Free Trade Agreement Between Pakistan and Turkey: What You Need to Know
Pakistan and Turkey, two important Muslim countries, have enjoyed a long-standing friendship and cooperation over the years. They have recently taken a significant step towards strengthening their economic ties by signing a free trade agreement (FTA) in 2019. The agreement is expected to bring a host of benefits for both countries, including increased trade, investment, and economic growth.
What is a Free Trade Agreement?
A free trade agreement is a bilateral or multilateral agreement among countries to eliminate or reduce trade barriers such as tariffs, quotas, and other restrictions on the cross-border movement of goods and services. The purpose of such agreements is to facilitate trade and promote economic growth by creating a level playing field for businesses and consumers.
Pakistan and Turkey`s FTA
Pakistan and Turkey have been discussing the possibility of a free trade agreement for the past few years. The negotiations began in 2015 and finally concluded in 2019, with the signing of the agreement between the two countries.
The FTA is aimed at boosting bilateral trade between Pakistan and Turkey by removing tariffs on a wide range of products and increasing market access for businesses in both countries. Under the agreement, Pakistan will eliminate tariffs on 35% of the tariff lines for Turkish goods over a period of 10 years, while Turkey will reciprocate by eliminating tariffs on 75% of the tariff lines for Pakistani goods.
Benefits for Pakistan
The free trade agreement is expected to bring several benefits for Pakistan. Firstly, it will provide increased market access for Pakistani businesses, especially in the textile, leather, and agriculture sectors. This will help Pakistan in diversifying its export base and reducing its reliance on a few traditional export items.
Secondly, it will help Pakistan in attracting more foreign direct investment (FDI) from Turkey. Turkey is a rapidly growing economy with a large and diversified manufacturing sector. Turkish investors are already investing in Pakistan in different sectors, including construction, energy, and textiles. The FTA will help in further enhancing investor confidence and attracting more FDI from Turkey.
Benefits for Turkey
The free trade agreement is also expected to bring several benefits for Turkey. Turkey is a leading exporter of textiles, machinery, and automobiles. The FTA will provide Turkish businesses with increased access to the Pakistani market, which has a population of over 200 million people and a growing middle class. This will help in expanding Turkish exports and diversifying their markets.
Secondly, the FTA will help Turkey in further deepening its economic and strategic ties with Pakistan, a country with significant geopolitical importance in the region. Turkey has been looking to expand its influence in the Muslim world, and the free trade agreement will help in achieving that goal.
The free trade agreement between Pakistan and Turkey is a significant step towards strengthening economic ties between the two countries. The FTA will help in increasing trade and investment, diversifying export bases, and creating jobs in both countries. However, the success of the agreement will depend on how effectively both countries implement it and address any challenges that may arise in the future. Overall, the FTA is a positive development for Pakistan and Turkey, and it is expected to bring benefits to businesses and consumers in both countries.