ISLAMABAD – Pakistan’s trade balance is expected to improve in the future with the introduction of the UK’s new trade regime for products imported from developing countries.
In fiscal year 2022, Pakistan recorded a trade deficit of over $45 billion. However, it is hoped the trade balance will improve with the introduction of the UK’s Developing Countries Trading System (DCTS), a trade analyst told WealthPK.
Sarah Javaid, trade analyst at the Policy Research Institute for Market Economy, said the UK’s DCTS will come into force in early 2023, replacing the Generalized Scheme of Preferences (GSP) and offering flexible trading terms and preferential trading access. to 65 developing countries, including Pakistan, who collectively export around £21 billion to the UK market. “Under the additional preferential tariff, Pakistan will benefit under the DCTS for an additional 156 goods exported to the UK,” she said.
According to the British High Commission in Pakistan, the new facility can help the country save £120 million in the form of export duties, while 94% of goods exported from Pakistan to the UK will now be eligible duty-free access.
Specific products benefiting most from DCTS in Pakistan include more than £250m in average annual exports to the UK of bed linen and nearly £100m of jeans, each of which will benefit from a 12% reduction in import duties in accordance with UK law. High Commission.
Sarah added that out of the total Pakistani products exported to the UK, textiles, garments and apparel items account for the highest share. She said Pakistan faced an average most favored nation (MFN) tariff of 5.1% on textiles, 11.4% on clothing and 3.1% on leather and footwear. from the UK. The UK has been one of Pakistan’s top export destinations, with total exports amounting to £2.1 billion in 2021. “Therefore, any preferential status can be beneficial for Pakistan,” Sarah said. According to WealthPK research, Pakistan’s top exports to the UK up to the first quarter of 2022 include clothing (£716.5m or 46.5% of all UK goods imported from Pakistan), fabrics textiles (£488.5 million or 31.7%), cereals (£88.7 million). million or 5.8%), vegetables and fruit (£36.5 million or 2.4%) and other manufacturers (£33.2 million or 2.2%).