After the crown prince’s visit, Saudi-Pakistan must ink the FTA
Last year’s economic package from the Gulf Arab states ought to be Pakistan’s last. Though Pakistan and the Gulf states are indispensable to one another, thanks to multi-layered ties and rising inter-dependence, Pakistan is neither poor, nor deprived of industrious manpower. Over the past decade, logistical infrastructure has considerably improved as well.
It is no secret that the dual economic package from Saudi Arabia and the UAE last year has helped Pakistan improve its conditions for doing business, which was the obvious takeaway of the announcement of Pakistan’s mini-budget last month.
After Crown Prince Mohammed bin Salman’s landmark visit, Islamabad must pursue a free trade agreement with the Kingdom as a central point of its agenda. After all, Saudi Arabia’s ambitious vision of transforming its economy requires the building of strong economic bridges with its partners.
Both countries agreed to start negotiations in October, and Saudi financial advisor Ahmad Al Ghamdi pledged to initiate a study for a free trade agreement with Pakistan. Signing an FTA will require exhaustive and impressive homework from the Pakistani side, for which Imran Khan should set up a joint ministerial body. A string of FTAs with Saudi Arabia, the UAE, Qatar and Bahrain etc. will certainly help build confidence in the country’s financial team and help address issues in a long-delayed free trade pact with Turkey. Additionally, if things proceed as desired and the Afghan Taliban quit an armed rebellion in the neighboring country, Pakistan and the United States could also be bound with a free trade deal.
With the convergence of CPEC and the economic dimension of the Saudi Vision 2030, Riyadh must be offered the same terms and conditions as those offered to China. If executed successfully, in a shorter period of time, Islamabad can seek a free trade agreement with the Gulf Cooperation Council (GCC) too. The bloc has already signed an FTA with Singapore, and a joint one with Iceland, Liechtenstein, Norway and Switzerland as members of the European Free Trade Association (EFTA).
If Pakistan signs a bilateral FTA with Saudi Arabia after recent boost of ties, an early deal with the UAE can also be achieved.
After Crown Prince Mohammed bin Salman’s landmark visit, Islamabad must pursue a free trade agreement with the Kingdom as a central point of its agenda.
Naveed Ahmad
Pakistan aspires to increase bilateral trade in the areas of textile, leather, sports goods, medicines and agricultural and dairy products. Riyadh won’t remain on the receiving end for it has its own competitive advantage in specific goods and services. The two economies are set to transform, thanks to internal policies as well as an outwardly approach. Rooting out corruption, bureaucratic de-politicization and cutting red-tapism will be crucial measures in improving the conditions for ease of conducting business in Pakistan.
Saudi Arabia for its part might be looking at unexplored opportunities in regions where the rate of return on investment is promising with far fewer overheads. For decades, the Northern Areas, Azad Jammu and Kashmir and Balochistan have been ignored when assessing Pakistan’s national power and export potential. And even though no sector of Pakistan’s economy is yet saturated in terms of foreign capital and technology, the conformist approaches of urban Sindh and Punjab have become null and void.
Devoid of distracting noise from various ideological lobbies and political parties, the Khan government can lay the foundation for a string of bilateral free trade agreements with friendly countries in the Middle East and North Africa on one hand, and Turkey and other central Asian nations on the other. Nonetheless, Pakistan needs to review almost all existing Preferential Trade Agreements signed over the past two decades. Some have proven worthless in delivering goods to the national exchequers while others need revision. Foreign Minister Shah Mahmood Qureshi's emphasis on economic diplomacy must dispense with a top to bottom approach, and the summit-level coordination council can ensure that the two sides pro-actively settle the nitty-gritties for an early conclusion of a free-trade deal.
