Does Pakistan know what to do with trade agreements?
Business Recorder - 06 December 2025
Does Pakistan know what to do with trade agreements?
The prime minister may describe the Pakistan-GCC Free Trade Agreement (FTA) as being in its “final stages”, but the real question is whether the country knows what to do with trade agreements at all.
The government speaks of new “meaningful” economic avenues with Bahrain and the wider Gulf, yet the reality is that Pakistan still has no coherent trade policy, no calibrated export strategy, and no institutional understanding of how FTAs should serve long-term industrial goals. The enthusiasm is familiar; so is the lack of substance behind it.
The Bahrain visit was wrapped in warm language. Generations of Pakistanis in the sheikhdom were acknowledged, remittances were praised, and historic ties were highlighted.
The Bahraini finance minister spoke of bonds “intertwined with history”, and the prime minister reciprocated, describing the reception as feeling “like we have come home”. But diplomatic warmth does not substitute for a plan. If the country’s export structure remains centred on sending whatever surplus happens to exist in a given season, a trade agreement with the GCC will do little beyond formalising access for products that are already uncompetitive, and opening the market further to goods manufactured elsewhere.
The prime minister promised full facilitation for investors and assured Bahraini businesses that Pakistan is “ready to open new, lasting, and meaningful economic avenues”. He highlighted youth potential, spoke of IT skills, and invited joint ventures. He listed agriculture, IT, artificial intelligence, fintech, minerals, energy, tourism and other sectors as areas of collaboration. These are aspirations, not policy. Without the institutional machinery to turn them into tradable strength, the country risks entering another agreement where all the leverage lies elsewhere.
The GCC itself is undergoing a transformation, as Bahrain’s finance minister pointed out. It is becoming a hub of innovation, sustainability and technological excellence. The Gulf is no longer merely a market for labour exports or a source of financial assistance; it is an increasingly sophisticated economic bloc.
Yet Pakistan’s approach remains frozen in an older template, one where emotional ties and strategic rhetoric are expected to stand in for competitiveness. The disconnect is widening. The prime minister highlighted Bahrain’s modern financial system, skilled workforce and emerging fintech sector. These are built on sustained investment in productivity — precisely the area where Pakistan’s state machinery has shown the least urgency.
It is also worth noting the irony embedded in the celebration of trade with the Gulf. Much of what is sold from GCC markets is produced by manufacturing that once existed in Pakistan but migrated due to the very policy failures that persist today: high costs, regulatory unpredictability, and lack of long-term planning. That this is not part of the national conversation, even as we negotiate an FTA with the region, reflects how deeply detached policymaking has become from economic realities.
An agreement cannot compensate for decades of missed industrialisation.
The government stresses that economic reforms and private-sector-led development are opening new doors. It invites Bahraini investors to enter Pakistan’s agriculture, IT, minerals, energy, and tourism sectors. But reforms that do not rest on a strategic trade framework inevitably lose coherence.
Free trade agreements are tools, not outcomes. They only work when embedded in a broader plan to build export capacity. Pakistan has not made that transition. It still exports what is left over, not what is deliberately produced for external markets. This is the fundamental weakness that no FTA — whether with the GCC or anyone else — can paper over.
None of this diminishes the value of regional cooperation, of course. The GCC is an important partner.
Bahraini officials rightly praised decades of Pakistani contributions to the sheikhdom. Remittances from Bahrain alone amounted to USD484 million last fiscal year, a figure that reflects the strength of people-to-people ties. But economic diplomacy requires more than sentiment. It requires strategy, coordination, and the ability to match agreements with credible domestic reforms.
As the country approaches yet another free trade commitment, the question is not whether FTAs are useful — they are. It is whether Pakistan has built the policy foundation to benefit from them. Without that, the excitement around the GCC agreement risks becoming another example of expending energy on the form rather than the substance of trade.
