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ECOTA and Pakistans exports

At a moment when Pakistan’s declining exports look troubling the commitment to double intraregional trade within the ECO–from its current standing– brings a gleaming hope.

Multiple studies indicate the prospects for enhanced export opportunities for Pakistan within the ECOregion.

However, studies conducted by the ECO and TRTA also highlight certain weaknesses related to Pakistan– which require attention.

An overview suggests that Pakistan has  increased its exports primarily to Afghanistan– Afghan import requirements have further enabled Pakistan to expand its exports of manufactured goods in areas of petroleum, plastics , steel, chemicals– which in the past have not been Pakistan’s core export items. But, issues of non tariff barriers, violations of certificates of origins and re exporting to Central Asian states continue to dent Pakistan’s export potential.

Pakistan’s trade with Turkey and Iran is primarily in the areas of textile and rice, respectively. However, owing to sanctions on Iran and Turkey and increasing tariffs on textile imports from Pakistan– played some part in denting Pakistan’s exports.

Whereas, trade with the remainder 6 Central Asian states— is primarily in areas of apparel, pharmaceuticals and leather. But, again due to hindrances in proper transport channels it is witnessing a downward push. It has also been noted that none of Pakistan’s top 10 exports make it to the ECO region.

Some of the prominent reasons attributed to these declines include:  

Pakistan’s narrow export base. Geographically concentrated areas of export– primarily because several traders are reluctant to divert from traditional partners and dabble in the Central Asian zone. Issues with quality in manufactured goods coupled with the availability of cheaper alternatives from China and India.  The 4th core problem was inefficient modes of transport.

Essentially- the ECOTA aims to resolve much of these issues. As it not only outlines trade objectives but also discusses the scope of improving the supporting systems : namely – transport and free movement.

The ECOTA– presently , is a preferential trade agreement , the members are required to draw up three lists of tariff concessions : positive , restricted and negative — the aim is to enlarge the positive list to include 80% of all traded goods within a span of 8 years. (Afghanistan has been granted 15 years to do so). However, the fact remains that the ECOTA was due to be implemented in 2003; but owing to contentions over tariffs and the goods included in the lists– led to delays . The ending note of this years summit; reiterated commitments to restructure flawed aspects of the agreements– and re-negotiate terms in order to allow equitable growth–as a top priority.

The issue of varied economic systems has also led to significant issues in the past; however resolves to develop a coherent strategy especially in terms of custom duties and easing of other non tariff barriers was enunciated.

Another prominent aspect is reliance on traditional partners– this trend appears to be adapted by all ECO members; Pakistan’s major import/export partners include China ,EU and USA, Turkey and Iran and the other central Asian states incline towards EU and Russia and China. One report highlights the prospects of  Central Asian imports of light engineered goods from Pakistan, Turkey and Iran instead of traditional sources in Russia and China.

However, once again the broader political and security objectives entangled to these trades cannot be ignored– Further, entwined to this aspect is also the reality that apart from the ECOTA; all regional players are under the bandwagon of various other unions.

Turkey’s trade presences are deeply positioned with EU custom union , some Central Asian states are under Russia’s Eurasian custom union , Pakistan’s trade preferences are aligned with China. While on the other end– most of these states are constantly working on various bilateral trade agreements as well. These diverse interests would require harmonizing with the ECO vision.

In conclusion: For starters– Pakistan could focus on improving trade ties and resolving trade contentions  with the neighbouring ECO members: which include Iran and Afghanistan. In order to ensure smooth and accounted for trade flow.

A top priority also remains sustainable access to energy sources– which amplifies the urgency for regional harmony. Secondly, a careful balance needs to be crafted while juggling multiple trade agreements; the prime focus should be on utilising these opportunities to enhance the export base and diversify avenues, bridge technological gaps and ensure that overlapping trade routes provide Pakistan with efficient modes of transport and diversified outlets . Naturally, various internal reforms would also be required to attain these objectives.

Lastly, as promising as the recent ECO visions seem in terms of trade– Pakistan would have to remain vigilant of the multiple power pull; and thereby cannot unilaterally guide the actions of the entire ECO; accepting certain realities and utilizing the existing trade ties of regional members to resolve its  economic grievances could be considered as a contingency.

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