Trade with China, Turkey highlight structural imbalances, NA told

Islamabad: The Ministry of Commerce revealed that Pakistan’s Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) have had mixed outcomes, with persistent trade deficits in partnerships such as China and Turkey, limited utilization of tariff concessions, and structural bottlenecks hindering export competitiveness. Lawmakers raised concerns about whether some agreements were signed without sufficient domestic industrial readiness, potentially leading to import led growth and threatening local industries.

During Starred Question No. 91 in the National Assembly, moved by Ms. Aliya Kamran, MNA, the Ministry of Commerce, headed by Federal Minister Jam Kamal Khan, provided details on Pakistan’s FTAs and PTAs. The Ministry outlined that all agreements include in built review mechanisms, which are periodically executed. For instance, the Malaysia Pakistan Closer Economic Partnership Agreement (MPCEPA) has been operational since 2008 and is currently under comprehensive review to address supply chain resilience, digital trade, SME development, and green economy cooperation, with the last review meeting held on January 26, 2026.

The China Pakistan Free Trade Agreement (CPFTA), operational in its second phase since 2020, was highlighted for difficulties in fully utilizing market access. Pakistan continues to face a trade surplus deficit with China, raising concerns in the Assembly about an imbalance in benefits. A meeting with the Chinese side on February 26, 2026, discussed Pakistan’s concerns regarding market access limitations.

Similarly, the Indonesia Pakistan Preferential Trade Agreement (IPPTA) saw Indonesia granting zero duty concessions on 20 additional items in 2019. Both sides are negotiating a Comprehensive Economic Partnership Agreement (CEPA), with the most recent meeting on January 29, 2026. Officials noted that Pakistan’s primary imports from Indonesia remain inelastic commodities like palm oil, contributing to fluctuating trade balances.

Other agreements include the Pakistan Sri Lanka FTA (PSFTA), operational since 2005, which has historically yielded a trade surplus for Pakistan. Uzbekistan Pakistan PTAs and Azerbaijan Pakistan PTAs have also produced favorable trade balances, but implementation delays persist, such as with Uzbekistan’s recent expansion protocol adding 29 items, yet not fully operational.

Trade with Turkey remains a major concern. Although Pakistan and Turkey agreed on concessions covering 261 tariff lines for Pakistan and 130 for Turkey, a persistent trade deficit is reported due to stringent non tariff barriers limiting Pakistan’s export potential. Lawmakers pointed out that smaller economies face disadvantages when entering agreements with larger, industrially mature partners, whose exports benefit more due to economies of scale.

The Ministry emphasized that trade agreements are negotiated with extensive stakeholder consultations, including the Ministry of Industries, Engineering Development Board, Ministry of National Food Security, Ministry of Science and Technology, Federal Board of Revenue, National Tariff Commission, chambers of commerce, sector councils, and exporters. High imports and weak exports, they noted, are influenced by a mix of internal, external, and structural factors including logistics, energy costs, exchange rates, and policy stability.

Concrete examples cited include the closure of borders with Afghanistan, disrupting exports of rice, kinnow, meat, and other products, and the costly Iranian corridor following geopolitical tensions. Limited banking channels and SPS/TBT (Sanitary & Phytosanitary/Technical Barriers to Trade) measures also constrain market access, irrespective of concessions.

To address these challenges, the Ministry has established the National Compliance Centre (NCC) to monitor adherence to international standards, bridge global trade laws, and identify sectors where Pakistan has export potential. Under the Strategic Trade Policy Framework (STPF) 2020-25, future FTAs and PTAs are to be carefully negotiated, focusing on value added products, industrial readiness, and measurable performance benchmarks. Awareness programs and export diversification initiatives are proposed to strengthen utilization of concessions and ensure Pakistan’s competitiveness in global value chains.

Trade data underscores these concerns. Pakistan’s bilateral trade with Turkey shows volatile balances: after signing the PTA, exports rose to USD 298.78 million while imports totaled USD 244.09 million in 2023-24, creating a surplus. However, by July-March 2025-26, exports fell to USD 121.18 million against imports of USD 315.19 million, producing a USD 194.01 million deficit. In contrast, Pakistan’s trade with Uzbekistan remains strongly in surplus, rising to USD 62.96 million by July-March 2025-26.