A four member delegation headed by Prime Minister's Advisor on Commerce, Textile, Industries and Production and Investment, Abdul Razak Dawood and comprising Secretary Commerce, Sardar Ahmad Nawaz Sukhera, Joint Secretary, Shafiq Shahzad Baloch and Kunwar Usman, Director Textile Research (Textile Division) is in Seoul to attend a two day Joint Trade Commission (JTC) meeting which is meant to explore avenues of cooperation in trade and commerce.
South Korea is an important trading partner of Pakistan in the Asia Pacific region with a bilateral trade of over $ 1 billion during the last five years.
During this period, Pakistan's exports to Korea have declined from $ 325 million in 2014-15 to $ 275 in 2018-19 while imports increased from $325 million to $818 million during this period, showing trade balance of $543 million in favour of Korea.
Pakistan's exports have declined primarily due to higher tariffs and non tariff barriers faced by Pakistani goods compared with its key competitors.
Pakistan's major exports to Korea are chemical elements, compounds, cotton fabrics (woven), cotton yarn, leather, cotton thread, article of apparel & cloths, knit/chroch, fish and fish preparation, oil seeds and oleaginous fruits, medical/surgical instruments and baby carriages sports goods.
Pakistan's major imports from Korea are machinery (all sorts) and its parts, chemical material and products, iron and steel manufacturer thereof, petroleum, medical and pharmaceutical product, chemical element and compounds, road vehicles and their parts, vegetable and synthetic textile fiber, dyeing tanning and coloring matter, old clothing.
South Korea has entered into bilateral and multilateral trading arrangements with many countries such as Singapore, USA, Chile, Peru, India, ASEAN, and EU etc. Pakistan's exports, therefore, face entry barriers in the Korean market in the form of higher tariffs and non tariff barriers. Other restrictions like visa restrictions for Pakistani businessmen and special tariffs for agricultural products from Pakistan impede expansion of trade. These factors deprive Pakistan from a level playing field in the Korean market. In order to improve bilateral trade and bridge widening trade balance, there is a need for a Free Trade Agreement (FTA) between Pakistan and Korea.
Both sides have completed their respective feasibility studies which strongly recommend conclusion of a Free Trade Agreement between Pakistan &the Republic of Korea.
The Pakistani side argues that since the findings of the feasibility study were supportive of an FTA therefore both sides may develop a common road map to seek early finalization of the FTA. Both sides principally agreed to the recommendations of the Joint Feasibility Study.
A senior official told this scribe that countries of Association of Southeast Asian Nations (ASEAN), India and China enjoy lower tariffs compared to Pakistan because of their preferential trading arrangements with South Korea.
In order to discuss bilateral trade and investment issues between the two sides, a Joint Trade Commission (JTC) has been established. Two meetings of the JTC have been held so far in 2015 and 2018. During the 1st JTC meeting both sides agreed to conduct a joint feasibility study to explore the possibility of a Preferential Trade Arrangement (PTA) between the two sides. Based on the findings of the study, it was agreed during the second meeting of the JTC, held in 2018, to enter into a preferential arrangement to provide each other a level playing field.
However, formal negotiations could not start due to Korean reluctance but it has now conveyed its willingness to host the 3rd meeting of the JTC on 1-12 August 2019 in Seoul (South Korea).
The sources said, in order to reinitiate the process of negotiations, both sides have agreed to raise the level of engagement to Minister's level.