Pakistan-Azerbaijan Bilateral Trade Brief

Overview:

Pakistan and Azerbaijan are strengthening their economic partnership through strategic agreements and targeted trade expansion. Bilateral trade, which stood at a modest $13.2 million in 2020, has seen significant growth in recent years. In 2023, total trade reached approximately $28.8 million, with Pakistan exporting $20.6 million to Azerbaijan and importing $8.2 million. Both nations have set an ambitious target to increase bilateral trade to $2 billion, reflecting a shift from symbolic to strategic engagement.

Recent Trade Data (2023):

Azerbaijan’s exports to Pakistan were valued at $8.2 million, dominated by nitrogenous fertilizers ($5.86 million), raw lead ($1.3 million), and refined petroleum ($932,000). Over the past five years, Azerbaijan’s exports to Pakistan grew at an annualized rate of 37.5%. Pakistan’s exports to Azerbaijan totalled $20.6 million, led by potatoes ($3.02 million), liquid pumps ($2.49 million), light synthetic cotton fabrics ($2.33 million), and rice ($2.03 million). Pakistan’s exports grew at an annualized rate of 6.46% from 2018 to 2023.

Trade Agreements and Institutional Mechanisms

The two countries have finalized a Preferential Trade Agreement (PTA) and a Transit Trade Agreement (TTA) to reduce tariffs, simplify customs procedures, and promote multimodal transport. Key tariff concessions under the PTA include 100% reduction on Azerbaijani hazelnuts, apricots, polyethylene, and tobacco, and a 66% reduction on Pakistani bananas, dates, gloves, and safety razors. The TTA facilitates transit via designated routes, harmonizes documentation, and establishes a joint coordination committee for oversight.

Strategic Developments

A landmark $2 billion investment agreement was signed in 2024, accompanied by 15 MoUs covering trade, energy, defence, transport, and cultural exchange. Azerbaijan is also supplying 85,000 metric tons of sugar to Pakistan to stabilize domestic prices. Defence cooperation, including the JF-17 fighter jet deal, complements economic ties. Both countries are leveraging geographic positioning to enhance connectivity through the Middle Corridor and Gwadar Port, aligning with regional frameworks such as ECO and CAREC.

Conclusion

The Pakistan-Azerbaijan trade relationship is evolving rapidly, supported by institutional frameworks, strategic investments, and shared geopolitical interests. With a clear focus on energy, logistics, and defence, the partnership is poised to play a pivotal role in regional trade integration.