FTA with the US?…Dr Farrukh Saleem
Consider these three facts: the US is already Pakistans single largest export destination, accounting for nearly $6 billion in annual exports; the US imports $125 billion worth of textiles annually; and over 60 per cent of Pakistans exports consist of textiles.
Currently, Pakistans textile exports to the US face tariffs of up to 15 per cent. On April 2, the US announced a new 29 per cent tariff, set to take effect on April 9. As a result, Pakistans exports to the US could decline by as much as a billion dollars, and unemployment in the textile sector which employs 40 per cent of the countrys workforce could rise significantly.
A Free Trade Agreement (FTA) with the US will bring down all tariff walls, boosting Pakistans exports by an estimated 20-30 per cent. Currently, Pakistans textile exports to the US are 3.0 per cent of the US textile imports. With an FTA in place, Pakistan could capture around 6.0 per cent of the US textile imports, potentially growing Pakistans textile exports to over $6 billion.
Last year, the US imported $20 billion worth of surgical instruments. Consider this: Sialkot is globally recognised for high-quality surgical instruments but exports are struggling to cross $500 million. Sialkot manufactures general surgical tools, dental equipment, veterinary instruments and specialised tools for ophthalmic and orthopaedic surgeries. Sialkots products meet stringent international quality standards, such as ISO 13485, ensuring their reliability and safety in medical applications.
Currently, Pakistans exports of surgical instruments to the US is 0.5 per cent of US imports. With an FTA in place, Pakistan could capture around 5.0 per cent of US imports of surgical instruments, potentially growing Pakistans exports to over $1 billion.
Last year, the US imported $12 billion in leather goods from countries like Vietnam ($3.25 billion), China ($2.58 billion), Italy ($1.46 billion), Indonesia ($1.16 billion) and Mexico ($684 million). Pakistans leather industry has access to premium raw materials and cost-effective production capabilities. Yes, Pakistans leather industry has the capacity to compete with the best in the world.
Currently, Pakistans leather exports to the US are 2.0 per cent of US leather imports. With an FTA in place, Pakistan could capture around 10 per cent of the US leather goods market, potentially growing Pakistans exports to over $1 billion.
In an average year, the U.S. imports approximately $75 billion worth of “miscellaneous business, professional, and technical services”, which includes a wide range of IT-related services such as software development, data processing, and systems integration. Pakistan, with its rapidly growing IT industry and a strong pool of tech talent, has the capacity to capture a large share of this lucrative market.
According to the latest data, US companies’ cumulative foreign direct investment (FDI) abroad reached $6.68 trillion, reflecting an increase of $364 billion from the previous year. In comparison, Pakistan’s FDI reached $1.82 billion last year, despite the country’s growing economy and its strategically important location. An FTA with the US could undoubtedly serve as a game-changer for Pakistan, unlocking vast potential for increased investment and economic growth.
The US market undoubtedly holds immense untapped potential for Pakistans key industries textiles, surgical instruments, leather goods and IT services. An FTA with the US could propel Pakistans exports into the billions, fueling job creation, boosting foreign direct investment, and transforming the countrys economic trajectory.
Vietnams FTA with the US boosted its GDP per capita from $1,000 to $4,000 in 15 years. The numbers speak for themselves.
Courtesy The News