ISLAMABAD: Almost after seven years, Pakistan and Turkiye have implemented a preferential trade agreement to boost bilateral trade volume across various sectors.

Both sides notified duty reductions on mutually agreed tariff lines with effect from May 1, an official announcement of the commerce ministry said on Thursday.

Islamabad and Istanbul signed the “Trade in Goods Agreement” in August 2016.

Under the agreement, Pakistan has gained preferential access to the Turkish market under 261 tariff lines covering traditional as well as non-traditional sectors such as leather, rice, dates, mangoes, cutlery, sports goods, seafood, processed agricultural products, rubber tubes and tyres, plastics, and engineering goods.

Pakistan’s export value of these tariff lines stands at $5.1 billion or 16 per cent of the total exports, while Turkish global imports in these products amount to $7.6bn.

Duty was reduced to zero per cent on 123 tariff lines, including five agricultural and 118 industrial products. The current export value of these products is $714 million, while Turkish global imports of these products stand at $3.920bn.

Customs duty on average is 2-3pc. However, the additional customs duty is 20pc for industrial products, which will be reduced. This is one area having the potential to increase exports of non-traditional products.

Whereas concessions on 130 tariff lines have been extended to Türkiye, including products such as black tea, processed food products and flavourings, industrial raw materials and parts of machinery, and parts of electronic equipment. The total export value of these products is $23bn or 12pc of its total global exports. Pakistan’s global imports of these products stand at $6bn.

Pakistan has reduced duty to zero on 16 tariff lines for Turkiye. Pakistan’s global imports of these tariff lines stand at $1.224bn, while Turkish global exports of these products are $2.486bn.

Pakistan exempted duty for Turkiye immediately on cocoa powder, acrylic filament and staple fibre, nonwoven man-made filament, black tea, modems, wire condensers, flavours for the food industry, machines for reception and transmission, enzymes and gum base.

The agreement will open new export opportunities, Commerce Minister Naveed Qamar said in a statement.

Since the signing of a framework agreement on March 22, 2016, both sides have held 14 rounds of bilateral negotiations to identify those products for trade which are not affecting each other’s interests.

In the second phase, Turkiye will reduce the duty to zero per cent on 92 tariff lines during a period between five and 10 years. Pakistan’s export value of these products is $1.608bn, while Turkish global imports stand at $2.084bn.

Turkiye has offered a margin of preferences and tariff rate quota on agriculture products to Pakistan. The categories of products which will get benefit from the concessions are leather, footwear, glass and ceramics, articles of base metal, plastics and rubber, furniture, mattresses and lamps, sports and engineering goods, chemicals and cosmetics, agriculture products and processed agriculture.

While Pakistan will reduce to zero per cent in five to 10 years on 16 tariff lines. Turkish global exports of these tariff lines stand at $2.123bn, while Pakistan’s imports of these products are $684m.

In five years, the duty will be exempted on chocolate crumbs, active yeast, flavouring powders, animal feed, laboratory reagents, clamps of steel, copper wire 6mm, pressure-reducing valves and slide fasteners. In 10 years, duty will be reduced on clips, brackets of iron and steel, mounting, fitting for furniture, parts of sorting, screening, grinding machines, apparatus for transmission of voice, etc.

The commerce minister stressed the need to increase business-to-business interaction for strengthening trade and investment relations between the brotherly countries. He said signifies a notable milestone in the historic brotherly relations between Pakistan and Türkiye and envisages further integration of the markets and business communities of both countries.

The total trade between Pakistan and Turkiye stood at $883 million in the fiscal year 2021-22 with Pakistan’s exports to Turkiye amounting to $366m and Pakistan’s imports from that country amounting to $517m. The balance of trade is in favour of Turkiye with a negative trade balance of $151m in 2021-22.

Published in Dawn, May 5th, 2023