Islamabad – Pakistan and US Strengthen Economic Ties with New Trade Agreement Initiative. Pakistan and the United States have reaffirmed their commitment to deepening economic and trade relations, announcing plans to move forward with a new bilateral trade agreement aimed at expanding market access, encouraging foreign investment, and boosting cooperation in critical sectors.
The announcement followed a high-level meeting held on Friday at the Finance Division in Islamabad between Natalie Baker, Chargé d’Affaires of the US Embassy, and Finance Minister Muhammad Aurangzeb. The talks centered on enhancing bilateral trade flows, creating a more investment-friendly environment, and promoting greater economic integration between the two countries.
Tariff Adjustments as a Turning Point
The meeting comes on the heels of a recent policy shift by the US government, which imposed a 19% reciprocal tariff on Pakistani goods—a notable reduction from the initially proposed 29%. This decision, implemented under an executive order signed by President Donald Trump, was viewed as a positive step towards fairer trade terms.
By regional standards, Pakistan’s revised tariff rate is now among the lowest in South Asia. For comparison: India imposes 50%, Bangladesh 20%, Vietnam 20%, and Sri Lanka 20% on similar goods. This competitive tariff structure could make Pakistani exports more attractive in the US market and potentially increase the volume of bilateral trade.
Economic Reforms Boosting Investor Confidence
During the meeting, Finance Minister Aurangzeb highlighted the impact of Pakistan’s ongoing economic reforms in improving the country’s global financial standing. He pointed to the recent credit rating upgrade by Moody’s, which aligns with assessments from other leading international rating agencies.
Aurangzeb explained that reforms—particularly tariff adjustments, fiscal discipline, and policy modernization—are part of Pakistan’s strategy to liberalize trade, attract more foreign direct investment (FDI), and promote export-led economic growth. These steps, he noted, are already generating greater interest from overseas investors, including those from the United States.
Focus Areas for US-Pakistan Economic Partnership
Looking ahead, both sides agreed that the new trade agreement should prioritize key growth sectors.
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Infrastructure Development: Opportunities for US companies to participate in large-scale transport, energy, and logistics projects.
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Digital Economy: Investment in Pakistan’s expanding tech industry, including software exports, fintech solutions, and e-commerce platforms.
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Mining and Natural Resources: Collaboration in mineral exploration and value-added processing to support Pakistan’s industrial base.
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Energy and Supply Chains: Strengthening cooperation in energy efficiency, renewable energy projects, and building resilient supply chains.
Aurangzeb expressed optimism that these areas would see significant inflows of US capital, leading to job creation, technology transfer, and industrial growth within Pakistan.
US Perspective and Commitments
Natalie Baker stressed the importance of the trade pact for both economies. She acknowledged the growing interest among American businesses in Pakistan’s market potential, citing opportunities in supply chain diversification, clean energy projects, and sustainable mining operations.
Baker also emphasized that the US sees Pakistan as a strategic trade partner in South Asia, noting that closer economic cooperation could also serve as a foundation for strengthening diplomatic ties.
Next Steps Toward the Agreement
Both delegations concluded the meeting with a mutual commitment to fast-track negotiations on the trade agreement. Technical teams from both countries will work on finalizing the framework, addressing regulatory requirements, and ensuring that the agreement aligns with international trade standards.
Once implemented, the pact is expected to:
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Expand Pakistan’s access to the US market.
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Increase bilateral trade volumes.
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Encourage long-term US investment.
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Foster innovation and technology exchange.
Bottom Line: The renewed trade push between Pakistan and the US signals a positive shift in bilateral relations, with potential benefits for exporters, investors, and consumers on both sides. If the agreement delivers on its promises, it could mark a turning point for Pakistan’s economic outlook in the years ahead.