SWOT Analysis of Pakistan-China Free Trade Agreement: Pros and Cons

Pakistan and China share a long lasting cordial relationship. To extend this relationship a free trade agreement (FTA) was signed in 2006 which came into effect in 2007. This study examined the impact of this FTA on patterns of goods traded by both nations. Before-After analysis reveals that the trade patterns have improved generally (Pakistan exports as well as imports from China have increased) but the trade deficit of Pakistan has also increased; the Revealed Comparative Advantage (RCA) and SWOT analysis shows that there is a difference in goods traded by both countries in world markets and bilaterally except the top ranked products. Conversely, Pakistan?s GDP does not have much influence on its exports to China. Therefore, in present conditions, Pakistan benefits more from the bilateral trade because its? exports to China are positively correlated with China?s GDP, which is growing faster than Pakistan?s GDP.