Hassan Nawaz Sheikh
Free Trade Agreements (FTAs) are considered important instruments for any economy to enhance exports through bilateral market access and tariff reduction. Pakistan has executed a number of FTAs with countries like Indonesia, China, Turkiye, Malaysia, Sri Lanka etc. However, holistically, they have not had an overall positive impact on our economy as we face trade deficits in nearly all of our existing FTAs.
On the contrary, Vietnam demonstrates how a developing economy can employ free trade agreements as part of a coherent export-led industrial policy. Vietnam has concluded 17 bilateral and plurilateral FTAs, including the CPTPP, RCEP, EU-Vietnam FTA and UK-Vietnam FTA. According to the OECD, these agreements connect Vietnam with 53 countries representing approximately 87% of global GDP, cover nearly 70% of its exports and have helped reduce its average applied tariff on manufactured goods from 16.6% to 1.1%.
The EU-Vietnam FTA, which entered into force on 1st August 2020, provides for the eventual elimination of 99% of tariffs. By 2025, Vietnam had become the EU’s largest goods-trading partner in ASEAN, with bilateral trade reaching approximately €76 billion. Vietnam’s merchandise exports also increased by 17% in 2025 to approximately US$475 billion.
Pakistan, meanwhile, remains dependent upon a relatively narrow collection of bilateral FTAs and preferential arrangements, while its exports stood at only slightly above 10% of GDP in 2024. Vietnam’s experience shows that carefully selected FTAs – when supported by industrial capacity, regulatory compliance and integration into global value chains – can translate market access into sustained export growth.
Pakistan’s Planning Ministry has recently set an export target of US$ 100 billion till the year 2035. However, with FY25 exports clocking out at USD 32.1 billion only and a dip of about 5.97% in the overall exports forFY26 as they closed out at USD. 30.13 billion only, the trajectory of export growth appears to be going haywire. The situation demands that Pakistan needs to delve into its own economic integration policy and explore beneficial market access.
Free trade agreements traditionally focus on trade-in-goods or trade-in-services, yet a more niche approach would be to look for the evolutionary form of trade agreements, such as “DigitalTrade Agreement (DTA)” or “Digital Economy Agreements (DEA)”.DTAs were primarily considered as a chapter on e-commerce in the traditional FTAs. However, the age of COVID made them come out on the fore as independent stand-alone trade agreements. E-commerce, in simple terms, trading of goods and services over the internet, usually involving retail transactions. However, it has now become a subset of digital trade that encompasses overall trade in goods and services that is digitally enabled. DTAs and DEAs promote trade in digitally deliverable services more effectively than traditional FTAs as these agreements facilitate cross-border data flows, reduce trade costs and, and enable modern business operations.
The Asia Pacific countries like Singapore, Australia, Chile etc have been more involved in executing such agreements. This presents a unique opportunity for Pakistan. While we need to focus on executing FTAs with our traditional trade partner countries like the ones in GCC or potential partners with whom we may develop direct physical access links such as Central Asian Republics (CARs) like Uzbekistan, Kyrgyzstan, Kazakhstan etc – the Asia Pacific countries with whom we have limited ties and are not geographically close to us, DTAs offer the most appropriate trade linkages with them. As the digital realm is not bound with physical boundaries, therefore, it makes all the sense to execute DTAs with developed economies in the Asia Pacific region.
Singapore has been a forerunner when it comes to digital trade agreements as it executed the “Digital Economy Partnership Agreement (DEPA)” – the first stand-alone digital trade agreement. Initially, only signed by Singapore, New Zealand and Chile only; the Republic of Korea also officially joined the DEPA in 2024. Nine other economies including UAE, China, Canada, Peru and Thailand are also in talks for accession to DEPA. DEPA covers a wide range of digital economy aspects including data flows, AI governance, fintech and e-commerce.
Singapore has executed bilateral DEAs with Australia, the UK, South Korea and the European Union and its digital economy now accounts for approximately 18.6% of its GDP. Pakistan’s trade with Singapore remains modest standing at US$ 278.11 million during 2025, according to the UN COMTRADE database, with mineral, fuels and distillation products topping the chart. However, significant potential exists to expand digital trade ties with Singapore and Pakistan’s accession to DEPA, would open access to a digital trade network spanning from American continents to the Asia Pacific.
Australia presents an equally compelling opportunity, with e-commerce chapters already embedded in 16 of its 19 FTAs and its digital economy projected to reach USD 195 billion by 2028.The two-way trade with Pakistan stood at approximately USD 2.39 billion as of FY2025. In November 2025, Australian government officials also visited Pakistan to advance negotiations on a modernised bilateral investment treaty.
Australia’s Digital Trade Strategy, administered by the Department of Foreign Affairs and Trade, actively promotes cross-border data flows, digital services market access, and e-commerce facilitation across Asia, creating a precisely timed opening for Pakistan to negotiate a formal bilateral Digital Trade Agreement covering data flows, cybersecurity standards, cross-border digital services, and digital public infrastructure.
Our economy needs trade liberalization as even Pakistan’s 2022 WTO Trade Policy Review noted that Pakistan’s openness to international trade and international economic integration has been on a downward trend since 2007-08. Digital trade agreement provides the opportunity to capitalize on the growing global trends and open new markets to Pakistani businesses.
—The writer is a practising Barrister and Head of Chambers at Hassan Law Chambers (HLC). He can be reached at [email protected]
