Home »Supplements » World Population Day » Pakistan needs to tap intra-ECO economic, trade potential
Economic Cooperation Organization (ECO) has a unique geo-strategic location, linking the East and the West. This region with its significant economic power, vast natural resources, and dynamic work force, has a huge development potential which need exploration in the better interest of all member nations. ECO region is a biggest Muslim region with the population of 488 million that shares 6 percent (approx) in world population. The ECO region comprises ten member states such as Azerbaijan, Afghanistan, Iran, Kazakhstan, Kyrgyz Republic, Pakistan, Turkey, Tajikistan, Turkmenistan and Uzbekistan. Pakistan, Iran and Turkey are the founder members of the regional bloc. The objective of creation of ECO region is to promote economic, technical and cultural cooperation among the Member States.

In addition to sizeable human resources, ECO Countries possess significant natural resources. Pakistan has strong textile base and the 5th largest milk producer, Iran and Azerbaijan, Kazakhstan, and Turkmenistan have Oil & Gas reserves while Afghanistan enriched with precious and semi-precious gems and famous for hand-woven carpets. Uzbekistan has gold and mineral resources. Kyrgyzstan is naturally endowed with Uranium and precious metal. Tajikistan blessed by nature with minerals and Turkey is one of the largest exporters of transport equipment.

Trade is the most important determinant of economic growth and development and significantly contributes in regional integration. At present, the total trade of all ECO member countries stands at US$ 804 billions in 2018 which has registered a declining trend compared to US$ 836 billions in 2012 and the reason behind the declining of trade is global recession and low oil prices on which this natural resources abundant heavily depend. The contribution of ECO region in world trade is just two percent notwithstanding the fact that ECO has 6.2 percent of world population. Intra-regional trade accounts 8.4 percent of total trade of world which is far below the potentials available. During 13th ECO Summit held in March 2017 in Pakistan it was resolved to double the current level of intra-regional trade of ECO within next 3 to 5 years. In this respect, huge responsibility lies on Turkey as they contribute more than 50 percent in ECO trade while Pakistan, Iran, Turkey, Kazakhstan and Afghanistan collectively contribute 94 percent in trade of ECO region. All these five nations come forward and take effective measures for enhancing of intra-regional trade.

ECOTA a preferential trade agreement aims to liberalize trade through graduation reduction in the tariff and removal of non-tariff barriers. The member nations have not yet completed the requirements for the implementation of agreement, at the top of which failure to submit lists of products for tariff concession. All the member nations are requested to complete the requirements for the implementation of agreements which will help in exploring the untapped trade areas. As Azerbaijan, Iran, Kazakhstan and Turkmenistan are oil and gas producing and exporting countries while Pakistan and Turkey are oil importing countries. The Central Asian countries have significant potential for hydro electric power and can supply it to Pakistan and Afghanistan who are facing shortage of energy. Tajikistan and Kyrgyz Republic have large untapped hydropower resources which can be explored and developed. Similarly, Pakistan and Kazakhstan are exporters of agricultural products like wheat, rice, fruits and vegetables while Iran and Turkey are importers of these agricultural commodities. These are the trade opportunities which can be materialized.

For the establishment of intra-regional investment, the Agreement on Promotion and Protection of Investment (APPI) was signed by five member nations, (i.e. Pakistan, Iran, Turkey, Azerbaijan and Afghanistan) but so far ratified by only Pakistan and Iran. For the enforcement of Agreement atleast ratification in two more members is required. In this context, I would like to request Turkey, Afghanistan and Azerbaijan to pursue the matter of ratification of this agreement with their government. With the implementation of this agreement, the investment activities will be expanded with the transfer of technology, new employment opportunities and utilization of raw material at the optimum level. We may urge the other members of ECO bloc to sign and ratified this agreement.

Turkey, Iran, Pakistan and Kazakhstan have established stock markets to induce investment. World development indicators and reports reflect that Pakistan and Turkey have good experience of financial markets and intermediations including central and commercial banking, Development Financial Institutes and investment companies, credit rating agencies and audit firms etc. In the presence of these experiences we should not be unsuccessful to enhance investment promotional activities and establishing cross the border multi-lateral business entities.

Here, it is also notable that the most important country from the linkages point of view in the region is Afghanistan; it provides a link between South Asia and Central Asia. Though, Afghanistan is a landlocked country, it is more important than many sea port countries, because it provides a link to six landlocked central Asian states with the Arabian Sea and Indian Ocean through Pakistan. It can provide a trade link between 6 central Asian and 7 South Asian countries. Its land route (and construction of railways in the country) can change the fortune of entire region. Regional efforts made by the ECO members on improving trade and transportation through implementation of infrastructural project such as the North-South Transport Corridor, the Trans-Caspian Transportation Route, the China - Pakistan Economic Corridor, Chabahar and Gwadar ports complement each other. All these projects have the potential to function better in parallel with the wider and more comprehensive initiative, namely, China's One Belt One Road (OBOR).

ECO Chamber of Commerce and Industry

ECO Chamber of Commerce and Industry (ECO-CCI) is one of the important organ and affiliated body of ECO; was founded by the Union of Chambers and Commodity Exchanges of Turkey, Iran Chamber of Commerce, Industries and Mines, and the Federation of Pakistan Chambers of Commerce and Industry, in 1990, in order to promote commercial, industrial and economic cooperation among the member states. It has been established as the representative of the ECO in the private sector, based on the Article 30 of Izmir Treaty. Today, ECO-CCI comprises the private sector of 10 members. Since its inception, the ECO-CCI is working for the long term benefits related to economy, trade, investment, industry, business etc instead of short term achievements and produces concrete projects in accordance to the mutual interest of member nations.

As per the Statute of ECO-CCI, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) enjoyed Presidency and Secretariat of ECO-CCI from September, 2014 to March 2018. Prior to Pakistan, the Presidency and Secretariat of ECO-CCI was given to Turkey and Iran for three years period respectively. During the tenure of Pakistan, the ECO-CCI organized five times its Statutory Meetings in Turkey, Iran and Pakistan. All Statutory meetings of ECO-CCI inaugurated by the Federal or Country Ministers on Trade or Development or Industry of hosting country and attended by ECO Secretariat, ECO Trade and Development Bank and representatives of ECO Members Chambers. ECO-CCI has made strong linkages with the missions of ECO Members Nation in Pakistan and Pakistan's missions in ECO member nations for organizing activities and significant participations in ECO-CCI meetings by all nations. As an outcome of these efforts, the Central Asian Countries have started participation in activities of ECO-CCI. Prior to the Executive Committee and General Assembly meetings, ECO-CCI regularly conducted the meetings of its Specialized Committees and their recommendations presented to the statutory meetings. There are six specialized committees and one sub-committee of ECO-CCI on Trade Facilitation, Transportation, Tourism, Women Entrepreneurs, Arbitration, Industry, Investment and SMEs Promotion and Business Rating Programme.

During the tenure of Pakistan, 13th ECO Summit and 22nd meeting of Council of Ministers also held and gave the member national chambers opportunity to participate in this summit and also took part in the formulation and implementation of ECO Vision 2025 which finalized the target and goals for next ten years related to economy, trade, investment, industry, transportation, tourism, energy, environment and others. The main responsibilities of ECO-CCI is promotion of trade and investment, enhancement of interaction between the business community of members nations, harmonization of financial rules, facilitation of trade related activities and capacity building of private sector of member nations etc.

Trade Relations between Pakistan and ECO Region

Pakistan is one of the founding member of ECO region; but the exports of Pakistan to ECO Countries declined during the last five years. At Present, Pakistan's export to ECO Countries stands at US$ 1.8 billion which was US$ 2.3 billion in 2014 whereas Pakistan's imports from ECO countries indicates an increasing trend and stand at US$ 1.2 billion compared to US$ 791 million in 2014.

Pakistan's Trade with Economic Cooperation Organization (ECO)Countries (Million US$)

The share of ECO countries stands 7.8 percent in Pakistan's export and 2.1 percent in Pakistan's import. Pakistan is mainly exporting cereals, cotton, edible fruits and vegetable, pharmaceutical products etc while importing petroleum products, iron and steel, machinery, ceramics, raw cotton, plastic products etc. The reason behind the declining of trade with ECO countries particularly with Iran is an absence of banking channels and Central Asian is lack of connectivity and lack of commercial activities. In order to promote trade with Turkey, Pakistan and Turkey has started negotiation of Free Trade Agreement which has not finalized yet due to non-inclusion of those products wherein Pakistan has comparative advantage.

Presently, Pakistan and Iran enjoys Preferential Trade Agreement (PTA) and as per the PTA, both are enjoying concession on 18 percent of items. Pakistan has given concessions to Iran on 338 items and Iran has reciprocated by providing concession on 309 items to Pakistan. There are a lot of tariff barriers in trade with Iran. The high customs duty on textiles and clothing, leather and footwear, fruit and vegetables and rice are the main obstacles in low volume of Pakistan's exports to Iran. Moreover, Iran also maintains a permit system for importers and when the Iranian government wants to restrict imports, it simply stops issuing permits. In the past, Pakistan has decided to negotiate a free trade agreement with Iran and sent documents in this respect; but the response from Iran side were weak. There are huge potentials available for trade between Pakistan and Iran on barter system, if Iran relax its trade policy with Pakistan and give good market access to Pakistan.

The current regional and global strategic environment has made ECO Countries more lucrative market for Pakistan and there is a need to maintain stronger ties with them. The ECO countries particularly Central Asian States offering huge benefits to Pakistan as they are richest part of the world offering in oil, gas and mineral resources, hydro-electric power, textile and other industrial base.

Below are some recommendations which can help in enhancing the trade and economic relations between Pakistan and ECO Countries.

*The private sector of Pakistan and ECO Countries should interact regularly for exchange of information related to available opportunities and meetings with counterparts traders. The holding of commercial activities regularly between Pakistan and ECO Countries like holding of trade fairs and exhibitions, arranging of meetings at commercial level and frequent exchange of trade delegation also help in understanding each other markets.

*Pakistan should organize single country exhibitions and arrange participation in trade fairs and exhibitions of ECO countries on reciprocal basis. Pakistan should invite and facilitate the ECO Countries in EXPO and TEXPO exhibitions.

*The NBP Subsidiary Banks and their branches are located in all Central Asian Republics except Uzbekistan (detail are given in Annex). There is a need of marketing of banking operation of National bank of Pakistan including the facilities given to traders in Central Asian Republics. As most of the traders are unaware about the National Bank operation in Central Asian Republics. Moreover, the banking channels with Iran should also be established.

*A representative Office of the National Bank of Pakistan was founded in Tashkent, Uzbekistan in 1995. Since then, the National Bank of Pakistan has been looking forward to a resolution of the Government of Uzbekistan to open a branch of the National Bank of Pakistan in Tashkent, Uzbekistan.

*The trade missions of Pakistan in ECO countries should also play an active role in expanding the trade relations by sharing business opportunities information and disseminations of calendar of exhibitions to concerned forums in Pakistan. The establishment of display center at Pakistan embassies may also help in marketing the Pakistan's product in these countries.

*For the improvement of visa procedure, ECO countries should simplified visa procedure and reduce the time for granting visa. ECO Visa Sticker Scheme is under negotiation at Government level. The implementation of this visa policy may resolve the visa issues of Pakistan to ECO countries. FPCCI recommendation may also be considered for visa issuance to genuine businessmen and traders.

*There is a need to negotiate trade impediments related to compliance, standardization, sanitary and phytosanitary standards (SPS), technical requirements, conformity assessment and rules of certificates of origins for enhancement of Pakistan's exports to ECO Countries. Pakistan and ECO Countries should formulate a strategy for mutual recognition of standards for exports of surgical instrument, food items and pharmaceutical goods to Central Asia as there is huge demand of these products.

*For creating air connectivity, we may recommend Turkish Air line and Emirates air line to operate their flights to Central Asian Republics through Pakistan weekly. This will improve air connectivity and allow Pakistan to enhance its connectivity.

*Pakistan should establish its railway link with its neighboring countries particularly with China, Afghanistan and Iran and these railway links should be extended to Central Asian countries as Iran has border with Turkmenistan, Afghanistan with Tajikistan and China ahs border with Kazakhstan, Kyrgyz Republic and Tajikistan. The railways links will facilitate the transportation of goods between Pakistan and Central Asian Countries.

*Pakistan-Afghanistan-Tajikistan Trilateral Transit Trade Agreement (PATTTTA) signed agreement in 2015 to develop business opportunities through construction of rail and road links. The implementation of this agreement can increase bilateral trade between Pakistan and Tajikistan. Pakistan has bilateral trade transit agreement with Kazakhstan, Kyrgyz Republic and Uzbekistan for transportation of goods from one country to another, but despite lapse of time these agreements has not implement yet. In the recent past, Pakistan signed TIR convention and the rules and regulation of this convention has been finalized and will be implemented in coming years.

*At the private sector level, FPCCI has signed cooperation agreement with its counterpart which should be made very proactive for promotion of bilateral trade and economic relations. The meetings of Joint Business Council should be organized followed by Business to Business meetings so that close interaction between Pakistan and Central Asian Republics could be established.

*Apart from economic and trade relations, the people to people connectivity can be improved through establishment of educations and cultural links. The arts and literature and cultural visits can be arranged by Pakistan for the ECO Countries and similarly the other side can arrange students and professional people visits from Pakistan. In past, Pakistan has arranged for cultural events for Turkey.

*The activities related to culture, in heritage and religious tourism can also be enhanced as a lot of opportunities are available in Pakistan and ECO Countries. Historically, Pakistan was the part of dynasties of Central Asia and the tribes from Central Asian countries came to Pakistan from Tajikistan and Kyrgyz Republic via Taxila and Gilgit in 2nd and 3rd century. The historical relations also encourage the people of Pakistan and Central Asian to visit historical places and learn about their civilization process.

*There is a need to transform informal trade into formal trade by updating the documentation system at Iran, Afghanistan and China border and removal of smuggling and under invoicing. There is a need of early completion of Turkmenistan-Afghanistan-Pakistan-India Pipeline (TAPI), CASA 1000 and other projects wherein Pakistan involved with ECO Countries. These projects will help in improving the bilateral/multilateral relations with ECO Countries.

Copyright Business Recorder, 2015


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