In August 2015, Pakistan and Thailand agreed to negotiate the terms of an FTA that is expected to be signed by the end of this year. This Study is the Second Review of the Study on the Feasibility of the Pakistan-Thailand Free Trade Agreement which was published last year. The 2015 Study had clearly shown that signing a FTA with Thailand was not in Pakistan’s interest; and the findings of this Study reinforce that conclusion in the light of updated data.
Even though, Thailand is Pakistan’s 39th largest export destination and 13th largest import source and Pakistan is Thailand’s 2nd largest trading partner in South Asia, Pakistan has seen a trade deficit with Thailand since 2008, which has further worsened to $ 732 million in 2015.
Pakistan’s imports from Thailand have increased over the last four years from $ 717 million in 2012 to $ 852.7 million in 2015. Pakistan’s top imports from Thailand comprise of vehicles other than railway, plastics and manmade staple fibers. Pakistan’s exports to Thailand amounted to $ 120.3 million in 2015. Pakistan’s exports mainly consist of fish, crustaceans and mollusks and cotton. Fish and crustaceans accounted for about 47 percent and cotton contributed about 23 percent to Pakistan’s total exports to Thailand.
In 2015, Pakistan had a potential to export $ 1.86 billion worth of goods whereas Thailand had an export potential of $ 6.92 billion. This shows that Thailand’s potential exports are about four times the size of Pakistan’s potential exports. Pakistan’s top potential exports to Thailand consisted of instruments and appliances used in medical or veterinary sciences, mandarins and cotton. Telephones for cellular networks and polypropylene were the major potential exports to Pakistan by Thailand. In Pakistan’s top 50 potential exports, 7 products which account for 25 percent of the indicative potential trade are already exempt from tariffs. This shows that a tariff reduction under the Pakistan-Thailand FTA may not bring much benefit to Pakistan.
|Changes from 2014 to 2015|
|*All Values in USD Billion|
|Pakistan’s Export Potential for Top 50 Items||2.02||1.86||-0.16|
|Thailand’s Export Potential for Top 50 Items||6.44||6.92||0.48|
Keeping in mind Pakistan’s past trade agreements, which have not proved beneficial, it is imperative that the Ministry of Commerce performs more intensive stakeholder interaction before rushing into a Free Trade Agreement with Thailand.
The Pakistan Business Council (PBC) is a private sector not-for-profit advocacy platform set up in 2005 by 14 (now 55) of Pakistan’s largest businesses. The PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives, activities and a soft-copy of this report can be found on our website: www.pbc.org.pk