Pakistan's cotton exports in trouble, India gains advantage after trade deals with EU and US
New Delhi (The Uttam Hindu): India's key trade deals with the European Union and the United States are feared to be a major economic setback for neighboring Pakistan. These agreements, in particular, could directly impact Pakistan's cotton and textile exports. Pakistani industry experts believe that if the situation doesn't improve soon, Pakistan's competitive position in the global market could be weakened.
While India has agreed to a much-anticipated free trade agreement with the European Union, a new trade deal with the United States has also resulted in a significant reduction in import duties imposed on India. US President Donald Trump has announced a reduction in tariffs on India from 50 percent to 18 percent.
Concerns grow within Pakistan's industry
According to the Tribune report, Ehsanul Haq, president of the Cotton Ginners Forum, expressed serious concern about the current situation. He stated that if the government does not immediately take concrete steps to provide relief to the cotton and textile industries, Pakistan's exports could see a significant decline. He warned that delaying policy decisions would further widen regional cost differentials, weakening Pakistan's position in the international market.
Why India is gaining an edge:
According to industry experts, the situation has become more challenging since the European Union reduced import duties on Indian products to zero. Furthermore, the United States has reduced tariffs on India to a range of 18 to 25 percent. In contrast, Pakistani products still face a tariff of approximately 19 percent in the US market. Experts say India will directly benefit from this tariff differential.
The Cotton Ginners Forum has demanded that the government of Pakistan bring the country's production costs in line with those of neighboring countries to maintain export competitiveness. It also demanded that long-pending refunds be released or adjusted against super tax liabilities.
A New Path Through the India-US Trade Deal
On Monday, President Donald Trump announced a reduction in tariffs imposed on India from 50 percent to 18 percent after talks with Prime Minister Narendra Modi. This trade agreement between India and the US had been under discussion for nearly a year. The US also stipulated in the deal that India would stop importing oil from Russia.
The 'Mother of All Deals' with the EU
The free trade agreement between India and the European Union is widely being called the 'Mother of All Deals'. Both sides have indicated that the agreement could be implemented this year. According to Union Commerce Minister Piyush Goyal, once the agreement is implemented, approximately 99 percent of India's exports will get duty-free access to the EU. This is expected to double India's exports in the next five years.