The Epoch of Free Trade Agreements in Pakistan and Predominance of China

Lubna Uzair and Ahmad Nawaz

Chinese Economy, 2020, vol. 53, issue 5, 395-411

Abstract: The study empirically analyses the free trade agreements of Pakistan implicitly and China-Pakistan agreement explicitly by utilizing data of major trade partners of Pakistan from 1996 to 2018. For modeling the impact of trade agreements, gravity equation augmented with different variables, to accommodate zones of trade liberalization of Pakistan. To estimate the equation, feasible generalized least square used in a setting of panel data by controlling for country pair-specific and time-specific effects. Estimates of an extended gravity-based specification reflect that trade liberalization with Malaysia, and Sri Lanka is not as effective as with China and the trade agreement with China is only welfare-led. However, the imports from China are more responsive to free trade agreements as compare to export to China. The findings suggest the next round of negotiations for another phase of the agreement with consideration of the provision of market access to Pakistani exporters.

Date: 2020
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DOI: 10.1080/10971475.2020.1730563

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