Pakistan’s trade with South America remains an underexplored avenue, despite the region’s growing economic significance. While Pakistan has actively engaged with traditional partners in North America, Europe, and Asia, its trade volumes with South American Countries have remained modest. According to the data of State Bank of Pakistan, in FY24, Pakistan’s total trade with South America stood at $842 million, accounting for only 0.1% of its global trade. Given South America’s vast consumer market, abundant natural resources and demand for textile and agricultural products, strengthening economic ties could provide Pakistan with much-needed trade diversification and increased exports.
One of the primary challenges in expanding trade with South America is the geographical distance, which increases logistical costs and reduces the competitiveness of Pakistani goods. Freight charges for Pakistani exports to South American markets are significantly higher than shipments to Europe or the Middle East. Moreover, the absence of direct shipping routes further complicates trade logistics. The average shipping time from Karachi to Buenos Aires is over 39 days, making Pakistani goods less attractive compared to competitors from Asia and North America who have shorter supply chains. High shipping costs also add to the challenge, with container freight rates to South America averaging $6000–$8000 per 40-foot container, compared to $2,500–$3,500 for Europe.
Despite these challenges, there are opportunities that Pakistan can leverage. South America’s textile imports alone amounted to over $8.5 billion in 2023, with countries such as Brazil, Argentina, and Chile being major importers. Pakistan, as one of the world’s leading textile producers, could position itself as a key supplier to meet this demand. However, the lack of preferential access remains a significant barrier. Currently, Pakistan does not have a Free Trade Agreement with any South American country, whereas regional competitors such as India and China benefit from bilateral agreements and trade preferences, giving them a competitive edge.
Pakistan has only 6 diplomatic missions in the entire South American region (Argentina, Brazil, Chile, Ecuador and Paraguay)—compared to India’s 33 and China’s 27
Agricultural trade also presents substantial opportunities. Pakistan’s exports of rice, fruits, and processed food products have seen success in multiple international markets, yet remain limited in South America. In 2023, Pakistan exported $7.5 million worth of rice to the region. This highlights the potential for Pakistan to expand its agricultural footprint, provided there is an improvement in trade facilitation, marketing, and regulatory compliance. Latin American states have strict sanitary and phytosanitary standards, and Pakistan must ensure its exports align with these requirements to gain a competitive edge.
Joint investment in soybean production and processing between Pakistan and Argentina can significantly strengthen the agro-supply chain—given Argentina—as one of the world’s largest soybean exporters—exporting $5.2 billion in 2023 (ITC, Trade Map). Collaboration or technology transfer programs in soybean cultivation and crushing facilities would reduce Pakistan’s reliance on expensive imports while ensuring food stability.
Another area with untapped potential is pharmaceutical exports. The South American pharmaceutical market is projected to surpass $39 billion by 2027, driven by increasing healthcare needs and rising incomes. Pakistan’s pharmaceutical industry, which exported $399 million worth of medicines in 2023, can explore partnerships and joint ventures with South American firms to access this market. However, regulatory challenges, such as complex drug registration processes and stringent quality standards, must be addressed through government-to-government (G2G) negotiations.
To strengthen trade relations, Pakistan must prioritise diplomatic and economic engagement with South American nations. The country has limited diplomatic missions in the region, reducing its ability to facilitate business networking and trade negotiations. As of 2024, Pakistan has only 6 diplomatic missions in the entire South American region (Argentina, Brazil, Chile, Ecuador and Paraguay)—compared to India’s 33 and China’s 27. Expanding commercial representation in key South American capitals and actively participating in regional trade fairs and exhibitions can help promote Pakistan’s products and services. Furthermore, leveraging regional trade blocs such as Mercosur—a trade alliance of about S2.7 trillion market—comprising Brazil, Argentina, Uruguay, and Paraguay—could open doors for preferential trade agreements.
Investment in infrastructure and logistics is another critical aspect. Pakistan can explore partnerships with global logistical firms to establish more efficient shipping routes and reduce transit times. Besides, exploring transshipment hubs in Africa or Europe for better connectivity with South America can help lessen logistical constraints. Pakistan must also work on strengthening banking and financial linkages with South America to facilitate trade transactions. The lack of direct banking channels and reliance on intermediaries raise transaction costs and discourage exporters.
Trade policy reforms can play a key role in fostering trade with South America. Pakistan may negotiate preferential trade access or tariff concessions with significant South American economies—while ensuring compliance standards and trade facilitation measures. Pakistan’s trade engagement with South America remains in its infancy, but the growth potential is immense. By capitalising on opportunities in textile, agriculture, and pharmaceuticals, Pakistan can reduce its dependency on traditional markets and establish itself as a competitive player in South America’s trade landscape.