Turkiye and Pakistan while enjoying a close historical, cultural and military relationship are jointly working to strengthen and expand trade ties with each other. Both countries have struck certain trade deals which show their interest in trade ventures.
Why are Pakistan and Turkey so interested in boosting bilateral trade? The answer is ‘market’. Turkey is an emerging market economy and an industrialized developing country with the 13th largest GDP by Purchasing Power Parity(PPP). While Pakistan is the 5th most populated country in the world with the 23rd largest GDP by PPP. So this is eye-catching for the two countries.
Moreover, both countries have historic economic relations. In 1985, Pakistan, Turkey, and Iran founded Economic Cooperation Organisation with the motto of sustainable socio-economic development for the people of the region. The two countries are also part of the Developing-8 organization for economic cooperation. With regard to bilateral trade ties, in March 2016, Pakistan and Türkiye signed a framework agreement for establishing free trade area between the two countries. This provided the basis for future negotiations on Free Trade Agreement(FTA).
Although the FTA has not been materialized yet, the framework agreement did bear fruit and resulted in Preferential Trade Agreement (PTA) between the two countries. Turkish Trade Minister Dr. Mehmet Mus and Pakistan Minister for Commerce Syed Naveed Qamar on August 12, 2022, signed the accord. The PTA is, quoting Prime Minister Shahbaz Sharif, a great moment and a milestone for the historic Pak-Turk relations. Under the agreement, Turkiye has offered concessions to Pakistan on 261 tariff lines, which include key export items of Pakistan from both the agricultural and industrial sectors. While Pakistan had offered the Turkish side concessions in 130 tariff lines.
Regarding PTA, the Commercial counselor at the Embassy of Turkiye in Pakistan Nurettin Demir said that the agreement was likely to be approved by the Turkish Parliament next month. Underscoring the importance of the agreement, he said, that it would act as a catalyst for improving Pak-Turk trade and economic ties.
Moreover, according to the Pakistan Ministry of Commerce, Pakistan’s top exports to Turkiye are cotton (yarn and grey color), plastics, beverages, articles of apparel and clothing accessories (both knitted and non-knitted), raw hides, leather, etc. While, its top imports are machinery, mechanical appliances, nuclear reactors, cotton, iron and steel, miscellaneous chemical products, edible vegetables, etc.
Bilateral trade between the two countries has been consistently increasing over the years, and stands at $882 million as of FY 2021-22, up by 17.8% from $749.12 million in FY 2020-21. Whereas, gradual improvement in Pak-Turk trade ties may further strengthen the economy and overcome the growing economic problems. Concluding with the quote of Phil Knight, “Trade agreements benefit both nations, always.”
