Commentary on Pakistan Bangladesh Trade Relations

This study focuses on Pakistan and Bangladesh trade relations, which have developed over the period of time. Both countries are the member countries of SAARC and are signatories of SAFTA. The empirical finding in the study revealed that for both countries, trade flows have increased over time, and a huge trade surplus remains in favor of Pakistan. The volume of trade between both countries, however, remains lows. In this context, the study analysis in detail the trade trends between them from various perspectives.<br><br>First, the study analyzed the economic and overall export flows of both countries. For both of the country’s major exports relies on labor-intensive manufacturing industries. In comparison to Pakistan, the volume and growth of overall exports increase significantly for Bangladesh. The second part of the study focuses on the bilateral trade flows. The study also calculates Pakistan and Bangladesh trade flows with major regional trading blocs. In contrast to Bangladesh, Pakistan's export share to their member countries in the South Asian region is greater and remains between 10-13 percent over the last 15 years, while for Bangladesh the export share remains between 2-3 percent. <br><br>The study also identified trade potential sectors for both countries, as well as top potential exports products, to enhance the existing bilateral trade flows. The study also focuses on RCA (Revealed Comparative Advantage) analysis of four top sectors of Pakistan and Bangladesh. The RCA results show that Pakistan has the comparative advantage in all four sectors but the highest revealed comparative advantage specifically in the textile sector. For clothing, Bangladesh has a very dominant revealed comparative advantage when competing with Pakistan and the rest of the world. <br><br>The last part of the analysis is based on the review of the trade Under SAFTA with a special focus on Pakistan and Bangladesh trade. The empirical result shows that although the bilateral trade has increased over time but trade under SAFTA has not increased. The study reveals that a long list of products in the sensitive list maintained by the member countries is one of the major reasons for SAFTA ineffectiveness. Therefore, the study recommends, to enhance the trade in the region, the justifiable method, therefore, should be followed by the policymakers and all relevant stakeholders to revise and cut down the sensitive list based on arguments and reasoning, particularly against the rationale behind keeping the products in the sensitive list. Trade barriers should be addressed and removed accordingly for the smooth flow of goods. Pakistan and Bangladesh cooperation offers win-win prospects for both and the South Asia region as a whole.<br><br>Data for the study have been taken from various sources, which include, World Bank Developing Indicators (WDI), ITC-Trade Map, ITC- Market Access Map, ITC- Export Potential Map, and Export Promotion Bureau of Bangladesh for the year 2005-2020<br>