The Gulf Co-operation Council has made a preliminary free trade agreement with Pakistan, the six-country bloc comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE announced late Thursday.
The preliminary deal was signed by GCC Secretary General Jasem Al Budaiwi and Pakistan’s Trade Minister Gohar Ejaz at the headquarters of the General Secretariat in Riyadh. There will be an internal administrative and approval process before the final trade deal is signed and comes into effect.
In a statement during the signing ceremony, Al Budaiwi called the deal “a historic economic agreement” that represented “a turning point in co-operation.”
The GCC added in another statement: “GCC countries are moving forward with the file of free trade negotiations with other countries, aiming to open and enhance the prospects for trade and economic cooperation for the Council member states regionally and internationally.”
Pakistan’s Commerce Ministry noted that once signed, it is likely to be the first free trade agreement by the GCC with any country since 2009, when it signed a pact with the European Free Trade Association, comprising Iceland, Liechtenstein, Norway and Switzerland. The GCC has one other FTA, with Singapore, and is in the process of negotiating more with Britain and several other countries.
Last year, GCC and Pakistani officials held technical talks about the possibility of a trade agreement that would help Pakistan increase its exports to the bloc. In March this year, Pakistani diplomats met with GCC counterparts in Riyadh to discuss the agreement and last week the South Asian country’s Foreign Minister Jalil Abbas Jilani met with Budaiwi, with the senior officials calling for the “early conclusion” of a deal.
In June, Pakistan established a Special Investment Facilitation Council to spur foreign direct investment in the country, particularly from Gulf nations. The council identified agriculture, defence production, energy, information technology and mining as the five sectors it would prioritise as the country looks to recover from an economic crisis and wide trade deficit.
Jilani told reporters that the council was courting interest from Middle Eastern countries.
“There are a lot of MoUs and agreements which are in the works, and we are expecting delegations from respective GCC countries very soon,” he said, adding that agreements will mostly concern joint ventures in the five priority sectors.
In July, the International Monetary Fund approved a $3 billion standby loan for Pakistan. The fund said the arrangement came at a challenging juncture for the country, which is in economic difficulties because of “an external environment, devastating floods, and policy missteps.” The turmoil has led to deep fiscal and external deficits, rising inflation and eroded reserves.