Canada’s GSP, NAFTA pushes up Pak trade deficit

ISLAMABAD: Pakistan has been cultivating trade deficits in its bilateral trade relationship with Canada for several years as the North American nation doesn’t treat its exports and imports under tariff preferential schemes, officials said on Monday.  

Annual trade between the two countries staggers below one billion dollars – a little over one percent of Pakistan’s total trade volume of around $74 billion. Officials said Pakistani authorities told their Canadian counterparts that the lower exports to Canada were due to its preferential trade with US and Mexico under the North America Free Trade agreement (NAFTA) as well as generalized system of preferences (GSP), granted only to the World Bank-designated least developing countries, including Bangladesh – Pakistan’s arch rival in foreign textile markets. 

Trade data, available with The News, showed that Pakistan’s share in Canadian global imports of $471 billion is negligible.  Total bilateral trade between Pakistan and Canada stood at $857.89 million in 2011/12 as the former’s exports fetched $211.229 million, while imports stood at $646.59 million, indicating that the trade balance was in favour of the latter.

Bilateral trade significantly dropped to $355.8 million in 2012/13 as exports stood at $215.81 million and imports $139.9 million, depicting a trade surplus for Pakistan. In 2013/14, the bilateral trade recovered to $431.8 million mainly in favour of Pakistan. In the subsequent years, trade balance, however, remained in favour of Canada. Bilateral trade stood at $657.7 million in fiscal 2014/15 mainly in favour of Canada to the tune of $201 million. It amounted to $856 million in 2015/16 and $911.6 million in 2016/17, benefiting Canada of $423 million and $462 million, respectively.

Officials said the balance of trade has been tilting towards Canada since fiscal 2006/07 owing mostly to imports of oil seeds and machinery.  There was a brief relief in 2012/13 and 2013/14 after decline in imports of oil seeds, aircraft equipment and parts, machinery, vegetables and vegetable preparations, medical/surgical instruments, road vehicles and parts, coal, and chemical materials. 

“Yet again, we are facing trade deficits,” an official of the commerce ministry said.  Pakistan’s major items of exports to Canada include rice, textile made-ups, apparel and cloth (knitted and crocheted), hosiery, cotton yarn, carpets, synthetic fabrics, medical/surgical instruments, sports goods, jewellery, iron and steel, fruit and fruit preparations, spices, and chemicals. 

The country’s imports from Canada are wheat, vegetables and vegetable preparations, including pulse, machinery and its parts, oil seeds, crude minerals, chemicals, pharmaceutical products, pulp and paper waste, old clothing and rags, coal, coke and briquettes and iron and steel products.  Officials said Trade Development Authority of Pakistan (TDAP) identified Canada as a potential export market as exports to the country have been rising since 2009.   

TDAP is also organising businessmen participation in an annual SIAL Food Show in Montreal scheduled in May next year. SIAL Canada is the leading name in the agri-food industry, with more than 850 national and international exhibitors from 50 countries hosting over 15,000 buyers from Canada, the United States, and 60 other countries.

“Pakistan may request the Canadian side to work in coordination with TDAP for promotion of select products, particularly agro-processed food, seafood, apparel, gems and jewelry in the Canadian market,” the ministry’s official said. 

“As a follow-up to the meeting of the Canadian High Commissioner with the Minister for Commerce, we are preparing a plan in consultation with the relevant stakeholders, for which technical assistance will be sought from the Canadian side.