US–Pakistan Trade Relations: Trends, Challenges & Opportunities

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US–Pakistan Trade Relations: Trends, Challenges & Opportunities

US–Pakistan Trade Relations: Trends, Challenges & Opportunities

The trade relationship between the United States and Pakistan has historically been shaped by a mix of geopolitical interests, economic needs, and evolving global dynamics. Despite decades of bilateral engagement, the full potential of US–Pakistan trade remains largely untapped.

📊 Overview of Bilateral Trade

The United States is one of Pakistan’s largest export markets. In recent years, Pakistan’s exports to the US have exceeded $6 billion annually, led by textiles, apparel, leather, and surgical goods. US exports to Pakistan include machinery, aircraft parts, electronics, and agricultural products.

📜 Legal & Trade Frameworks

Pakistan has benefited from trade preferences under the Generalized System of Preferences (GSP), allowing duty-free access to certain goods. However, the GSP program has seen suspensions, and negotiations on broader trade agreements have remained stagnant due to political and security concerns.

📉 Key Challenges

  • No Free Trade Agreement (FTA): Unlike US–India or US–Mexico trade deals, Pakistan lacks a comprehensive FTA with the US.
  • Security & Trust Issues: Geopolitical mistrust and instability affect investor confidence.
  • Inconsistent Policies: Regulatory unpredictability and tax reforms in Pakistan make long-term deals difficult.
  • Limited Value Addition: Pakistan primarily exports low value-added products like raw textiles instead of tech or advanced manufactured goods.

🌍 Strategic Opportunities

  • IT & Software Exports: Pakistan’s growing tech sector could boost services exports to the US if supported by proper legal frameworks.
  • Renewable Energy Collaboration: Green technology and climate finance present mutual investment opportunities.
  • Pakistani Diaspora Leverage: Over 1 million Pakistani-Americans are a major bridge for startups and trade links.
  • Legal Reform: Strengthening contract enforcement, IP protection, and arbitration mechanisms could attract more US investors.

🤝 US–Pakistan Business Dialogues

Recent Trade and Investment Framework Agreement (TIFA) meetings have discussed enhancing digital trade, protecting IP, and easing customs procedures. However, political instability continues to overshadow progress.

🔍 Legal Takeaway

To unlock trade potential, Pakistan must:

  • Establish predictable legal and tax regimes.
  • Negotiate targeted sectoral agreements like IT or agriculture.
  • Strengthen diplomatic and business forums beyond military cooperation.

📎 Related Legal Blogs

🖋 Author: Syed Mustafa Hussain Gardezi
Advocate High Court, Legal Blogger at Lets-Legislate
📱 WhatsApp: +92 345 7149555

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