Building Bridges: Pakistan and Canada Strengthen Ties

Canada and Pakistan recognised diplomatic relations in 1947, shortly after Pakistan’s independence. Both countries pursue a broad range of interests in their bilateral relations, including governance and democracy, human rights, climate change, development assistance, regional security and defence, transnational crime, and trade and investment.

Canada encourages programs that support human rights specially women’s rights in Pakistan. People-to-people links between Pakistan and Canada stay solid. There are over 215,000 Canadians of Pakistani origin living in Canada. In 2019, Pakistan was Canada’s fifth-largest source of permanent residents. Despite a long-standing diplomatic relationship, Canada and Pakistan’s trade partnership remains underutilized. This article explores into the current state and future prospects of their economic ties.

Trade Relations:

In 2020, Pakistan was Canada’s 36th-largest export destination for merchandise, with Canada-Pakistan joint trade reaching $1.11 billion. Of this, Canadian exports to Pakistan equalled $669 million and imports from Pakistan equalled $438 million. Opportunities for Canadian companies exist in education, information and communications technologies, cleantech, energy, oil and gas, and the agri-food and wood sectors.

In 2022, Canada exported $476M to Pakistan. The main products that Canada exported to Pakistan are Rapeseed ($184M), Dried Legumes ($140M), and Scrap Iron ($34.7M). During the last 27 years, the exports of Canada to Pakistan have increased at an annualized rate of 6.27%, from $92.2M in 1995 to $476M in 2022. The ECI scored for Canada was relatively high in 2022 (0.85) which shows that Canada made relatively more of different products, especially complex ones that not many other countries can make

In the same year, Pakistan exported $568M to Canada. The main products that Pakistan exported to Canada were House Linens ($61.5M), Leather Apparel ($52.6M), and Polyacetals ($44.6M). During the last 27 years, the exports of Pakistan to Canada have increased at an annualized rate of 5.18%, from $145M in 1995 to $568M in 2022. The ECI scored for Pakistan was relatively low in 2022 (-0.54) which proves risky as Pakistan only exported few simple products that are also produced by majority of other countries.

Future Prospects:

There are recommendations for a limited Preferential Trade Agreement (PTA) in the first stage, which allows Pakistani manufacturers increased access to Canada’s textile market, especially for apparel, in return for tariff concessions on certain agricultural produce such as Canadian canola and other fruits and vegetables. Canada-Pakistan Foreign Investment Promotion and Protection Agreement (FIPA):

Canada’s objective in entering these negotiations is to secure a comprehensive, high-quality agreement which will protect investors through the establishment of a framework of legally binding rights and obligations. Key sectors of interest are minerals, information technology, and infrastructure. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): Although Pakistan is not currently a member of the CPTPP, the agreement represents a potential future opportunity. The CPTPP is a free trade agreement between Canada and 10 other countries in the Asia-Pacific region. If Pakistan were to join this agreement, it could potentially open up new avenues for trade between Canada and Pakistan.