Zafar Iqbal
The Prime Minister’s announcement that the Pakistan-GCC Free Trade Agreement (FTA) is in its “final stages” has generated diplomatic enthusiasm, but the underlying question remains whether Pakistan truly understands how to leverage trade agreements for sustainable economic growth. While the government highlights new “meaningful” avenues with Bahrain and the wider Gulf, the reality is that Pakistan still lacks a coherent trade policy, a calibrated export strategy, and the institutional mechanisms required to translate FTAs into long-term industrial gains. Enthusiasm alone cannot substitute for structured economic planning.
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The recent visit to Bahrain was marked by diplomatic warmth. Historical ties were praised, remittances acknowledged, and longstanding contributions of the Pakistani diaspora highlighted. The Bahraini finance minister spoke of bonds “intertwined with history,” while the Prime Minister described the reception as feeling “like we have come home.” Such rhetoric reinforces goodwill, but without policy, it does not enhance competitiveness. Pakistan’s exports continue to depend on seasonal surpluses, offering products that are largely uncompetitive, while imports from other countries fill domestic demand gaps. A GCC FTA, in the absence of domestic productivity and export strategy, risks formalizing access to markets where Pakistan cannot assert leverage.
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During his address, the Prime Minister highlighted potential sectors for bilateral collaboration, including agriculture, IT, artificial intelligence, fintech, minerals, energy, tourism, and youth-driven ventures. While these areas reflect aspirational goals, they remain unanchored by concrete policy. Without institutional capacity and strategic planning to translate these aspirations into tradable strengths, Pakistan risks entering agreements where all negotiating leverage resides with its partner countries.
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The GCC itself is undergoing profound transformation, evolving into a hub of innovation, sustainability, and technological excellence, as highlighted by Bahrain’s finance minister. The Gulf has moved beyond serving merely as a labour market or financial benefactor; it is becoming a sophisticated economic bloc with long-term industrial planning. In contrast, Pakistan continues to approach trade from an older template, relying on emotional ties and strategic rhetoric rather than competitiveness and productivity. The Prime Minister’s praise for Bahrain’s skilled workforce, modern financial system, and growing fintech sector underscores what Pakistan has yet to develop — sustained investment in productivity and infrastructure that supports long-term industrial growth.
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Ironically, much of the manufactured goods exported from the GCC today were once produced in Pakistan but migrated due to high costs, regulatory unpredictability, and policy failures. That these structural deficiencies are absent from public discourse, even as the country pursues a GCC FTA, reflects a troubling disconnect between policymaking and economic realities. Free trade agreements cannot compensate for decades of missed industrialization; they can only enhance growth when embedded within a strategic framework.
Pakistan’s government continues to promote private-sector-led development and invites Bahraini investors to explore opportunities in agriculture, IT, minerals, energy, and tourism. However, reforms that lack integration into a broader trade and export strategy risk incoherence. FTAs are tools, not outcomes. They deliver tangible benefits only when domestic production aligns with international market demands. Pakistan, however, remains an economy that exports surplus rather than strategically produced goods, undermining the potential of any trade agreement.
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The GCC remains a vital regional partner, and bilateral cooperation has undeniable value. Pakistani contributions in Bahrain, including USD 484 million in remittances last fiscal year, demonstrate the strength of people-to-people ties. Yet, economic diplomacy demands more than sentiment; it requires strategic coordination, effective policy instruments, and the capacity to harmonize agreements with domestic reforms. Without this foundation, the excitement around the GCC FTA risks becoming another example of form over substance.
To realize the benefits of trade agreements, Pakistan must develop a clear, coherent trade policy that prioritizes export competitiveness. This includes identifying sectors with comparative advantage, investing in industrial capacity, modernizing production processes, and establishing robust institutional mechanisms to monitor and support trade outcomes. FTAs can only be effective if they complement these efforts, rather than serve as standalone gestures of diplomatic goodwill.
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The government’s current approach—highlighting bilateral goodwill, historical ties, and aspirational sectors—falls short of creating measurable economic gains. As Bahrain and the wider GCC develop into global hubs of innovation, Pakistan’s outdated export and trade framework may further exacerbate competitive disadvantages. Without reforms that connect trade agreements to real industrial growth, the country risks repeating a familiar pattern of missed opportunities and unbalanced deals.
Strategic engagement with the GCC requires not just ceremonial visits and warm rhetoric but a transformation in policy thinking. The state must prioritize actionable measures: develop an export-oriented industrial strategy, streamline regulatory frameworks, improve ease of doing business, and invest in human capital aligned with international market demands. Only then can Pakistan negotiate from a position of strength and ensure FTAs deliver tangible economic dividends.
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As negotiations progress, it is imperative for policymakers to recognize that FTAs are not ends in themselves. They are instruments to enhance productivity, competitiveness, and long-term growth. Without a policy foundation and coherent industrial strategy, agreements with the GCC or any other partner may become symbolic, generating headlines without impacting Pakistan’s export performance or industrial modernization.
In conclusion, Pakistan’s pursuit of a GCC FTA highlights both opportunity and risk. While the partnership has historical and diplomatic significance, the country’s ability to benefit materially hinges on internal reforms, export strategy, and institutional readiness. To transform the agreement into a meaningful economic milestone, policymakers must align rhetoric with strategy, aspirations with capability, and agreements with concrete domestic reforms. Otherwise, the excitement surrounding the GCC FTA risks becoming yet another exercise in form over substance, with minimal economic returns for Pakistan.
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