The Pulse

Pakistan and Turkey Inch Closer to Preferential Trade Agreement

The agreement will increase the volume of bilateral trade and improve economic relations.

Pakistan and Turkey Inch Closer to Preferential Trade Agreement
Credit: Turkey and Pakistan via

Pakistan and Turkey are on the cusp of signing a preferential trade agreement (PTA). According to reports in the Pakistani press, Turkey is willing to sign the accord immediately but Islamabad is accused of delaying the agreement. The pact would help the Pakistani economy gain access to a growing market in Turkey and help bolster economic growth. Specifically, the agreement will “provide concessions on a number of goods to Pakistan’s exporters, who would have the advantage to smoothly penetrate into the Turkish market.” Total trade volume between the two countries reached close to $1 billion in 2010.

Turkish officials note that “nothing is pending from the Turkish side but it is being delayed by the Pakistani government.” The PTA has been in the works between the two countries since at least 2005. According to the most recent data, bilateral trade is heavily in favor of Pakistan and largely imbalanced. Turkey maintains a $500 million trade deficit with Pakistan, according to official Turkish government data. Bilateral investment inflows are growing on both sides. Turkey is a major investor in construction projects in Pakistan, and Pakistan invests in several fast-growing Turkish industries.

Noting the scope for improvement in bilateral economic ties, Murat Mutsu, a Turkish diplomat at the Consulate General of Turkey in Karachi, notes: “It is the desire of the Turkish government to strengthen trade ties with Pakistan. We must make efforts to increase the trade volume and investments in both countries.”

The specifics of why Islamabad is delaying the signing of the PTA are somewhat mysterious. It isn’t likely that Islamabad is looking to improve the terms of the PTA at this time, as negotiations have concluded.

Turkey and Pakistan have close bilateral relations in general. Relations between the two countries have grown closer in recent years since the Muslim-oriented Justice and Development Party (AKP) came to power in Turkey in 2002 under Recep Tayyip Erdogan. Both countries regularly emphasize their religious and cultural similarity, as well as their common geopolitical interests. Both countries cooperated with the United States during the Cold War, with Turkey as a member of NATO and Pakistan as a major non-NATO U.S. ally. Turkey sees Pakistan as an important peg in its South Asia foreign policy. The two countries cooperate, along with Afghanistan, as part of the Trilateral Ankara cooperation process, which began in 2007 under Turkish Foreign Minister Abdullah Gul.