Pak, Thailand agree to start FTA negotiations this September

The first session of negotiations on Free Trade Agreement between Pakistan and Thailand will take place in Thailand on September 27-28 this year. This was agreed during the meeting held by the Minister for Commerce, Engr. Khurram Dastgir Khan with the Minister for Commerce of Kingdom of Thailand General Chatchai Sarikulya on Thursday.

The two Ministers lead their respective delegations to the third session of the Pakistan-Thailand Joint Trade Committee Meeting. A large business delegation accompanied the Thai Minister which took part in the meeting of Joint Business Council and held direct meetings with Pakistani businessmen.

During the high level visits in 2013, leadership of both the countries desired to double the volume of bilateral trade by 2018. This translated into formulation of a Joint Trade Committee for Government to Government consultations and a Joint Business Council for interactions between the two private sectors.

It was mutually decided by the Ministries of Commerce of both the countries to commission feasibility studies for Pakistan-Thailand FT as there is considerable scope for expansion of bilateral trade, which can more than double in the short run as a result of FTA.

At the product level, Thailand has comparative advantage in electrical and electronic appliances, machinery and components, and automobiles and parts.

Pakistan, on the other hand, has comparative advantage mainly in cotton yarn and woven textiles, ready-made garments, leather products and other miscellaneous manufactured items such as surgical instruments and sports goods.

In addition, there exists potential for boosting intra-industry trade between the two countries in several product segments most notably knitted or crocheted fabrics, articles of apparel and clothing accessories, made up textiles, and leather products.

Both types of trade can bring benefits for the two countries in terms of enhanced competition and efficiency, lower prices, and improved product quality and variety.

The findings of this study show that at the product level, Thailand has comparative advantage in more than 1000 commodities which constitute about 21 percent of Pakistan’s total imports which amounts to about $9 billion.

Pakistan, on the other hand, has comparative advantage in 684 commodities that constitute about 3 percent of Thailand’s total imports which amounts to about US$7 billion.

Asia has emerged as global hub of manufacturing with increasing integration of east and Southeast Asian economies in global production networks. Pakistan due to its geographic location, better connectivity and Central Asia, reasonable physical infrastructure, state-of-the-art telecommunication services and well-developed finance and insurance sector is better positioned to become part of global manufacturing chain.

By facilitating cross border movement of goods and services, a free trade regime between the two countries can encourage original equipment manufacturers to base their manufacturing operations in Pakistan to take advantage of cheap labor while relying on Thailand’s technological edge in higher-end product design and manufacturing.

Furthermore, the FTA with Thailand will be a stepping stone towards Pakistan’s greater integration with ASEAN, a dynamic market of 600 million people with a combined GDP of US$2.4 trillion.

Pakistan and Thailand have agreed to launch negotiations for a comprehensive free trade agreement which will cover trade in goods initially and subsequently trade in services .