Turkey and Pakistan, while enjoying a close historical, cultural and military relationship, are jointly working to strengthen and expand trade ties with each other, with both countries signing multiple trade deals.
Why are Pakistan and Turkey so interested in boosting bilateral trade? The answer is ‘market’. Turkey is an emerging market economy and an industrialised developing country with the 13th largest GDP by Purchasing Power Parity (PPP). Pakistan is the fifth most populated country in the world with the 23rd largest GDP by PPP.
Moreover, both the countries have historic economic relations. In 1985, Pakistan, Turkey and Iran founded the Economic Cooperation Organisation (ECO) with the motto of sustainable socio-economic development for the people of the region. The two countries are also part of D-8 Organisation for Economic Cooperation. As for bilateral trade ties, the two countries have signed several trade agreements ranging from Pakistan Turkey Trade Agreement 1964, to now the Preferential Trade Accord (PTA) in 2022. Keeping focus on recent developments, in March 2016, Pakistan and Turkey signed a framework agreement for establishing a free trade area between the two countries. This provided the basis for future negotiations on the Free Trade Agreement (FTA).
Although the FTA has not yet materialised, the framework agreement did bear fruit and resulted in a PTA between the two countries. Turkish Trade Minister Dr Mehmet Mus and Pakistan Minister for Commerce Syed Naveed Qamar on August 12, 2022, signed an 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 agricultural and industrial sectors. Pakistan had offered the Turkish side concessions in 130 tariff lines.
Regarding PTA, Commercial counsellor at the Embassy of Turkey in Pakistan Nurettin Demir said that the agreement was likely to be approved by the Turkish Parliament next month. Underlining 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 Turkey are cotton (yarn and grey colour), 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 growing economic problems. Concluding with the quote of Phil Knight, “Trade agreements benefit both nations, always.”
