Pakistan and Thailand will start negotiations on a free trade agreement in Thailand on Sept 27 to double volume of bilateral trade by 2018.
The understanding on the issue was reached in the third meeting of Pakistan-Thailand Joint Trade Committee on Thursday. Minister for Commerce of Thailand General Chatchai Sarikulya and Pakistan’s Commerce Minister Khurram Dastagir Khan led their respective delegations to the meeting.
This agreement will initially cover trade in goods and subsequently trade in services.
In 2006-07, Pakistan had carried out a study for initiation of Preferential Trade Agreement (PTA) with Thailand. However, no progress was seen and the study remained only on paper.
To proceed further on the issue, Pakistan and Thailand formed a Joint Trade Committee for government-to-government consultations and a Joint Business Council for interaction between the two private sectors in 2013.
According to joint statement, both the committees have identified various sectors, including food and agriculture, fisheries, auto parts, gems and jewellery, textiles and apparel, energy and health for furthering bilateral relations.
It was also observed that exporters of both the countries were facing tariff and non-tariff barriers due to preferential regimes maintained by both the countries in favour of their respective FTA partners.
It was mutually decided by the ministries of commerce of both the countries to commission feasibility studies for Pakistan-Thailand FTA. The studies indicate significant trade complementarities and considerable scope for increasing bilateral trade by lowering tariff and non-tariff barriers.
An official statement issued by the commerce ministry said studies show that there is considerable scope for expansion of bilateral trade, which can more than double in the short run as a result of FTA.
Thailand has comparative advantage in electrical and electronic appliances, machinery and components, and automobiles/parts. Pakistan, on the other hand, has comparative advantage mainly in cotton yarn and woven textiles, readymade 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.