LAHORE: A free trade agreement (FTA) with Turkey should be based on mutual benefits and prepared after consulting stakeholders if its full benefits are to be reaped, experts said.
Any such agreement should support the existing players who have invested and brought foreign direct investment (FDI) to the country, set up plants and created hundreds of jobs, they said.
They believed that reducing duties under the FTA on the import of products which are produced locally may benefit importers, but it will hurt the local investors and make thousands of people jobless. “This could discourage FDI and manufacturing and damage industrialisation in the country. It could also discourage other multinational companies planning to invest here,” they added.
Sindh Board of Investment has also raised concern on the FTA with Turkey in a letter to Sindh’s chief minister and federal ministries of commerce and industries, federal Board of Investment and the Trade Development Authority of Pakistan.
“FTAs are meant to boost trade between countries and open markets for your goods, but unfortunately in Pakistan, all FTAs and PTAs [preferential trade agreements] have only resulted in increase in trade deficit,” the letter said. “FTA with China led to an increase in trade deficit from $2.9 billion to $4.1bn, FTA with Malaysia led to an increase in trade deficit from $1.6bn to $1.9bn and PTA with Indonesia led to an increase in trade deficit from $800 million to $1bn approximately.”
Ameen Jan, a consultant who has previously worked at McKinsey and the United Nations, suggested that any FTA should support import of raw material instead of finished goods that are already manufactured here because low-priced raw material encourages local investors to maximise productivity.
Mr Jan said industrial, trade and export promotion policies should be the bedrock of economic growth. Trade agreements, he said, should support these policies, and not be unrelated to them. One of the keystones of industrial policy must be to harness FDI and technology transfer from abroad, which will benefit sustainable job creation and export potential in Pakistan.
Meanwhile, the auto industry also fears that the Ministry of Commerce is hastening to sign FTA with Turkey. Other sectors have also expressed reservations.