Pakistan, Iraq eye stronger economic ties

Commerce Minister Jam Kamal Khan is attempting to boost economic ties with Iraq after signing a protocol to increase cooperation, highlighting its significance to the relationship between both countries.

Pakistan and Iraq have displayed their commitment to strengthen their partnership by following an agreement to collaborate in a diverse set of fields, including tourism, health, education, and trade.

One of the goals is to expand religious tourism, as large throngs of pilgrims flock to Iraq seasonally. The Middle Eastern country will consequently benefit from the increased inflow of Pakistani citizens, bringing with them funds to purchase Iraqi goods and services.

However, analysts predict that true trade gains can only be achieved through the exchange of goods. According to the Observatory of Economic Complexity, Iraq’s export revenues stood at a staggering $123 billion in 2022, with recent figures hovering close to $100 billion.

Iraq’s primary export is petroleum, constituting 97 percent of the country’s exports. It already exports its petroleum to Pakistan’s neighbours, with India and China accounting for 33.5 percent and 30.6 percent of Iraq’s crude oil exports, respectively.

Given that Pakistan is closer to Iraq than its other trade partners in the region, experts argue that it will be cheaper for Pakistan to import Iraqi petroleum. With Brent prices up by approximately 3.5 percent in the past five days and an upward trend predicted under Donald Trump’s threat to sanction Russia, it will be in Pakistan’s best interest to secure a source of petroleum that can be transported cost-effectively.

The commerce minister, however, is more interested in boosting export revenues for Pakistan and is already urging Iraqi authorities to ease visa restrictions for Pakistani businesspersons, as per Dawn.

Iraq imports approximately one billion dollars worth of rice and textiles each. Currently, Iraq imports approximately 60 and 32 percent of its rice from Thailand and India, respectively. It also imports a little under one percent of its rice from Pakistan, which reflects Pakistan's huge potential to enter the market.

The figures for Iraqi textile imports are similar to China, catering to the Middle Eastern countries’ textile consumption. However, Pakistan could leverage its cost-effective labour to secure contracts from Iraqi importers with a lower per capita income on average as opposed to other countries that export their goods to Iraq.