Free trade agreements (FTA) are agreements between countries to eliminate or reduce tariffs, quotas, and other trade barriers on goods and services. These agreements enhance trade relations between countries and lead to increased economic growth.
Pakistan has been actively pursuing free trade agreements with several countries around the world. Currently, Pakistan has signed FTAs with China, Sri Lanka, and Malaysia. Furthermore, negotiations are underway with several other countries including Turkey, Thailand, and the United States.
China-Pakistan Free Trade Agreement (CPFTA)
The CPFTA is one of the most significant agreements for Pakistan, as China is its largest trading partner. This agreement, signed in 2006, eliminated tariffs on more than 3000 products, including textiles, machinery, and chemicals. Since the agreement came into effect, trade between the two nations has increased significantly.
Sri Lanka-Pakistan Free Trade Agreement (SLFTA)
The SLFTA, signed in 2002, was the first FTA signed by Pakistan. This agreement reduces tariffs on a range of goods, including tea, rubber, and textiles. Since signing the agreement, bilateral trade between the two countries has increased from $62 million in 2005 to $360 million in 2020.
Malaysia-Pakistan Free Trade Agreement (MPFTA)
The MPFTA, signed in 2007, is a comprehensive agreement that covers trade in goods and services, investments, and intellectual property rights. This agreement has eliminated tariffs on more than 8000 products, including palm oil, electronics, and chemicals. Since the agreement came into effect, bilateral trade between the two countries has increased significantly.
Potential Free Trade Agreements
Pakistan is currently negotiating FTAs with several countries, including Turkey, Thailand, and the United States. These agreements are expected to reduce trade barriers and increase economic growth for both countries.
Turkey-Pakistan Free Trade Agreement (TPFTA)
Negotiations between Pakistan and Turkey for an FTA began in 2015. Once implemented, this agreement is expected to boost trade between the two countries by reducing tariffs on a range of products.
Thailand-Pakistan Free Trade Agreement
Negotiations for an FTA between Pakistan and Thailand began in 2015. This agreement is expected to increase trade between the two countries by eliminating tariffs on a range of goods, including agricultural products.
United States-Pakistan Trade and Investment Framework Agreement
The United States and Pakistan signed a Trade and Investment Framework Agreement (TIFA) in 2003. The TIFA aims to increase trade relations between the two countries by identifying ways to eliminate trade barriers. Negotiations for a comprehensive FTA are still underway.
Conclusion
Free trade agreements are essential for Pakistan`s economic growth and development. The agreements with China, Sri Lanka, and Malaysia have already proved beneficial, and negotiations with other countries are expected to yield similar results. By reducing trade barriers and increasing trade relations, Pakistan can continue to build strong partnerships with other countries and boost its economy.
