ISLAMABAD: International Monetary Fund (IMF) has urged Pakistan to ink Free Trade Agreements (FTAs) with large, important trading partners to secure market access and further rationalize import tariffs.
According to IMF’s Sixth Review Under the Extended Arrangement Under the Extended Fund Facility, Pakistan’s exporters are facing higher tariffs in Pakistan’s major export markets as compared to the exporters of competing economies, which restricts Pakistani exporters’ competitiveness.
While Pakistan has signed FTAs with China, Sri Lanka, and Malaysia, has preferential trade agreements with Iran, Indonesia, and Mauritius, and is part of the South Asian Association for Regional Cooperation (SAARC), a number of FTAs remain under negotiation or consultation. However, most of Pakistan’s exports are to countries with whom Pakistan does not currently have a FTA. For example, in FY 2021 trade with the United States, United Kingdom, Afghanistan, and Germany (Pakistan’s first, second, fourth, and fifth most important export destinations, respectively) comprised about 37 percent of total merchandise exports, while exports to Pakistan’s 3 FTA markets were about 10 percent.
IMF has observed that absence of permanent FTAs with the major export market destinations hurts Pakistani exporters’ competitiveness as they face higher tariffs than other exporters
The Fund says that Pakistan remains a very closed economy as compared to other Emerging and Developing Economies (EMDEs), with openness...
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