The diplomatic relationship between Pakistan and the United States was established on August 15, 1947, a day after Pakistan came into being. The United States (US) is considered as one of the first two nations that recognize Pakistan as an independent and sovereign state. Since its independence, Pakistan considers its relationship with the US as an important element of its foreign policy. Thus, Pak-US relationship is as old as Pakistan and there has been general consistency in this bilateral relationship with vicissitudes at times. This piece of paper aims to debate the economic and trade relationship between Pakistan and the US with prospects and challenges.
In the bilateral economic and trade relationship, the US has significantly as-sisted Pakistan in the construction and development of several mega irrigational and energy projects such as Mangla, Tarbela and Gomal Zam dams. Besides, the US con-tributed greatly towards the Green Revolution in Pakistan during the 1960s. The proc-ess of economic collaboration and cooperation between both states continued smoothly during the Cold War era, since Pakistan was a significant military partner of the US in the field of power politics against Communism. Nevertheless, the post-Soviet era has brought many setbacks in the economic and strategic relationships of Pakistan and US. Nevertheless, despite these vicissitudes, both states managed their bilateral relations to the acceptability of either side.
Focusing on contemporary economic and trade relations, Pakistan and the US have seen notable growth in bilateral trade. According to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), trade volume exceeded $7 billion in 2023 and reached $6.3 billion in the first ten months of 2024, reflecting positive trends. The US remains Pakistan’s largest export market, with exports totalling $8.33 billion in 2022. Additionally, it has been a vital source of Foreign Direct Investment (FDI), contributing $118.4 million in 2022, and remittances from the US amounted to $3.09 billion that year, with further increases observed in 2023 and 2024. For decades, the US has supported Pakistan’s economic development, underscoring its role as a key economic partner. These developments provide a strong foundation for advancing trade and commerce between Islamabad and Washington, fostering mutual growth and economic stability.
About the economic relationship of Pakistan and the US, Donald Blome, the US Ambassador to Pakistan said, “The United States is Pakistan’s largest export mar-ket globally and Pakistan’s exports to the US have more than doubled over the last decade”. This is evidence of the ‘robust economic relationship Pakistan and US share.’ The Ambassador made this statement during his meeting with the Sialkot Chamber of Commerce and Industry and Sialkot Women Chamber of Commerce and Industry. The Ambassador later visited GharPar in Lahore, a Pakistani women-led business that’s redefining women’s economic empowerment. This Pakistani entrepre-neur company participated in a US government-funded entrepreneurship training pro-gram in 2016 and also participated in the US Department of Commerce’s 2024 Select USA delegation from Pakistan.
The President (Elect), Mr Donald Trump has already given a hint of revitaliza-tion of international partnerships for economic development. This vision of the new US administration will be a unique opportunity for all states to collaborate with each other for better economic cooperation with a win-win situation. Since Pakistan has been a partner of the US for decades, therefore, such an opportunity will enable Paki-stan to globally collaborate for its economic uplift. Recently, Pakistan has envisioned a new and renewed focus for improving its economy with enhanced collaboration and cooperation at regional and global level.
Through this renewed economic vision, Pakistan is looking forward for strengthening the existing political and economic ties with the international community, especially with Europe and the United States. This vision includes business-to-business relation-ships while fostering deeper people-to-people connections across diverse fields as key goals for enhancing bilateral engagement. This vision underscores the importance of economic diplomacy as a tool for nurturing closer ties. Since the US still remains one of Pakistan’s top export destinations, therefore there is a need to expand this trade and economic opportunity further. Currently, Pakistani exports to the US include sectors like; textiles and apparel, agricultural products, IT services, garments and leather goods, pharmaceuticals and medical equipment, chemicals and raw materials and sports equipment.
For decades these Pakistani products have been famous in the markets of US and Europe. The hallmark of these Pakistani products includes; high-quality, cost-effectiveness and timely disbursement. For the masses of the US, these Pakistani products represent a blend of affordability and premium quality. Whereas, there have been ups and downs in the strategic and political relationships of both states, there has been consistency in the trade and commerce of both states. The positive sign of this trade relationship has been that it fosters mutual understanding, creates employment in both nations, and builds bridges of trust and interdependence.
The economic community of Pakistan is looking forward for further expand-ing the trade relationship with US in untapped areas/ potential like; Information Tech-nology and Software Services: Expanding Pakistan’s role in providing IT solutions and software development to US companies, Renewable Energy: Partnering to de-velop sustainable energy solutions, such as solar and wind projects, Advanced Manu-facturing: Strengthening ties in high-tech industries to boost production capacities, Cultural and Creative Industries: Promoting cultural exchanges through trade in arts, crafts, and media, Tourism: Enhancing bilateral tourism by investing in infrastructure and joint marketing strategies. In order to boost the trade and commerce between Pakistan and the US there is a need to take collaborative initiatives through joint ventures and technology transfers which will have a positive impact in their bilateral relations. Economic engagements between Islamabad and Washington will boost CBMs at political, diplomatic and stra-tegic level.
—The writer is Professor of Politics and IR at International Islamic University, Islamabad.
