Pakistan Thailand Free Trade Agreement

Since 2010, Pakistan has had a bilateral trade deficit with Thailand. While Thai exports to Pakistan consisted mainly of sophisticated industrial products, Pakistani exports to Thailand are largely dominated by textiles, clothing, cotton and cereals, i.e. mainly raw materials. Describes the trade agreements in which this country is involved. Provides resources for U.S. companies to obtain information on the use of these agreements. The idea of a free trade agreement (FTA) between Pakistan and Thailand circulated in early 2013. This decision was taken in the context of Pakistan`s “East Asia Vision”, which was complemented by Thailand`s “Look West” policy and bilateral trade between the two countries exceeded the billion-dollar mark for the first time. The report, the third in its series, focuses on Thailand`s manufacturing sector, which serves as the backbone of the country`s exports. In addition, Thailand is considering joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Thailand has formed a committee to examine the impact of such a trade pact. Auramon Supthaweethum, director general of the Trade Negotiations Division, said Thailand and Pakistan held nine rounds of talks that closed 12 chapters of the agreement`s 13 chapters. Recognizing that Pakistan is a major exporter of aquatic animals, ASEAN countries appear to be interested in establishing new trade relations with Pakistan. To this end, this study used the revealed comparative advantage (RCA), export product dynamics (EPD) and Model X methods. This procedure is adapted by (Luhur et al., 2019). The results of the estimate show that Pakistani “crustaceans” (HS-0306) and “aquatic invertebrates” (HS-0308) fell into the position of “rising star” in Thailand, Malaysia and Indonesia, showing that Pakistan was able to meet the growing demand in these countries. In addition, Pakistani “frozen fish” (HS-0303), “fish fillets and meat” (HS-0304) and “molluscs” (HS-0307) have gained a “rising star” position in the Thai market. In order to determine the development potential of the Pakistan market in Thailand and each ASEAN market considered, the Model X method of the potential export product was used in this study. Model X estimates show that Thailand, Malaysia and Indonesia have a positive development status and market potential, which means that all three markets have significant potential for the development of the Pakistani fishery products market. He said Pakistan and Thailand were finalizing supply lists of 200 priority items under a proposed bilateral free trade agreement.

Pakistan and Thailand are negotiating a free trade agreement to improve market access, he said. Thailand has implemented bilateral trade agreements with various countries, including Australia, Chile, China, Laos, New Zealand, Japan, Peru and India. The purpose of this report is to advise caution when Pakistani officials negotiate the terms of the proposed free trade agreement between Pakistan and Thailand. Pakistan, which is already suffering from premature deindustrialization and an ever-growing bot deficit, has a poor record when it comes to negotiating trade deals. Thailand, on the other hand, is an export-oriented economy, high exports are the result of better market access through its various trade agreements. The graph below shows a comparison of bilateral trade with Pakistan and Thailand. Thailand intends to conclude negotiations on a free trade agreement with Pakistan by the end of the year, hoping that once implemented, the pact will help boost economic growth by 0.18 to 0.32 percentage points. Outstanding issues for the negotiations include the Customs Protocol, trade facilitation and related market access rules. Other Thailand free trade agreements still under discussion include: Items classified as “cotton” (HS-52) accounted for 16.5% of Thailand`s total textile imports from Pakistan. A list of textile articles has been developed, which the PBC recommends should be included in the list of concessions in possible future negotiations on a trade agreement with Thailand.

In textiles, Pakistan is the 23rd largest source country for Thailand, but with a share of only 0.5% and a negative CAGR of 6.2%. In 2019, Thailand imported $5.40 billion worth of textile products from around the world. With textiles accounting for 25.0% of Pakistan`s total exports to Thailand, signing a trade deal could likely open up the Thai textile market to Pakistani textile manufacturers. The report, titled “Potential of the Proposed Pakistan-Thailand Free Trade Agreement,” is the fourth in PBC`s Pakistan-Thailand FTA series and is part of PBC`s market access series. This report has been prepared on the basis of the latest available trade and economic data and aims to determine whether the competitiveness of the Pakistani economy is changing, which may have made policymakers optimistic about the ability of Pakistan`s manufacturing and other value-added sectors to compete with the sophisticated products of Thai industry. While Thailand will immediately benefit from a reduction in tariffs on its main exports to Pakistan, Pakistan will need time to build capacity, especially in the automotive sector, in order to benefit from a free trade agreement. Pakistani officials must be extremely careful when signing a free trade agreement with Thailand. Pakistani industry may not be able to compete in a market exposed to cheap imports from an industrial economy like Thailand. Not only would the free trade agreement weigh on Pakistan`s economy with deficits, but it could also lead to the forced shutdown of manufacturing and the loss of more jobs than our economy can handle. .