Free trade agreements cripple local industry: PBC

KARACHI: Pakistan’s free trade agreements with foreign countries are undermining the country’s local industry, while they largely remain in favour of its trading partners, a business policy advocacy group said on Tuesday.  

The Pakistan Business Council (PBC), in its white paper, said the country endured a staggering jump in trade deficit vis-à-vis China – its biggest free trade partner – to $14 billion in 2015 from three billion dollars in 2006.  

“At a time when the largest global economies are becoming protective of domestic employment it is time that Pakistan wakes up and looks after its people,” advised the council, representing local and multinational corporations. Its members account for 10 percent of Pakistan’s GDP and almost one-fifth of tax and export revenues.

The PBC is against the signing of proposed free trade agreements with Turkey and Thailand.

It also called for an integrated strategic trade policy that includes inputs from all the provinces, to ensure protection to the domestic industry and increase exports.  

The PBC said the country has been maintaining three to five percent growth for the past one decade, which exposes it to a serious challenge related to ‘demographic dividend’ – a terminology denoting the majority populations.   

Economists said the country needs to grow seven to eight percent to create employment opportunities for its burgeoning youth numbers – at least 60 percent of the country’s population. 

The group said taxes on inter-corporate dividends, proposed under the Companies Bill 2016, will discourage consolidation and business expansion beyond the homeland. The bill also suggested financial disclosure of foreign shareholdings and returns filings. “The current bias against business is making domestic industry uncompetitive within Pakistan itself,” it added, referring to the proposed law.