Will the trade agreement signed with Turkey provide an advantage to Pakistani textiles?
The Turkish government overprotects its textile sector which is the reason that Pakistan’s total yearly exports to Turkey never exceeded $400 million. The trade agreement signed in August 2022 has yet to be ratified by the Turkish National Assembly. Still Turkish commercial attaché Eyyup Yildirim told a gathering at the Karachi Chamber of Commerce and Industry that the agreement could lift the bilateral trade between Pakistan and Turkey to $15 billion from the current around $1.1-1.3 billion in the last ten years. It has been stagnant for almost a decade. Turkey’s share in bilateral trade with Pakistan is 70-75 percent and Pakistan’s share ranges from 25-30 percent.
The textile sector is one of the major contributors to the Turkish economy growing above the national average. With an investment of over $150 billion, it has assumed importance in the Turkish economy and is a major provider of jobs, particularly to its women. The Turkish government regularly takes measures to protect its textile sector by imposing high duties on textiles and apparel imports. of which, around 50 billion was invested during the last 5-10 years.
With a view to protecting its domestic textile industry from the flooding of imports. Chinese textiles and apparel have the highest penetration in the Turkish market. India, Pakistan, Bangladesh, Vietnam, and Indonesia are the other major exporters.
The KCCI president, Mohammed Tariq Yousuf while stressing the need to finalize the trade agreement between the two countries, proposed in the meantime Turkey must allow unilateral market access to Pakistan under the GSP Plus program. He also appealed that Turkey must also review the protective textile duty structure, that restricts Pakistan’s textile exports.
Turkey also imposed anti-dumping duties on Pakistani denim in the past. The exporters lamented that Pakistan faces a loss of US$200 million. At that time Pakistan’s exports of fabric to Turkey were worth $380 million. The Turkish importers were also required to pay provisional customs tariffs.
The details of trade agreements are not yet fully disclosed but even if the import duties on textiles from Pakistan are reduced the imports would still be threatened by anti-dumping duties that Turkey has been regularly imposing on Pakistani denim. The agreement does not bar the Turkish government from imposing anti-dumping duties.
