral Trade between Pakistan and Egypt has been in favor of Egypt for the last 5 years.

Major Findings of the Study:

• Exports of Pakistan to Egypt in 2020 were worth $71.3 million with the major commodities in the export basket being ‘Cotton’ ($42.8), ‘Plastics’ ($3.0 million), ‘Other Vegetable textile fibres’ ($2.9 million), ‘Optical Instruments’ ($2.9 million), ‘Rubber’ ($2.6 million), ‘Pharmaceutical products’ ($2.6 million), ‘Man-made staple fibres’ ($2.4 million), ‘Iron and Steel’ ($1.3 million), ‘Articles of Apparel’ ($1.1 million) and ‘Articles of leather’ ($1.1 million).
• With an import value of $273.6 million, Pakistan’s imports from Egypt were dominated by ‘Natural gas, Liquified’ (HS-271111) with imports worth $128.8 million in 2020 and contributing 47.0 percent to total Pakistani imports from Egypt.
• For Pakistan, there exists an export potential of around $1.1 billion in Egypt mainly driven by the agricultural sector ($105.7 million), textile sector ($226.5 million), pharmaceutical and surgical sector ($258.0 million), and the plastic and rubber sector ($62.3 million).
• “Maize…” (HS-100590), “T-shirts, singlets and other vests…” (HS-610990), “Medicaments…” (HS-300439) and “Polycarbonates…” (HS-390740) provide both product and market diversification opportunities for Pakistan.
• The Egyptian government has established 3 to 4 regulatory authorities in the past few years to closely monitor imports. This has increased non-tariff barriers for all of Egypt’s trading partners including Pakistan. Some measures include requirement of import licenses, technical standards on some 860 products, labelling and packaging requirements, and veterinary quarantine regulation.
• Rice is one of the staple foods in Egypt and in recent years Egypt has increased its imports from the world. In 2020 the total value of rice imports was $46.7 million, Egypt imported 66.0 percent of its rice from India whereas only 0.8 percent came from Pakistan.
• Pakistan’s demand for natural gas has been increasing at a rate of 11.7 percent annually whereas domestic gas supply has been increasing at an annual rate of 2.4 percent. This imbalance in demand and supply indicates that Pakistan will heavily rely on imports of natural gas from the world in the coming years.

Major Recommendations for Increasing Exports to Egypt:

• Negotiating for a Revision in Egypt’s Tariffs for Pakistan’s High Potential Exports
  Pakistan’s top exports to Egypt are subject to high tariffs which range between 0 and 40 percent. However, Egypt is given access to the Pakistani market at relatively lower tariffs of between zero and 20 percent. It is recommended to initiate negotiations with Egypt to seek tariff parity to enhance Pakistan’s exports to Egypt.
• Online Visa Policy Needs to be Initiated
  Both countries need to make their visa regimes more friendly, especially for business travelers.
• Public – Private Partnership to Promote Pakistani brands
  The government of Pakistan needs to work in a PPP mode to help promote the creation of global Pakistani brands. Egypt can be a test case for this.
• Natural Gas Import Diversification Strategy Needs be Implemented
  Pakistan is working on a strategy to reduce dependence on single or a limited number of sources for its energy needs. Signing a long-term deal with Egypt for imports of LNG could be a part of this strategy.
• Duty Drawback Schemes Within Pakistan Need to be Improved
  Duty drawback schemes announced by the Government of Pakistan should be made accessible to indirect exporters as well as for importers of raw material who produce finished goods for exports. In addition, a 5-year duty drawback scheme be provided to exporters of finished goods that use indigenous raw materials.
• Export Subsidies Should be Time Bound and Performance Specific
  Time and performance-based subsidies should be allowed to businessmen who venture into non-traditional markets such as Egypt. Schemes need to be closely monitored and should be transparent, easily understood and simple to follow, especially for the SME sector.
• Improve Export Competitiveness by Empowering SMEs and Providing training
  Export Competitiveness can be improved by empowering SMEs through access to finance, easily available subsidized credit, low interest rates on loans and skills training / development programs. Exporters need to be educated and trained on the regulations and standards that have to be met for exporting to Egypt.
• Pricing Could be the Key for Cracking the Egyptian Market
  Egyptian consumers are price conscious and due to openness of the Egyptian economy, competition is fierce. Pakistani exporters need to work on their costings if they are going to succeed in the Egyptian market.
• Simplifying Export Regulations – Pakistan Single Window
  The Pakistan Single Window System needs to be improved with inputs from the SME sector. Collection and dissemination of information about foreign markets and export requirements also needs to be improved.
• Direct Logistics Linkages
  Currently, there is no direct airlink between Pakistan and Egypt, this increases travel time and restricts the exports of perishable and high-value goods. There is a need for starting a direct airlink between the two countries.

Given the export potential, it is recommended that negotiations for a Preferential Trade Agreement (PTA) between Pakistan and Egypt be initiated.

The PBC is a private sector not-for-profit advocacy platform set up in 2005 by 14 (now 86) of Pakistan’s largest businesses including multinational. PBC’s research-based advocacy supports measures which improve the Pakistani industry’s regional and global competitiveness. More information about PBC, its members, objectives, and activities can be found on its website: www.pbc.org.pk

Recently, there has been renewed interest in Islamabad and Dhaka to revisit the possibility of signing an FTA between the two countries. With Bangladesh’s LDC status expected to lapse in 2026, the government of Bangladesh is looking to maintain market access in key markets through trade agreements.

Bilateral trade between Pakistan and Bangladesh has been in favor of Pakistan for at least the last 10 years.

However, Pakistan’s exports to Bangladesh decreased from $947.23 million in 2011 to $583.44 million in 2020.

Major Findings of the Study:

Pakistan’s main export commodities to Bangladesh are classified under ‘Cotton’ ($427.6 million); ‘Salt; Sulphur; earths and stone; plastering materials, lime and cement’ ($73.7 million); ‘Edible vegetables’ ($17.5 million); ‘Raw hides and skins’ ($9.8 million); ‘Machinery’ ($9.7 million); ‘Inorganic chemicals’ ($4.4 million); ‘Man-made staple fibers’ ($4.0 million); ‘Plastics’ ($3.9 million), ‘Tanning or dyeing extracts’ ($3.9 million); and ‘Edible fruits and nuts’ ($3.2 million).

With an import value of $46.78 million, Pakistan’s major import from Bangladesh was ‘Jute and other textile bast fibers’ (HS-530310). This single tariff line accounted for 75.5 percent of Pakistan’s total imports from Bangladesh in 2020.

For Pakistan, there exist an export potential of at least $2.95 billion in Bangladesh, mainly driven by sectors that include textile, agriculture, foodstuff, chemicals, base metals, plastics, and salt & cement products. The aggregate export potential for the top 25 commodities amounted to $1.24 billion in 2020. However, the country only exported goods worth $435.78 million for these top 25 commodities to Bangladesh during the year. Ten of the top 25 products fall under the category of ‘Denim and Woven Fabrics of Cotton’ (HS 52-55). While Pakistan can potentially export $522.74 million worth of these commodities, it exported $341.25 million worth of woven fabrics to Bangladesh in 2020.

Major Recommendations:

• The current tariff structure reveals that there is room for tariff cuts for goods traded between the two countries.
• Non – tariff barriers imposed by both countries need to be revisited.
• Anti-dumping duty (ADD) on Bangladesh’s exports of ‘Hydrogen Peroxide’ (HS-284700) needs to be reconsidered as this is a major irritant for Bangladesh at the moment.
• Regional syndication restriction claims by Bangladeshi potato exporters needs to be
• Pakistani food exporters need to work towards complying with the standards set by Bangladesh Standard & Testing Institution (BSTI).
• Pakistan should ask for unilateral access from China to the Chinese market similar to that given by China to Bangladesh’s exports.
• Both countries need to make their visa regimes more lenient for business travelers.
• A mechanism needs to be agreed between the two countries to ensure Pakistani Consignments especially of fabrics are not inordinately delayed.
• The possibility of a direct shipping line needs to be explored to promote bilateral trade.
• Pakistan needs to diversify its export basket to Bangladesh
• Bangladesh’s exports to Pakistan should also be a priority in bilateral negotiations.
• Japanese buying houses operating in Bangladesh should be targeted & efforts made to get them to also open offices in Pakistan. This interaction will allow Pakistani firms to improve standards.

Whilst Pakistani textiles have parity access in the USA with countries like Bangladesh, exports from Pakistan suffer high duties into countries like Japan, relative to Bangladesh. The PBC, through its national charter of exports, recommends that one of the strategies to achieve economic diplomacy goals is that Pakistan should be allowed parity access in Japan, Australia, and Canada with countries like Bangladesh.

The PBC is a private sector not-for-profit advocacy platform set up in 2005 by 14 (now 88) of Pakistan’s most prominent businesses. PBC’s research-based advocacy supports measures which improve the Pakistani industry’s regional and global competitiveness. More information about PBC, its members, objectives, and activities can be found on its website: www.pbc.org.pk

The Republic of Tajikistan (Tajikistan) is a country in Central Asia with a total area of 143.1 thousand square kilometers. The population of Tajikistan in 2020 was estimated at 9.5 million. A comparison of the economic profiles of Pakistan and Tajikistan is shown in the table below.

Pakistan’s population is approximately 23 times that of Tajikistan. Pakistan also has a higher GDP and per capita income than Tajikistan.

In 2020, Tajikistan ranked 106th in the world on the Doing Business (DB) Indicator. The country ranked 104th on the Global Competitiveness Index (GCI) in 2019. Tajikistan ranked 134th on the Logistics Performance Indicator (LPI) in 2018.

The Republic of Tajikistan is part of multilateral organizations and trade blocs such as the CIS, WTO and the ECO.

The figure below shows Tajikistan’s trade with the world.

The Russian Federation, Kazakhstan and China are the top trading partners of Tajikistan. Turkey is also among the top 10 trading partners of Tajikistan.

The top export commodities of Tajikistan to the world are monetary gold, aluminium, cotton, lead ores, portland cement and zinc ores among others while the country’s top imports from the world are wheat, mineral fuels, propane, iron and steel etc.

The figure below shows bilateral trade between Pakistan and Tajikistan.

In 2020, Pakistan’s exports to Tajikistan were US$ 2.1 Million while its imports from Tajikistan were only US$ 836,000/- resulting in a trade surplus of roughly US$ 1.2 Million for Pakistan.

Pakistan’s main exports to Tajikistan are buttermilk, wilkings, citrus and pharmaceutical products, while the country’s main imports from Tajikistan are textile products and kidney beans.

In 2020, Pakistan had a potential to increase exports of products related to Chemical or Allied Industries, Foodstuffs, Vegetable Products and Live Animals & Animal Products to Tajikistan. Pakistan had an export potential of at least US$ 12.5 Million for each group. Some of these products including pharmaceutical products, paints and varnishes, food preparations, rice, bananas and dairy products are already being exported to Tajikistan. Other sectors for which a market can be developed in Tajikistan are Metals, Machinery & Electrical Equipment and Plastics & Rubber as these sectors had a combined export potential of at least US$ 71.2 Million in 2020.

In Fiscal Year 2020, Pakistan’s exports of services to Tajikistan were worth US$ 1.3 Million while its imports of services from Tajikistan were worth US$ 2.7 Million. Pakistan had a trade deficit of roughly US$ 1.4 Million in services with Tajikistan in FY 2020.

The biggest hurdle a Pakistani company faces while exporting to Tajikistan is that the consignment has to go via Afghanistan using the Torkham and Sher Khan borders. Any cargo from Pakistan reaching the two borders faces issues because of Afghan government regulations. Furthermore, the cargo isn’t allowed to go from Chaman and Jalalabad in Afghanistan to reach Tajikistan.

There is a limited availability of foreign funds, especially US Dollars, in Tajikistan and therefore, ensuring payments to Pakistani exporters is a tedious task.

For promoting trade, Government of Pakistan needs among other things to support the Tajik Government in its efforts to become a member of the Quadrilateral Traffic in Transit Agreement (QTTA) by involving the Chinese Government enabling Pakistan to export to other CIS countries using Tajikistan as a transit hub.

Pakistan and Tajikistan can begin negotiations for signing a Preferential Trade Agreement (PTA) with the aim of increasing mutually beneficial bilateral trade. The PTA at a later date can be converted into an FTA.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 88) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk

On 3^rd February 2012, the two countries signed the Indonesia–Pakistan Preferential Trade Agreement (IPPTA) which came into effect from September 2013. The figure below shows bilateral trade between Indonesia and Pakistan since the signing of the PTA.

Major Findings of the Study

• Currently, the IPPTA allows concessional market access to Pakistan on 232 goods (103 zero-rated) and market access to Indonesia on 313 goods (82 zero-rated).
• Palm Oil, which is Pakistan’s largest import from Indonesia, as well as the commodity with the second-largest indicative potential for exports from Indonesia to Pakistan is a part of Pakistan’s concession list for Indonesia.
• Other imports from Indonesia include mineral fuels and oils, vehicles, paper and rubber products.
• In turn, Pakistan largely exports agricultural products and food items such as rice to Indonesia, along with textile products, raw hides and skins, fish, paper, iron and so on. Seven out of the current top 25 exports have been included under IPPTA concessions. Therefore, it is important to note that majority of the top products are those on which Indonesia does not apply a preferential tariff for Pakistan.
• At HS-06 level, Pakistan has an indicative export potential for the top 25 items amounting to $3.2 billion. In 2019, Pakistan actually exported a mere $68.8 million of these high potential products to Indonesia.
• Most of Pakistan’s high export potential commodities fall under Agricultural Products and Foodstuffs (HS-01–24), including edible fruits and vegetables from the horticulture sector. High potential items include Dates, Potatoes, Onions and so on.
• Inputs from relevant stakeholders revealed that the main issues that the face when exporting to Indonesia are those of non-tariff barriers rather than of market access. There is a general lack of awareness of IPPTA, as well as, of Pakistani products. Connectivity is another obstacle which has restricted bilateral trade between the two countries. There also exists a mismatch between Pakistan’s supply and Indonesia’s demand. As for the Indonesian side, businessmen report some issues in the packaging and labelling requirements of Pakistan.

Major Recommendations

• Pakistan needs to negotiate on high potential textile products which consist of cotton items and high-valued added apparel, and high potential food items including fruits and vegetables.
• More trade fairs and marketing of textile goods, especially high value-added products in place of low value-added products (woven fabrics of cotton), will allow Pakistan to tap into this market.
• Potential in the horticulture sector can be realized through increasing awareness, research and development, proper branding, rigorous marketing, trade fairs and promotional activities.
• However, it is also necessary that Pakistan diversifies its exports to Indonesia and does not focus on just horticulture items.
• The lack of awareness issue can be reduced by increasing participation in Indonesian trade exhibitions which are held every year to promote their products. Such expos, exhibitions and meetings should be encouraged and facilitated so that Indonesian businessmen are also made aware of Pakistani products. The platforms of Pakistan Indonesia Business Forum (PIBF) and the Pakistan Embassy in Jakarta can be used to introduce Pakistani brands and products in the Indonesian market.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 86) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk

The Republic of Kazakhstan is a transcontinental country with a total area of 2.7 million square kilometers. The population of Kazakhstan in 2019 was estimated at 18.5 Million.

A comparison of the economic profiles of Pakistan and Kazakhstan is shown in the table below.

Kazakhstan has the second largest population among the Central Asian countries, but the country’s population is still
approximately a twelfth of the population of Pakistan. Pakistan also has a higher GDP than Kazakhstan with a
difference of US$ 96.5 Billion between the GDPs of the two countries. However, the GDP per capita of Kazakhstan is
almost eight times that of Pakistan.

In 2019, Kazakhstan ranked 25th in the world on the Ease of Doing Business Indicator. The country also ranked 62nd on the Logistics Performance Indicator (LPI) in 2018.

The Republic of Kazakhstan is part of numerous multilateral organizations and trade blocs including the UN, CIS, WTO and the EAEU. The country also has a central role in the Chinese led Belt and Road Initiative due to its geographic location along with its vast energy and mineral resources.

The figure below shows Kazakhstan’s trade with the world.

Kazakhstan’s exports increased by 26.0 percent while its imports increased by 25.0 percent during the 2015-19 period. This led to an increase of 26.0 percent in the trade surplus between 2015 & 2019.

The Russian Federation and China are the top trading partners of Kazakhstan while Uzbekistan is the main trading partner in the Central Asia region. Italy, South-Korea, Turkey and France also remain among the top 10 trading partners of Kazakhstan.

The top export commodities of Kazakhstan to the world are mineral fuels, iron and steel, ores, copper, chemicals and cereals among others while the country’s top imports from the world are machinery, iron and steel, vehicles other than railway, mineral fuels, plastics and pharmaceutical products.

Pakistan’s exports to Kazakhstan were more than twice compared to the country’s exports to the rest of the Central Asian countries combined for the 2017-19 period.

The figure below shows bilateral trade of Pakistan with Kazakhstan.

Pakistan’s exports to Kazakhstan increased by 550.0 percent while its imports from Kazakhstan decreased by 77.0 percent increasing the trade surplus of Pakistan with Kazakhstan by 805.0 percent for the 2015 – 19 period.

In 2019, Pakistan’s exports to Kazakhstan were US$ 83.5 Million while its imports from Kazakhstan were only US$ 0.8 Million resulting in a trade surplus of roughly US$ 82.6 Million.

Pakistan’s main exports to Kazakhstan are cereals, fruits, oil seeds, pharmaceutical products and vegetables, while the country’s main imports from Kazakhstan are chemicals, vegetables, raw hides and skins, coffee, tea, spices, oil seeds, fruits and live animals.

The table below shows Pakistan’s export potential for exporting top 25 export products to Kazakhstan at HS-06 Level.

*All Values in US$, Thousands

In 2019, Pakistan had an export potential of US$ 270.8 Million for exporting the top 25 export commodities to Kazakhstan. Pakistan has potential for export expansion of rice, wheat, black tea, guavas, mangoes, wilkings, oranges, bananas, onions, tamarinds, surgical instruments, pharmaceutical products, gloves and textile articles in Kazakhstan. Other products for which a market can be developed in Kazakhstan include sugar, sugar confectionery, polyethylene, T-shirts, Portland cement, articles of bedding, mandarins, footwear, food preparations, women’s or girls’ trousers and flat-rolled products of iron.

The logistics route Pakistan exports’ currently use to reach Kazakhstan is the Afghanistan Corridor, which is a major impediment in trading activities with Kazakhstan as it gives rise to informal trade between the two countries along with increased transit time and transportation costs. The other major issue is the non-availability of reverse cargo. Furthermore, there are no direct flights currently available from Pakistan to Kazakhstan making the export of perishable products difficult.

The lack of formal banking channels further hinders trade between the two countries as Pakistani exporters face difficulties in getting their payments through formal channels and using Letters of Credit (LC) is difficult in Kazakhstan.

For promoting trade, the Government of Pakistan should coordinate with the Government of China in order that the China Corridor is functional for Pakistan to export to Kazakhstan efficiently along with providing a reverse cargo service. Pakistani government should ensure the availability of direct cargo flights from Pakistan to Kazakhstan. Ministry of Commerce (MOC) needs to work on making the transportation routes from Pakistan to Kazakhstan known and functional for transporters.

The Government of Pakistan should coordinate with Government of Kazakhstan to open up subsidiaries or desks of Pakistani banks in Kazakhstan so that trade occurs through formal channels. Furthermore, The State Bank of Pakistan (SBP) could make receivables discounting possible in order for Pakistani exporters who export to Kazakhstan to obtain short term loans against accounts receivables.

Trade Development Authority of Pakistan (TDAP) is advised to organize trade exhibitions for rice, guavas, mangoes, wilkings, pharmaceutical products and surgical products in Kazakhstan so that Pakistani products become widely known in the country.

Pakistan should focus on signing a Free Trade Agreement with Kazakhstan in order that Pakistan can benefit from duty-free trade with Kazakhstan in the long run and capitalize on the opportunity of rapid export expansion in the country. The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 85) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk

This study on the Federal Democratic Republic of Ethiopia follows an earlier study on The Republic of South Africa

Major Recommendations for Increasing Exports to Ethiopia

Credit lines for merchandise exports are required
Export credit insurance is required for covering commercial, political, and extraordinary risks involved in exporting to Ethiopia. The insufficient level of forex reserves in Ethiopia among other things exposes exporters to credit risk.

Online visa policy needs to be activated
Currently, Pakistani exporters are unable to avail online visa application facility. Moreover, there is no Ethiopian embassy in Pakistan. To strengthen bilateral ties, it is important to engage with the Ethiopian authorities to ensure online visas for Pakistani businessmen.

Large-scale and reliable importers need to be identified
Ethiopian importers require explicit permission for foreign exchange from the central bank before they can import. Large-sized and reputable importers are in a better position to seek approvals. Pakistani exporters, as well as commercial counsellors, could help identify large-scale importers.

Partial subsidies for surgical & pharmaceutical products registration
Surgical and pharmaceutical products are in demand in Ethiopia. Government authorities procure around 80 percent of surgical and pharmaceutical products in Ethiopia. However, none of the Pakistani exporters of these products have got their products registered in Ethiopia citing costs as a major impediment. It is recommended that the government of Pakistan assist Pakistani firms by partially covering registration costs incurred by them.

Preferential market access
Ethiopia is currently not a full member of the WTO and is also not a signatory of common external tariffs under COMESA. Unlike other African countries, there is a scope for bilateral trade negotiations. Pakistani authorities should initiate negotiations with their Ethiopian counterparts to ensure better market access.

Ethiopian market is largely ignored by Pakistani exporters
There exists potential for exporting to Ethiopia products in Pakistan’s export basket. Ethiopia is among the least developed countries, however, robust economic growth coupled in the last decade with trade liberalization has attracted investors as well as exporters.

The Government of Pakistan devised a ‘Look Africa Plan’ in 2017 for promoting exports to Africa, the Plan needs to be implemented and exporters encouraged to avail of the opportunities available in Ethiopia.

Ethiopian buyers located in the Ethiopian SEZs should be targeted
Industries in the Ethiopian SEZs enjoy zero duty on imports along with other incentives for producing exportable products. Eastern Industrial Zone and Hawassa Industrial Park have been identified as major contributors to driving the Ethiopian manufacturing sector.

Pakistani exporters need to focus on Ethiopian buyers located in SEZs to expedite export opportunities by meeting the demand of these industrial importers.

Equity investments in the Ethiopian SEZs should be considered
The Economic Coordination Committee (ECC) of Pakistan has recently amended the foreign equity investment rules to promote foreign investments. Ethiopia has one of the world’s most conducive investment laws and has attracted the attention of international investors in the last few years. Tax incentives, land-lease terms, customs duty concessions, and utility rates are far more attractive in Ethiopian SEZs as compared to those of other LDCs including Bangladesh, Myanmar, and Cambodia.

Pakistani investors should consider investing in these SEZs and use Ethiopia as an export hub for the rest of the African continent.

Cement exports to Ethiopia
To protect the local industry, Ethiopia banned cement imports in 2012. However, due to shortages and inflationary pressures the government has lifted the ban and allowed imports through the ‘Franco Valuta’ channel in the last quarter of 2020. Pakistan has a competitive advantage to export cement to African countries and was the only exporter to Ethiopia with exports worth $15.46 million in 2012.

Following the lifting of the ban, Pakistani cement exporters need support to recapture their market share in the Ethiopian market.

Major Findings of the Study

• Surgical instruments, semi-finished leather, textiles, and medicaments are currently the top exports of Pakistan to Ethiopia. Domestic textiles and leather industries are highly protected in Ethiopia with tariffs of up to 35 percent. Out of the 15 top Pakistani export products, 7 belong to the textile sector at the HS-06-digit level.
• The largest increase of 330.2 percent in 2019 over 2018 was witnessed in Pakistan’s exports of ‘Instruments and appliances (HS-901890)’ to Ethiopia. Around 80 percent of surgical and medical instruments are being procured by government agencies. These products also face a relatively lower tariff of 5 percent in Ethiopia.
• A new commercial section in the Pakistan Embassy in Ethiopia has been set up since early 2020 to promote bilateral trade, Pakistan has lifted restrictions on imports of red kidney beans from Ethiopia. It is being reported by various sources that Ethiopia is also interested in promoting bilateral trade and is keen to establish its embassy in Pakistan. A direct air link between the two countries is also being finalized.
• Paper & paper products (HS-481910, HS-482110 & HS-490199), and Tractors (HS-870120 & HS-870899), provide both product and market diversification opportunities for Pakistan’s export basket.
• Pakistan’s exports to Ethiopia are highly correlated with consumer price inflation and the current account balance of Ethiopia whereas they are negatively correlated with the exchange rate.
• Under the current trade scenario, there exists an export potential of at least $200 million to Ethiopia mainly driven by sectors that include textiles, leather, surgical & pharmaceuticals, cement, agricultural, and engineering products.
• The average tariff applied by Pakistan on products originated from Ethiopia ranges between 3 to 59 percent with an average rate of 13.5 percent. However, the tariff faced by Pakistani products in Ethiopia ranges between Zero & 35 percent, with an average tariff of 18.5 percent.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 85) of Pakistan’s largest
businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and
global competitiveness. More information about PBC, its members, objectives and activities can be found on its
website: www.pbc.org.pk

Africa is a non-traditional market for Pakistani exports. As part of its support for the Government of Pakistan’s efforts to increase exports, the Pakistan Business Council (PBC) has initiated a series of studies to better understand the potential for increasing exports to the African continent. This Study on the Republic of South Africa is the first in the Africa Series and is part of the PBC’s Market Access Series. South Africa has been selected as it is sizeable in the African context both in terms of population as well as GDP.

Major Recommendations for Increasing Exports to South Africa

• Anti-dumping duty on cement exports from Pakistan needs to be removed. South Africa slapped anti-dumping duties in the range of 14 to 77 percent on cement imported from Pakistan effective from December 18, 2015. This has resulted in Pakistan’s exports of ‘Portland Cement (HS-252329)’ to South Africa falling from $80.95 million in 2014 to just $4.2 million in 2019.
• Par-boiled rice should be prioritized for exports to South Africa. South Africa’s imports of rice are dominated by parboiled rice. Though Pakistan exports parboiled rice, Pakistani rice exporters need to understand the demands of the South African market and come up with a strategy to promote rice exports to South Africa.
• A Trade Agreement between Pakistan and SACU is desirable. Ministry of Commerce in Pakistan needs to negotiate better market access for the SACU trade bloc. The SACU trade bloc of which South Africa is the major economy brings five countries in Southern Africa into a customs union. Pakistan’s current and future imports of coal from South Africa, which in 2019 were worth about $1.0 billion and which are likely to increase in the coming years provides Pakistan with some negotiating leverage. Currently, Pakistan is offering lower tariffs for its major imports from South Africa while its products face high tariffs in the South African market.

• Partial subsidies for registration of pharma products in South Africa. Pharmaceutical tariff lines enjoy zero duties on imports into South Africa. Government of Pakistan should consider providing subsidies to Pakistani pharma companies to cover costs of drug registrations, certifications (bioequivalence) etc., to allow Pakistani pharma companies to compete in the South African market.
• Potential exports of electrical fans to South Africa. There exists a potential of $24.25 million for exports of electric fans (HS-841451) to South Africa. Pakistan’s Ministry of Commerce has recently revised the duty drawback rate to 4.39% from the previous 1.7% providing an incentive to export these products.
• Hedging payment risks. Obtaining Letters of Credit from South African buyers and negotiating documents drawn on South African banks is difficult. A dedicated export credit guarantee agency needs to be created in order to hedge risks in exports to markets like South Africa where credit, operational, and exchange rate risks are high.
• Time & effort needs to be invested in identifying large & reliable importers in South Africa. Trust deficit, a lack of credible banking channels, and other related issues can only be reduced if large-scale and reliable importers are identified. Office of Trade Commission of Pakistan in South Africa, as well as the expat Pakistani community in South Africa can play a vital role in this.

Major Findings of the Study

• Currently textile products are among the top exports of Pakistan to South Africa, although these face high tariffs imposed by SACU in the way of common external tariffs. Out of the 16 top export products, 10 belong to the textile sector at HS-06-digit level.
• The highest decline of 51.7 percent over 2018-2019 was witnessed in Pakistan’s exports of ‘Portland Cement (HS-252329)’. The CAGR reflects an average decline of 41.4 percent per annum in the period 2015-2019. Antidumping duties ranging between 14.0 to 77.0 percent on Pakistani cement manufacturers is the most likely explanation for the decline.
• Among the top export products, ‘Semi-milled or wholly milled rice (HS-100630)’ and ‘Instrument and appliances (HS-901890)’ are subject to zero tariffs whereas exports of ‘Paper and paperboard (HS-481159)’ are subject to a relatively low tariff of 2.0 percent.
• The highest positive CAGR (2015-19) relates to exports of ‘Denim (HS-520942)’ and ‘Men’s or boys’ ensembles of cotton (HS-620322)’ from Pakistan to South Africa i.e., 203.0 percent and 73.0 percent respectively.
• Electric Fans (HS-841451) and Tractors (HS-870192), provide both product and market diversification for Pakistan’s export basket to South Africa. South Africa is the second largest export destination among African countries for Pakistani Tractors.
• Pakistan’s imports from South Africa are dominated by ‘Bituminous Coal (HS-270112)’ with imports worth $996.0 million in 2019 and comprising 85.0 percent of total imports from South Africa. Imported coal feeds the coal-fired power plants constructed at Port-Qasim (Sindh), Sahiwal (Punjab), and Hub (Baluchistan) under CPEC as well as catering to the local demand created by the cement and brick kiln sectors.
• Pakistan’s top export items are subject to tariffs ranging between 0 to 40 percent in South Africa, however, top imports from South Africa are given access to the Pakistani market at a lower tariff range i.e. between 0 to 20 percent.
• Under the current trade scenario, there exists an export potential of at least $3.6 billion to South Africa mainly driven by sectors which include agriculture, textile, salt & cement, pharmaceutical & surgical, and engineering products.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 83) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk

The Republic of Uzbekistan is a Central Asian country bordered by five landlocked countries. It is also one of only two doubly landlocked countries in the world. It covers a total area of 447,400 square kilometers and has a population of 33.6 Million.

The table below shows a comparison of the economies of Pakistan and Uzbekistan.

Uzbekistan has the highest population among the Central Asian Republics (CAR), but the country’s population is still roughly a sixth of the population of Pakistan. Pakistan also has a GDP almost five times that of Uzbekistan, though per capita GDP of Uzbekistan is much higher than that of Pakistan.

Uzbekistan ranked 69th in the world on the Ease of Doing Business Indicator as of 2019.

The figure below shows the trade overview of Uzbekistan with the world.

Kazakhstan is the main trading partner within the region. Turkey also remains among the top trading partners of Uzbekistan while South Korea has emerged as a major export partner for the country. The top export commodities of Uzbekistan to the world in 2019 were pearls, mineral fuels, cotton, copper, fruits and vegetables while the country’s top imports from the world were machinery, vehicles, iron and steel etc.

Though Uzbekistan’s trade with Pakistan is relatively small, it has always had a deficit in its trade with Pakistan. In 2019, Uzbekistan’s exports to Pakistan were worth US$ 5.4 Million, its major exports were salt, sulfur, zinc, edible vegetables and cotton among others while its imports from Pakistan were valued at US$ 22.6 Million resulting in a trade deficit of US$ 17.2 Million. Uzbekistan’s major imports from Pakistan were pharmaceutical products, edible fruits and nuts, products of the milling industry and textile articles etc.

Pakistan’s export potential in its trade with Uzbekistan was US$ 373.1 Million for the top 25 export products in 2019. The products which showed the highest potential for exports to Uzbekistan were: pharmaceutical products, wheat, potatoes, sugar, bananas and surgical instruments.

Pakistan and Uzbekistan signed a Memorandum of Understanding (MOU) for a Joint Working Group on Trade and Investment in May 2020 to encourage bilateral trade. From Pakistan’s perspective the country needs to focus on increasing its exports of pharmaceutical products, wheat, potatoes, sugar, surgical instruments, bananas, lead-acid accumulators and milled rice to Uzbekistan. Other products for which a market can be developed in Uzbekistan include Portland cement, polyethylene, parts of gas turbines, vegetable fats, food preparations and products of iron.

The lack of formal banking channels is a major impediment to the development of trade with Uzbekistan. It is important that the State Bank of Pakistan (SBP), the Ministry of Finance & Commerce, private businesspersons and other stakeholders develop a viable framework to help overcome the challenges posed by the financial regulatory regime in that country.

For promoting trade, the Government of Pakistan needs to send trade delegations to Uzbekistan in order to help develop better insights into the Uzbek market. The Trade Development Authority of Pakistan (TDAP) should start organizing international exhibitions in Uzbekistan for the products where Pakistan has an advantage. And finally, it is important to promote direct transport linkages between the two countries.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 83) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk

In 2019, the UK imported goods worth $1.7 billion from Pakistan making the UK an important export destination for Pakistan. This Study attempts to answer the following questions:

• What will be the UK’s trade regime especially for Pakistan following Brexit?
• How is the UK’s trade regime likely to impact Pakistan’s exports to the UK — in the near,  medium term?
• What is the likely trend in Pakistan’s exports to the UK in the near, medium term?
• How can Pakistan increase its presence in the UK market post-Brexit?

In June 201 6, the UK electorate in a referendum narrowly decided that the UK should exit the European Union (EU) and … take back control…”. The term used for the UK’s exit from the EU is Brexit.

The UK’s Trade Regime Post-Brexit: The UK will formally exit the EU at the end of 2020 unless there is an agreement to extend the departure date as talks continue on what is called the “Divorce Deal”. So far what we know about the UK’s trade regime post-Brexit are:

• In the absence of a trade deal with the EU, imports to and from the EU will be subject to normal or MFN tariffs.
• The UK in the interim transition period will continue with the existing EU non-tariff barriers including compliance and testing requirements pending the setting-up of its own national standards
• The EU’s bilateral trade agreements will no longer apply to trade between the UK and the EU’s partner countries and the UK will look to negotiate its own trade agreements with its major trading partners
• All EU unilateral trade benefits such as GSP, GSP+ and EBA (Everything but Arms) will continue in the transition period as the UK reviews these unilateral trade concessions.

The UK’s Trade Regime for Pakistani Imports: In the post-Brexit period the UK has committed to Pakistan & other developing countries the following:

• The EU’s unilateral concessions such as GSP+ will continue post the UK’s exit from the EU. However, there is a likelihood that these will be reviewed subsequently keeping the UK’s economic and strategic objectives in mind
• The EU’s compliance requirements will continue to apply for imports from Pakistan under the UK’s new trade regime pending the development of the UK’s own national standards.

Likely Trends in Pakistan’s Exports to the UK: There are forecasts to suggest that the UK’s GDP will contract between 1 and 4.5% in the post-Brexit period. Based on past trends in Pakistan’s exports in periods where the UK has seen a contraction in its economy, the following are the likely trends in Pakistan’s exports to the UK post-Brexit:

• Historical data suggests that there is a “lag effect” of one year between a slowdown in the UK’s economy and the impact of this slowdown on Pakistan’s exports. This suggests that in the near-term there will be no major drop in Pakistan’s exports to the UK. This analysis does not take into account the “Covid-19 affect” on consumption in the UK.
• There is expected to be no major drop in Pakistan’s exports to the UK primarily because of the very low contribution of Pakistan to overall UK imports (0.25%). In addition, the nature of Pakistan’s exports the UK which are mostly products with low levels of sophistication reduces the likely impact on demand from a reduction in consumer buying power.

PBC’s Recommendations for Policy Makers & Industry: While Pakistan will continue to benefit from GSP+ in the near term, this benefit might not continue in future. The major recommendations coming out of this Study are:

• In the transition period after the UK exits the EU, policy makers in Pakistan need to monitor the new rules for trade that will be framed by the UK post the transition period. For Pakistan of special importance will be the Non-Tariff Barriers like compliance and testing that the UK might introduce for imports including those from Pakistan.
• Pakistan will need to lobby with the UK government to ensure that the current duty-free access granted by the EU GSP Plus scheme continues.
• Pakistan also needs to monitor if the UK will continue with duty-free access for Pakistan’s competitor countries and if it will extend these to countries such as India which are currently not eligible for duty-free access.
• Though it appears that there will be no major drop in exports, this is primarily due to the low level of sophistication of Pakistan’s exports, this needs to change.
• To ensure that Pakistan derives the maximum benefit from its initial duty-free access to the UK market, Pakistan needs to put in place a policy framework that promotes the manufacture and exports of products which have large and increasing demand e.g. apparel of man-made fiber and more products which have a higher level of sophistication than what is currently being exported to the UK.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 74 (now 83) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk 

• What prompted this report?
• What is the US GSP program?
• Who are the top beneficiary countries of the US GSP Program?
• What are the major US imports under the GSP Program?
• How is Pakistan currently benefiting from the GSP Program?
• What is the potential for Pakistan to increase exports to the US under the GSP Program?
• What are the major recommendations for increasing exports to the US under the GSP Program?

What prompted this Report?

In 2019, the United States of America (US) was Pakistan’s second largest export destination after the EU. Pakistan’s bilateral trade with the US was worth $6.60 billion in 2019 including exports of $3.95 billion. And while Pakistan at various stages in their 70 – year relationship has expressed a desire to sign a market access agreement, the US for domestic and strategic reasons has been lukewarm to the suggestion.

On the other hand, at various forums, US officials in both Islamabad and Washington have suggested to their Pakistani audiences to take a closer look at the US GSP program. Their reasoning being that while Pakistan continues to lobby for a trade agreement it should also try to exploit the opportunities provided under the GSP program which is a unilateral market access program.

This Report therefore looks as the US GSP program as a tool for increasing Pakistan’s exports to the US by creating greater awareness of the program.

What is the US GSP Program?

• The United States Generalized System of Preferences (GSP) program provides unilateral preferential duty-free entry for about 5,000 products imported into the US
• Textile products are mostly exempt from the ambit of this program
• Eligible products must meet specific Rules-Of-Origin (ROO) requirements to receive duty-free treatment
• Another restriction that the scheme imposes is Competitive Needs Limit (CNL) requirements. CNLs set a ceiling on GSP benefits for each product and country. The US can suspend GSP if imports of a single product from a beneficiary exceeds a specific value, $195 million per annum in 2020; or 50.0 percent or more of total US imports of a product entering under the GSP Program

Who are the top beneficiary countries of the US GSP Program?

The major beneficiaries of the US GSP program along with GSP imports from these top beneficiaries is given in the table below:

Currently Pakistan is the 9^th largest beneficiary of the GSP Program with exports of $345.0 million in 2019.

What are the major US imports under the GSP Program?

The top ‘10’ imports under the GSP program in 2019 are given in the table below:

How is Pakistan currently benefiting from the GSP Program?

In 2019 total US imports from Pakistan under the GSP Program amounted to $344.6 million or roughly 8.72% of total US imports from Pakistan of $3.95 billion. The top ‘20’ US imports from Pakistan under the GSP Program in 2019 are shown in the table below:

What is the current potential for Pakistan to increase exports to the US under the GSP Program?

The indicative trade potential for Pakistan to increase exports under the US GSP Program is $2.4 billion (at the HS-06 level), and the indicative potential for the top ‘20’ products is $2.0 billion; these top ‘20’ products and their potential is given in the table below:

What are the major recommendations for increasing exports to the US under the GSP Program?

Ensure GSP benefits are claimed through better dissemination of information: To fully benefit from the program, Pakistan needs to ensure better utilization of the GSP program. For 2019, over $27.1 million of US imports from Pakistan, eligible for GSP were assessed for duties unnecessarily. Duties were paid on articles such as leather sports gloves, mittens, and mitts; certain non-cotton pillows, cushions and similar furnishings; certain athletic articles and equipment; miscellaneous iron, and steel articles, and certain cotton fabrics coated, covered or laminated with plastics.

Diversify and focus on emerging industries: Analysis of Pakistan’s export performance reveals that its export base is quite narrow and highly concentrated in a few commodities, namely textiles, apparel, leather, rice, chemicals, pharmaceuticals, and sports goods. For Pakistan, it would be beneficial to use GSP as a market entry tool and focus on goods that are GSP eligible, such as; silk fabrics and apparel including dresses, women’s suits, scarves, hand-loomed cotton and fabrics, some types of gloves and mittens, national flags, and hand-loomed and hand-hooked carpets. However, importance also needs to be given to non-traditional export goods, some of which are GSP eligible and imported by the US in substantial quantities. These include items under jewelry, rubber goods, plastics, motor vehicle parts, electric fixtures, and fittings, etc which Pakistani manufacturers can look to exploit.

Trade Diplomacy could be the key for Pakistan: Even though US GSP imports from Pakistan are well below the Competitive Need Limit (CNL), in case Pakistan appears to be nearing any provision of the CNL, Pakistani diplomats need to monitor the CNL thresholds continually and engage in intense diplomacy to seek a waiver in case of a breach.

Use GSP for Market Diversification:  At the HS-06 level, Pakistan has an aggregate trade potential to export more than $2.0 billion to the US for the 20-high potential GSP commodities. It has a further export potential of $246.8 million for 30 additional goods to the US^[3]. Given these figures at the HS-06 level, exporters can look to target the US market and shift resources/production to export goods at the tariff line that fall under the GSP scheme.

Pakistan exports certain goods to other countries, of which US is a significant importer. Many of these items are eligible for GSP treatment upon entering the US, such as; some footwear uppers and upperparts, parts and accessories of motor vehicles, leather handbags and gloves and certain types of plastics. There are also certain products under the category of fresh fruits and vegetables of which Pakistan exports significant quantities globally. Agri-exporters can focus on the US market and take advantage of the items eligible for duty-free access into the US. The following list is compiled according to commodities that indicate the highest potential to increase exports to the US, given Pakistan’s supply capacity and high global demand.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 83) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk

[1] Values taken from UN COMTRAD
[2] A detailed table consisting of all the GSP eligible goods at tariff line that fall under the above-mentioned product categories can be found in the Annexure under table 40E
[3] See table 42 in Annexure 2

Major Findings

• Under the terms of the FTA, Pakistan offered concessions to Malaysia on around 6,803 tariff lines, including palm-based products. In turn, Malaysia offered concessions on around 10,593 tariff lines.
• Comparing Malaysia’s Concession List under the Pakistan FTA with that offered to other FTA partners, Pakistan has managed to negotiate the lowest number of lines for zero tariffs.
• In 2019, Pakistan faced a trade deficit of $724.1 million with Malaysia with imports from Malaysia being nearly three times exports.
• Palm Oil, which is Pakistan’s largest import from Malaysia, as well as the commodity with the largest indicative potential for exports from Malaysia to Pakistan is a part of Pakistan’s concession list for Malaysia.
• Other important imports from Malaysia comprise of Machinery and Mineral Fuels.
• Pakistan’s exports to Malaysia largely consist of Agricultural Products on some of these like rice, Malaysia applies high tariffs. In the case of rice, Pakistan’s competitors Myanmar, Thailand, Vietnam (ASEAN members) and India face a lower tariff as compared to Pakistan.
• At HS-06 level, Pakistan has an indicative export potential for the top 25 items amounting to $2.0 billion, in 2019, Pakistan actually exported a mere $74.2 million of these high potential products to Malaysia.
• Most of Pakistan’s high export potential commodities fall under Agricultural Goods and Foodstuff. High export items include Rice, Vegetables, Fruits and Meat.
• Major non-tariff barriers to increasing Pakistani exports to Malaysia include labelling and certification requirements. In addition, due to the absence of direct flights to Malaysia exports of perishables from Pakistan is difficult and expensive. In such case, Pakistan can try to tap into the potential market of Textiles.

Major Recommendations

• Since most textile goods under MPCEPA are allowed zero duty access, more trade fairs and marketing of textile goods, especially high value-added products in place of raw material (Cotton), will allow Pakistan to tap into this market.
• Another potential market is for Surgical Equipment which are currently exported in low volumes to Malaysia.
• Pakistan’s Pharma and Drug regulatory authorities are not registered with the International Pharmaceutical Inspection Convention which restricts the export of such goods to Malaysia. By gaining recognition of international authorities, exports can increase since the country already produces high quality pharmaceutical products.
• At FTA review meetings Pakistani negotiators should target tariff parity with Malaysia’s other FTA partner countries. Parity should be especially targeted for high potential exports such as Rice, Portland Cement, Articles of Bedding etc.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 83) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk

This report titled “Potential of the Proposed Pakistan – Thailand Free Trade Agreement” is the fourth in the PBC’s Pakistan – Thailand FTA series and is part of the PBC’s Market Access Series. This report has been prepared based on the latest trade and economic data available and aims to see if there is any change in the competitiveness of Pakistan’s economy which may have given policy makers renewed optimism that Pakistan’s manufacturing and other value-added sectors will be able to compete with the sophisticated products manufactured by Thai industry.

The Pakistan Business Council (PBC) would like to restate its position that an FTA with Thailand, or for that matter with any country, should only be signed if it leads to incremental jobs, exports and additional revenues for the government. The findings of this Study have led to the conclusion that Pakistan is NOT READY to sign an FTA with Thailand and that Pakistan would be better off signing a limited Preferential Trade Agreement (PTA) seeking parity access for Pakistan’s fisheries and textile products.

Figure: Pakistan – Thailand Bilateral Trade

Source: ITC, Trade Map

Since 2010, Pakistan has had a trade deficit in its bilateral trade with Thailand. While Thai exports to Pakistan have mostly been of sophisticated manufactured products, Pakistan’s exports to Thailand are for the most part dominated by textiles, apparel, cotton and cereals i.e. mostly commodities.

Recognizing Pakistan as a significant exporter of aquatic animals, there seems to be an interest among ASEAN countries in building new trade relations with Pakistan. For this purpose, this study has used Revealed Comparative Advantage (RCA), Export Product Dynamic (EPD), and X-Model methods. This procedure is adapted from (Luhur et al., 2019). The EPD estimation results show that Pakistani ‘Crustaceans’ (HS-0306) and ‘Aquatic Invertebrates’ (HS-0308) in Thailand, Malaysia, and Indonesia were falling in the ‘Rising Star’ position, which showed that Pakistan was able to meet the growing demand in these countries. Moreover, Pakistani ‘Frozen Fish’ (HS-0303), ‘Fillets and Fish Meat’ (HS-0304), and ‘Molluscs’ (HS-0307) have acquired a ‘Rising Star’ position in the Thai market. To determine Pakistan’s market development potential in Thailand and each ASEAN market under consideration, this study further used the X-Model of Potential Export Product method. The X-model estimates show that Thailand, Malaysia, and Indonesia indicate a positive and potential market development status, which means all three markets have a significant potential to develop the Pakistani fishery product market.

For textiles, Pakistan is the 23rd largest source country for Thailand but with a share of just 0.5 percent, along with a negative CAGR of 6.2 percent. As of 2019, Thailand imported $5.40 billion worth of textile products from the world. Since textiles represents 25.0 percent of Pakistan’s total exports to Thailand, signing a trade agreement could likely open up Thai textile market for Pakistani textile manufacturers.

Items classified under ‘Cotton’ (HS-52) enjoyed a significant share of 16.5 percent in total textile imports of Thailand from Pakistan. A list of textile articles has been developed that PBC recommends being pushed for inclusion in the concession list in any possible future negotiations for a trade agreement with Thailand.

This study does a brief historical analysis of Thailand’s manufacturing sector to show how a set of appropriate policies followed by the Thai government and its close collaboration with the private sector has resulted in the inflow of large amounts of FDI. From Thailand’s export point-of-view, an analysis of two manufacturing industries, namely; the automobile industry and the auto parts industry has been conducted. This report compares Thailand’s major export industries with Pakistan’s and the differences especially in the auto and the auto parts industries are highlighted. The auto and auto parts industry are relevant as comparators since the Thai authorities have asked for preferential access to these industries.

The current tariff structure reveals that there is room for tariff cuts, for goods traded between the two countries. Pakistan could ask for 100 percent concession or the most concessionary tariffs for its top potential textile and seafood exports to Thailand. Since Pakistan is not among the primary source of textile articles for Thailand, but has a high potential to supply these products, provision of concessionary duties will make Pakistani products more competitive in the Thai market against zerorated products of India, China, Japan, Australia and New Zealand.

While Thailand stands to benefit immediately from a reduction in tariffs for its major exports to Pakistan, Pakistan will need time to build capacity, mostly in the automotive sector to gain from an FTA. Pakistani officials need to be extremely cautious in signing a free trade agreement with Thailand. Pakistani industries, may not be able to compete in a market exposed to low-cost imports from an industrial economy such as Thailand. The FTA would not only burden the Pakistani economy with deficits but could lead to the manufacturing industry being forced out of business and more job losses than our economy can sustain.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 83) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk

Accounting for a mere 0.79% of Pakistan’s bilateral trade, Turkey is not a significant trading partner for the country. The trade balance has mostly been in favor of Pakistan, except for in 2018 when the surplus changed into a deficit of $55 million. Pakistan’s imports from Turkey have grown at CAGR of 10.0% while its imports to Turkey have declined by 3.2%.

At HS-06 level, Pakistan has an indicative trade potential for the top 25 items amounting to $2.3 billion – for these top 25 items, of these, Pakistan exported a mere $137.4 million to Turkey in 2018. Majority of the products with high potential fall under textile goods. Similarly, the indicative trade potential for the top 25 Turkish exports to Pakistan amounted to $4.6 billion while Turkey exported a mere $37.4 million of those commodities to Pakistan. Most of these high potential products are high-value added and fall under the automobile sector.

All in all, the analysis indicates that Pakistan holds high potential in commodities which have low value addition. Most of these products already have 0.0% tariff applied by Turkey or fall under agricultural products where any sort of concession may be difficult to obtain. The other major class of high potential products fall under the textile category. These also have low value addition as they mainly consist of denim fabric, cotton yarn etc. On the other hand, Turkey holds the potential to export machinery or goods from the auto industry which involve high value addition.

Based on the findings of this study, PBC recommends that Pakistan disassociate itself from the FTA negotiations and instead insist that Turkey allow Pakistan unilateral market access to which it is entitled under the GSP+ program.

The Pakistan Business Council is a research-based business advocacy body composed of the most significant local and foreign investors with long-term commitment to Pakistan. The PBC pursues advocacy free of sectoral and investor origin biases, “Make-in-Pakistan” is PBC’s primary thrust aimed at creating jobs, value-added exports and encouraging import substitution. More information on the PBC and its areas of research are available on our website: www.pbc.org.pk.

Pakistan-Mercosur Bilateral Trade

Pakistan’s share in Mercosur’s exports and imports remains less than 0.3%, indicating that Pakistan is not a significant trading partner for the countries in the bloc. Furthermore, bilateral trade has always been in favor of Mercosur. In 2018, Mercosur’s exports to Pakistan totaled $576.6 million while its imports from Pakistan were worth $139.8 million, resulting in a favorable trade balance for the bloc of $436.8 million. Mercosur mainly exports agricultural goods and machinery to Pakistan, with exports growing at a rate of 9.71% over the last ten years. Its major imports from Pakistan consist of textile products with imports growing at a rate of 4.48% in the last ten years.

Pakistan has the potential to increase its exports to Mercosur with the export potential of just the top 25 products amounting to $2.6 billion whereas Mercosur’s actual imports of these commodities from Pakistan was worth just $30.0 million in 2018. From the 25 high potential export items of Pakistan, textile and agriculture have the highest potential. Trade in 20 out of the 25 high potential products did not take place in 2018 indicating Pakistan needs to concentrate on getting market access for these products.

On the other hand, Mercosur’s aggregate export potential to Pakistan of its top 25 products amounted to $6.2 billion while it only exported $114.8 million of these goods to Pakistan in 2018. The bloc has the potential to export goods from the automobile industry worth $2.6 billion to Pakistan. The high potential goods mostly include motor cars and motor vehicles designed for the transport of people. In 2018, Mercosur only exported 2 out of its 25 high potential items to Pakistan in 2018.

The Pakistan Business Council is a research-based business advocacy body composed of the most significant local and foreign investors with long-term commitment to Pakistan. The PBC pursues advocacy free of sectoral and investor origin biases, “Make-in-Pakistan” is PBC’s primary thrust aimed at creating jobs, value-added exports and encouraging import substitution. More information on the PBC and its areas of research are available on our website: www.pbc.org.pk