South America: An untapped market for Pakistan

South America is the fourth largest continent in the world’s Southern hemisphere, known for its rich and diverse culture, unique and fertile landscape, and extensive mineral resources. The region accounts for 8.28% of the world’s population, making it inhabitants of 667 million people, and 5.26% representation in the world gross domestic product (GDP) depicts its economic significance. South America has vast market potential for emerging economies and the developed world.

This insight comprehensively focuses on exploring and utilizing the South American region. It highlights that the Pakistan-South American partnership consolidates all dimensions of statecraft (Diplomatic, information, military, and economic). Pakistan’s policy shifts to geo-economics and firmly follows its growth and development, peace and connectivity imperatives.  A country that always lies at the crossroads of the geopolitics of significant powers, new avenues for cooperation and opportunities lie in the South American region.

Pakistan has conducted diplomatic outreach in South America, has seven diplomatic missions, embassies and honorary consulates are operational all across the region. Simultaneously, Argentina, Brazil, Chile, Ecuador, and Paraguay have their embassies and consulate generals in Pakistan, respectively. Diplomacy on the state leadership level seldom occurred between Pakistan and South America, except when President General Pervez Musharraf officially visited Argentina, Brazil, and Mexico in 2004, which proved very beneficial to Pakistan in boosting economic, diplomatic, and cultural relations.

South America has shared similitude and correspondence interests on many International issues with Pakistan, including the potency of the United Nations, reforms in the Security Council forum, and global development issues, especially from the global south. In November 2018, Pakistan, with the support of 64 states, sponsored a resolution on the “Universal realization of the right to self-determination” was adopted by the UN General Assembly unitedly. Pakistan has been advocating this flagship resolution since the 1980s, which proclaims the right of self-determination of people who were still under the subjugation of colonial and foreign occupation; this resolution adheres the relevance to the Falkland Islands (under British control previously the territory of Argentina) and Kashmir issue.

             Pakistan has linked through this region with military information and defense diplomacy on multilateral and bilateral fora. Pakistan became a permanent Organization of American States (OAS) member on 6 January 1988. This multilateral forum gives vital partnerships to permanent observer states by supporting development and programs and creating a linkage between global communities and the American community. Parliamentary friendship groups for Argentina, Brazil, Cuba, Chile, and Venezuela have established reciprocity to establish firm parliamentary relations with other countries and fortify the parliamentary exchange programs.

Brazil’s parliamentary friendship group held a meeting on 5 January 2023 in parliament lodges Islamabad to enhance the bilateral trade cooperation between the two states. Argentina’s parliamentary friendship group persistently hold meetings with their respective delegation in Pakistan to promote bilateral trade and cooperation and to facilitate training for formal football players of Pakistan.

When it comes to the public diplomacy paradigm, various arenas already exist. For instance, Pakistan has a landmark park named “Plaza de Pakistan” in the Capital city of Buenos Aries, inaugurated on 27 July, commemorating the 60^th anniversary of establishing Pakistan-Argentina diplomatic relations. Pakistan has a small community of people residing in Brazil, Chile, Argentina, Cuba and Ecuador. Pakistani- Cuban Doctors Association (PCDA) is contributing significantly to the development of the Pakistan and Cuban Medical Association.

Pakistan defense diplomacy and extensive contribution to UN peace-building missions, the peace-building mission in Haïti (1993-1997), is an example of Pakistan’s Defense diplomacy vital contribution. In the aftermath of the military coup in 1992, political violence was disrupted, killing more than 1000 people in Haiti; the UN adopted a resolution in 1992 for peacebuilding and rehabilitation. The blue berets from the Pakistan Battalion group restored peace and stability, reinvigorated Haitian police, aided in building roads and schools, conducting free and fair elections. The defense trade between Pakistan and South American countries already exists; in 2008, Brazil approved the sale of 100 MAR-1 medium-range missiles that are used in air-to-surface radar tracking installations; the deal was worth 85 million dollars.

On 5 August 2019, a Memorandum of understanding was signed between Brazil and Pakistan in Brasilia by Brazilian Defense Minister Fernando Azevedo e Silva and the Ambassador of Pakistan in Brazil, Mr Najm, us Saqib, to deepen defence cooperation. On 5-10, May 2019 visits of military leadership from both countries indicate the interest of stakeholders in enhancing bilateral defense cooperation. Pakistan and Argentina Air Force cooperation on aircraft deals, spare parts, and modernizing avionics systems have existed since the 1990s. Argentina sold Hercules C-130 aircraft to the Pakistan Air Force in 1996. Keen interest Argentina in purchasing JF-17 fighter jets developed by the joint defense venture of Pakistan Aeronautical Complex (PAC) and Chengdu Aircraft Corporation (CAC) of China.  

Economic engagements with this region will be an objective performance indicator for multifaceted partnerships. Pakistan’s economic market is not diversified; it heavily relies on just a few traditional markets and excessively depends on the concentrated nature of export. This is the main reason behind Pakistan’s persistent trade deficit and worsening economic crisis, which is vulnerable to fluctuations in the International financial system.                                       

            Several economic engagements have already been done at multilateral and bilateral levels. In July 2006, Pakistan signed an agreement on a trade framework with the Mercosur trade bloc (the most significant trade bloc in South America founded by Argentina, Brazil, Paraguay, and Uruguay), which was intended to conclude a preferential free trade agreement (PTA). However, no significant progress has been made until today. Pakistan’s shares of trade in the Mercosur bloc are always less than 0.3%, which shows that Pakistan’s trade with Mercosur countries is not significant enough. The following graph shows Pakistan’s bilateral trade with the Mercosur bloc from 2014 to 2018.   

Pakistan-Mercosur Bilateral Trade

Pakistan trades with all South American countries, but the trade volume is low. The table below shows the Pakistan trade trend with this region for the last 20 years (2003-2022).

Countries	Past 20 years Imports of Pakistan from South America ( 2003-2022) USD, Million	% Share	Past 20 years Exports of Pakistan to South America( 2003-2022) USD, Million	% share
Argentina	3016.1	24%	850.36	24%
Bolivia	2.93	0.024%	9.95	0.28%
Brazil	8710.25	71%	1154.07	32%
Cuba	10.23	0.08%	36.01	10.01%
Paraguay	168.16	1.38%	124.04	3.51%
Uruguay	158.89	1.30%	161.12	4.5%
Colombia	54.99	0.45%	735.3	20%
Ecuador	8.46	0.06%	200.46	5.67%
Venezuela	10.89	0.089%	251.82	7.14%
Total Trade Volume	12140.9		3523.13

Source: IMF

Concurrently, The Federation of Pakistan Chamber of Commerce and Industry (FPCCI) has established the Pakistan-Brazil Business Council and the Pakistan-Brazil Business Forum to fortify the trade relations between states and facilitate the business community and investors. Moreover, Pakistan’s trade with South America remains on very few tariff lines: oil seeds (soybean), cotton, Medical instruments and appliances, cereals, sugar, iron and steel articles, and sports manufacturing.

Forgoing in view, it is evident that Pakistan has much more potential to engage with South America than it is currently doing. It will also open new markets and opportunities for the state of Pakistan and its people. To start with, the following is recommended:

1. Public awareness campaigns nationally undertaken by the government to ensure that public and private enterprises utilize the state’s interests in South America. The region is rich in culture and cultural diplomacy by bringing cultural exchange programs and establishing culture center’s to promote tourism, business, and people-to-people connections. 
2. Exchange programs in universities and priority in educational scholarship opportunities on both sides.
3. Soft power methodology can provide the inroads Pakistan needs to develop its trade and other spheres beyond the boundaries dictated by major powers.
4. Pakistan’s leadership must go beyond its frontiers and comfort zone in the region. State leadership-level diplomacy opens new doors for economic and bilateral cooperation.

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