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Pakistan's Free Trade Agreements and Their Impact On The Garment Sector

The document discusses Pakistan's free trade agreements and their impact on the garment sector. It notes that Pakistan's largest trading partners, the US and EU, account for 91% of its garment exports but these markets are expected to remain in recession for the next 2-3 years. Pakistan needs to diversify its export destinations to minimize the effects of the recession. While Pakistan has FTAs with China, Malaysia, Sri Lanka, and ASEAN, these agreements have provided limited benefits due to high import duties, small market sizes, or the countries already having strong domestic garment industries. The document suggests Pakistan pursue a similar FTA with India to gain duty-free access to its large apparel market or seek membership in ASEAN

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Asim Elahi Mangat
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140 views3 pages

Pakistan's Free Trade Agreements and Their Impact On The Garment Sector

The document discusses Pakistan's free trade agreements and their impact on the garment sector. It notes that Pakistan's largest trading partners, the US and EU, account for 91% of its garment exports but these markets are expected to remain in recession for the next 2-3 years. Pakistan needs to diversify its export destinations to minimize the effects of the recession. While Pakistan has FTAs with China, Malaysia, Sri Lanka, and ASEAN, these agreements have provided limited benefits due to high import duties, small market sizes, or the countries already having strong domestic garment industries. The document suggests Pakistan pursue a similar FTA with India to gain duty-free access to its large apparel market or seek membership in ASEAN

Uploaded by

Asim Elahi Mangat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Pakistans Free Trade Agreements

and their impact on the garment


sector
The global economy is once again going through a crisis and as a result
Pakistans exports are also expected to take a hit because USA and the EU
are its largest trading partners. It can be expected that these economies
will remain in recession for the next 2-3 years and Pakistan needs to
diversity its export destinations in order to minimize the effects of
recession in the EU and USA. While, demand is expected to go down
considerably it is also expected that protectionist policies will be
implemented, especially in the US to stem their unemployment rate.
Garment exports to the EU & USA:
30% and 58% of Pakistans total woven garments are exported to USA and
EU-27 respectively. While, 63% of knit garments are exported to USA and
29% to the EU-27. Overall, EU and the USA account for 91% of Pakistans
total garment exports.
Pakistans exports of woven garments to EU and USA
Importers
Total Exports to World
United States of
America
EU-27

Exported value
in 2008

Exported value
in 2009

Exported value
in 2010

1,361,171

1,206,499

1,461,643

470,904

386,189

435,268

729,398

668,475

859,684

All figures in USD 000

Pakistans exports of knit garments to EU and USA


Importers
Total Exports to World
United States of
America
EU-27

Exported value
in 2008

Exported value
in 2009

Exported value
in 2010

1,888,467

1,680,773

1,982,423

1,166,899

1,038,702

1,238,550

569,690

497,859

580,854

All figures in USD 000

FTA with China:


Although, Pakistan has an FTA with China but exports of woven and knit
garments still have an average import duty rates ranging from 12-16%.
PRGMEA has already requested the government to bring Pakistans
garment exports under duty-free regime with China.
1 | Page

Chinas imports of woven and knit garments from the world


Exporters
World Woven
World Kints

Imported value
in 2008

Imported value
in 2009

Imported value
in 2010

1,221,966

1,018,575

1,418,275

853,704

633,170

815,177

All figures in USD 000

MFN with India:


India has recently signed a treaty with Bangladesh under which 46 textile
and garment items have been allowed duty-free access in the Indian
market. According to news reports, India has US$ 3 billion apparel market
size which Bangladesh can easily capture a large portion because of this
treaty. As Pakistan shares its borders with India just as Bangladesh,
Pakistan should also look to have a similar treaty with India which can
open the possibility of a real economic union between the eight states of
South Asia. Pakistans garment exports to India currently have an import
duty of about 10%.
Indias imports of woven and knit garments from the world
Exporters
World Woven
World Kints

Imported value
in 2007

Imported value
in 2008

Imported value
in 2009

67,238

87,408

67,376

33,248

50,302

45,427

All figures in USD 000

FTA with Malaysia & Sri Lanka:


Although Pakistan has signed FTAs with Malaysia and Sri Lanka but as the
quantum of garment imports is not significant, these markets will not
provide any sizeable replacement for EU and US markets. As Sri Lanka has
a strong garment manufacturing industry of its own and raw material
exports such yarn and fabrics will increase because of FTA.
Malaysias imports of woven and knit garments from the world
Exporters
World Woven
World Kints

Imported value
in 2008

Imported value
in 2009

Imported value
in 2010

235,850

153,978

174,237

180,910

119,467

135,362

All figures in USD 000

Sri Lankas imports of woven and knit garments from the world
2 | Page

Exporters
World Woven
World Kints

Imported value
in 2008

Imported value
in 2009

Imported value
in 2010

34,922

41,975

47,765

44,919

34,654

40,586

All figures in USD 000

FTA with ASEAN:


ASEAN is currently the fastest growing trading block in the world and it is
imperative that Pakistan should either seek membership of this block or
negotiate an FTA in order to get a foothold in this significant economic
activity zone.
ASEANs imports of woven and knit garments from the world
Importers
World - Woven
World - Kints

Imported value
in 2008

Imported value
in 2009

Imported value
in 2010

178,922,628

157,693,883

166,057,820

165,201,294

152,276,107

168,212,961

All figures in USD 000, Aggregated data

3 | Page

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