Pakistan and the Mercado Común del Sur (MERCOSUR) – a regional trade bloc in South America – recently signed a Preferential Trade Agreement (PTA) in June 2021. This agreement between the two nations aims to strengthen economic ties and promote trade between Pakistan and MERCOSUR member countries.
Under the PTA, Pakistan will enjoy reduced tariffs on 313 products, including agricultural goods such as mangoes, oranges, and rice. Similarly, MERCOSUR member countries will benefit from reduced tariffs on 107 products, including beef, fruits, and leather products. This agreement is expected to increase Pakistan`s exports to MERCOSUR countries, which currently account for only 2% of its total exports.
The PTA is a vital step in fostering regional trade integration and promoting economic growth. It provides an opportunity for Pakistani businesses to take advantage of the vast markets in South America by gaining access to new customers and expanding their reach. Similarly, MERCOSUR countries can benefit from the agreement by importing high-quality Pakistani products at a reduced cost.
However, despite the potential benefits, there are challenges in implementing the PTA. The agreement requires the harmonization of regulations and technical barriers to trade, which can be time-consuming and cumbersome. The lack of information and knowledge about the new markets may also pose a challenge for Pakistani businesses looking to export to MERCOSUR countries.
The Pakistani government has assured that it will provide complete support to its exporters in ensuring a smooth transition into the MERCOSUR markets. This support will include establishing trade promotion cells in MERCOSUR countries, creating awareness about the PTA through seminars and other events, and providing exporters with market intelligence and information.
In conclusion, the Pakistan-Mercosur Preferential Trade Agreement is a significant development for both Pakistan and the MERCOSUR bloc. It will provide new opportunities for businesses in both regions, and the reduction of tariffs on goods will encourage greater trade and investment. While there may be challenges in implementation, the agreement`s potential benefits are enormous, and with proper support and coordination, this PTA can pave the way for stronger economic ties and greater regional integration.