United States and Pakistan finalize trade agreement; American aid to bolster Pakistan's substantial oil reserves expansion
US-Pakistan Trade Deal Focuses on Oil Sector and Tariff Reductions
The United States and Pakistan are edging closer to finalizing a trade deal aimed at boosting economic collaboration in various sectors, including energy, mines and minerals, IT, cryptocurrency, and others. The deal, which could be signed within days, has a significant focus on the joint development of Pakistan's massive oil reserves and reductions in reciprocal tariffs, particularly on Pakistani exports to the US.
The US is in the process of selecting the lead oil company for the partnership to develop Pakistan's oil reserves. This collaboration could potentially extend to future oil sales to third countries such as India. The exact tariff rates and sectors benefiting from the tariff reductions have not been publicly disclosed.
The deal comes at a time when the US is adjusting its trade policy, including imposing tariffs on other countries like India. The US aims to build stronger ties with Asian powers, including Pakistan, to counter China's influence in the region.
Pakistan faced a potential 29% tariff on exports to the US under tariffs announced by Washington in April. However, these tariffs were suspended for 90 days to allow negotiations to take place. The US total goods trade with Pakistan in 2024 was estimated at $7.3 billion, an increase from $6.9 billion in 2023. The US goods trade deficit with Pakistan in 2024 was $3 billion, a 5.2% increase over 2023.
Pakistan is designated by Washington as a "major non-NATO ally." The US State Department and Pakistan's foreign ministry issued statements last week about the importance of expanding trade and ties in critical minerals and mining. Pakistani Foreign Minister Ishaq Dar and Secretary of State Marco Rubio emphasized this point during their meeting last week.
It's worth noting that many economists dispute President Trump's characterization of unfair trade relations. Trump did not mention any agreement on tariffs in his announcement, and negotiations with Pakistan's rival India on trade are still ongoing. The finance ministry did not provide details about the tariffs to be reduced.
In conclusion, the US-Pakistan trade deal combines strategic energy cooperation with tariff concessions to enhance bilateral trade, primarily benefiting Pakistan’s oil sector and export market access to the US, though full technical details remain undisclosed as of now.
References:
- Reuters
- CNN
- Bloomberg
- The Guardian
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