XINJIANG, China: Changes in the subsidy policy of Pakistan proposed from exports diverting industries of textile and leather towards exports creating industries of beverages, rice, surgical Instruments and sports goods in a research by Anwar Shah et al. from Quaid-i-Azam University of Pakistan and Baku Engineering University of Azerbaijan who examined the impact of Pakistan-China free trade agreement (FTA) on exports creation under the Central Asia Regional Economic Cooperation (CAREC) Institute research grants program which supports researchers from members of the CAREC Think Tanks Network (CTTN) to produce targeted knowledge products which add to the body of knowledge on regional cooperation in CAREC.
“This is one of the knowledge products that we help create to advance regional cooperation and contribute to the partnership for sustainable development goals,” said Syed Shakeel Shah, Director at the CAREC Institute.
The analysis of Anwar Shah et al. covered 83 industries. The research found that post-FTA, total exports of China from ten major industries was $88 billion. While this figure for Pakistan stood at $17 billion from ten major industries.
The in-depth analysis at the industry level showed that the total exports creation of Pakistan with China after FTA stood at $6.1 million per annum. This equals 0.02 percent of the total average yearly exports of Pakistan. Further, Shah et al. found that food and beverage sector had the highest (72 percent) share in exports creation with China. Exports diversion with 15 most favored nations (MFN) of Pakistan was also analyzed. The findings demonstrated that half of the industries in the textile sector diverted exports from the MFN partner towards China. This is in spite of the fact that the textile sector remains the largest beneficiary of subsidies in Pakistan.
This work also explored the possible factors of modest performance in terms of exports creation by Pakistani industries. The major factor happens to be low level of exportable surplus. Authors suggest that potential FTAs between Pakistan and other CAREC countries is possible in industries where the production of exportable surplus is relatively higher.
CAREC Institute is an intergovernmental organization, jointly governed by 11 member countries, with an international organization status in the PRC, dedicated to promoting economic cooperation among CAREC members through research, capacity building, policy advocacy, and partnerships. The Institute acts as a knowledge connector among the five CAREC clusters – economic and financial stability; trade, tourism, and economic corridors; infrastructure and economic connectivity; agriculture and water; and human development – to ensure coherence in design and implementation of policies, programs, and projects to promote regional economic cooperation and integration, where integration is defined as a strategy that promotes the benefits of collective and collaborative activities among member countries through economies of scale, more vigorous intra-regional trade, expansion of markets, shared information platforms for exchange, and harmonized frameworks for social and economic interaction.