- Textile sector stands to gain $2–3 billion annually.
- US may cut cotton, soybean export tariffs.
- Bilateral surplus boosts Pakistan’s trade position.
ISLAMABAD: Pakistan and the United States are on track to conclude ongoing trade talks, with both sides actively exploring a Preferential Trade Agreement (PTA) aimed at promoting reciprocal market access and incentivising bilateral trade.
Finance Minister Muhammad Aurangzeb held a virtual meeting with US Commerce Secretary Howard Lutnick on Tuesday to discuss tariff arrangements, The News reported.
“Both sides showed satisfaction over the ongoing negotiations and resolved to conclude them next week. It was also resolved that further to the trade agreement, a partnership, based on strategic and investment interests, would be concluded covering areas of mutual interest,” said an official announcement made after a virtual round of talks on Wednesday. Both sides expressed confidence in concluding the trade negotiations at the earliest.
In the aftermath of Field Marshal Asim Munir’s recent visit to the US, both countries are finalising trade negotiations. Ways are being explored to either finalise the PTA or bilateral trade agreement (BTA).
Washington has opted for BTT with those countries where the trade deficit runs into multi-billion-dollars per annum. The US can favour Pakistan by placing its textile exports in the category of 10% tariff after receiving incentivised based tariff on its exports of cotton and soybean to Pakistan. Both the countries are exploring incentives in line with the World Trade Organisation (WTO) conditions, said the official sources.
“The US companies have established 970 research and development centers in Pakistan. At this juncture in our history, another opportunity has come on the surface where the negotiators must hold parleys with strength to maximise benefits in favour of Pakistan.
“In the past, when the ROZs were negotiated between the two sides during the tenure of former rulers Gen Musharraf/PM Shaukat Aziz, they proved to be a non-starter. The discussion focused on a meaningful engagement in trade, investment and deepening economic ties mutually beneficial to both sides with technical level trade related discussions to be concluded next week,” the official statement added.
The bilateral trade stands in favor of Pakistan, as its exports hover around $5.1 billion, while imports from the US range $2.1 billion, so trade is surplus of $3.1 billion for Pakistan.
On Bilateral Trade Agreement, some officials say the US is negotiating with those with whom its deficit was huge, ranging in billions of dollars. However, in case of Pakistan, the Trump administration is exploring possibilities to incentivise in terms of enhanced market access within the available framework.
For instance, Pakistan is importing cotton and soybean from the US and its tariff could be rationalised especially in the context of recently enacted National Tariff Policy, which was going to be approved along with the Budget 2025-26 in next 24 hours.
On reciprocal basis, the US can incentivise Pakistan’s textile sector in terms of $2 to $3 billion on annual basis.
“Different options are under consideration, and both the countries are heading toward firming up proposals to finalise reciprocal tariff incentives,” said the official sources.
