Arsalan Ali

Pakistan has the potential to enhance its exports to Latin American countries such as Chile, Argentina, and Brazil. However, the lack of trade agreements, high freight costs and unjust ad valorem taxation are major hurdles to increasing exports, according to a report by the Trade Development Authority of Pakistan (TDAP). The report suggests that Pakistan could increase its exports by $140 million to Chile, $65 million to Argentina, and over $180 million to Brazil by signing trade agreements with these countries.

Data from the State Bank of Pakistan (SBP) shows that Pakistan's exports to Chile, Brazil, and Argentina during the first nine months (July-March) of the current fiscal year (2022-23) amounted to $47.144 million, $80.994 million, and $35.928 million, respectively. Imports from Chile, Brazil, and Argentina during the same period were valued at $25.721 million, $644.312 million, and $135.621 million, respectively.

During the previous fiscal year, exports to Chile, Brazil, and Argentina were recorded at $109.730 million, $102.958 million, and $47.361 million, respectively. To realise the true trade potential, the report recommends that Pakistan should sign a preferential trade deal with Chile, which could result in savings of up to $8 million on its import costs by purchasing more from the Latin American country.

It further highlights that bed linen, articles of clothing, men's or boys' outfits, and instruments and appliances are Pakistan's top exports to Chile, while wood pulp and inorganic chemicals are its main imports. The report emphasises that reducing the ad valorem tax through trade agreements and offering government subsidies to reduce freight costs could help increase exports to Chile.

The report highlighted that if a trade deal is finalised between Pakistan and Argentina, Pakistan could possibly save more than $220 million in import expenses by purchasing more from the country. It stated that Pakistan's main exports to Argentina are man-made staple fibres, cotton woven fabrics, and sports and toy manufacturing, whilst main imports are animal or vegetable fats, cotton, cereals, and iron and steel goods.

The report said Pakistan could potentially save more than $90 million in import expenses by increasing imports from Brazil through a preferential trade agreement. Instruments and appliances, bed linen, pieces of clothing, and cotton are among Pakistan's top exports to Brazil, while oil seeds and oleaginous fruits, cotton, iron and steel, and sugar confectionary are among its primary imports.

Credit: Independent News Pakistan-WealthPk