Trade between Pakistan and Central Asian Republics: Prospects, Issues and Way Forward

Abstract

Abstract

Pakistan has limited trade with Central Asian Republics (CARs). Facing with stagnant exports and widening trade gap, CARs offer a great opportunity to Pakistan to diversify and expand its trade. The study analyzed the existing trade profile of Pakistan generally and with Central Asian states particularly. Additionally, the potentials for trade with CARs were also explored. The analysis suggests that trade with the CARs has not been encouraging as trade volume with these countries is nominal as total exports to CARs rose from US$ 40.4 M in 2016 to US$109 M in 202. Similarly imports also grew at nominal rate from US$ 28.0 M IN 2016 to US$ 59.1 M in 2021. Great trade potential exists for trade with Central Asian Countries. Pakistan has comparative advantage in different products like cotton and cotton products, pharmaceuticals, sports items, surgical items, cement, sugar, IT and telecommunication etc. and can export cheaper goods to the Central Asian states. Moreover, Central Asian Republics are rich in natural resources and Pakistan can import a number of products to meet local needs and accelerate economic development. However, Pakistan’s trade with the CARs has been facing upheavals, mainly due to continuous insecurity in Afghanistan, money exchange issues, banking and transaction problems, tariff issues and absence of direct flights. It is recommended that trad with Central Asian states shall be improved through transit and free trade agreements. Moreover, rationalization of tariff and provision of banking facilities in CARs, trade exhibitions, simplification of processes, tourism and cultural and educational exchange programs facilitated by direct flights and easy visa processes can help boost mutual trade. Construction of road and railways infrastructure in Afghanistan and extension of CPEC project to Afghanistan will connect Afghanistan and CARs to Pakistan which will reduce time and cost of transportation and hence will improve trade among Pakistan, Afghanistan and Central Asian Republics.

      Keywords: Pakistan, Central Asian Republics, Trade, potential, Free Trade Agreement, transit, CPEC