Pak China FTA-II all set to scale up scope for exports

LAHORE: The revised Pak China Free Trade Agreement (FTA-II) is all set to significantly broaden the scope for exports from Pakistan in medium to long term, The News learnt on Thursday.

Out of total 313 tariff lines (TLs) mutually agreed between two all-weather friends under the FTA-II draft, 215 belong to agriculture-based categories having national average yearly export of $7.33 billion.

Chinese import of these items stands at $27.40 billion, more than three times the value of same product lines if compared with similar exports of Pakistan.

According to proposed composition of 313 Priority Tariff Lines (TLs), the agriculture-based categories include 103 tariff lines of garments and made-ups under the head of Articles of Apparel, 28 TLs for seafood, poultry, milk & cream, honey under the head of animal products, 24 TLs for yarn & carpets under the head of textiles, 21 TLs for prepared foodstuff, 20 TLs for leather, 12 TLs for cereals & fruits and 7 TLs for oilseeds, vegetable fats & oils.

The present solid agriculture-based economy of the country can give a head start to tap Chinese market in short- to medium-term.

On the other hand, potential for non-agriculture-based tariff lines seems to be in the medium- to long-term given limited domestic base of these industries. However, sky is the limit for these relatively smaller bases as China’s global imports of such items are more than 24 times of said items’ export from Pakistan.

Out of 313 total proposed tariff lines, non-agriculture-based products are stated to be 98 including 15 TLs for fans, refrigerators, ACs, hydraulic pumps, heat exchange units under head of machinery, 14 TLs for plastic, articles of plastics, 13 TLs for tractors, auto & motorcycle parts under the head of vehicles, 13 TLs for soaps & organic surface active agents, makeup preps, gelatin under the head of chemicals, 12 TLs for cereals & fruits, nine TLs for jewelry, eight TLs for bedding articles, mattresses, electric lamps, 7 TLs for footwear, and 19 TLS under the head of others including electronic accumulators, sanitary ware, manicure/pedicure sets, conductors, cables, cement, glassware, iron & steel.

Almas Hyder, President Lahore Chamber of Commerce and& Industry (LCCI) termed the upcoming signing of revised FTA with China a tremendous opportunity for Pakistani commerce and industry.

“We need to develop products in line with the demand of Chinese market. The sooner we pull our socks up the better to capture significant share in the Chinese market,” Hyder said. While anticipating opening of Chinese market on zero-rated terms, he said, “We have already started process of engaging local companies under a systematic way in order to give them exposure of Chines market”.

“We will take representatives of 200 local companies to China by end of this year to sit with the buyers. This is a long process—right from getting familiar with the Chinese market and developing product lines accordingly. However, at the platform of Lahore Chamber, we have started our efforts,” the trade body official said.

Talking about the role of the government in creating enabling environment, Hyder said lack of financing on attractive terms has been one of the biggest challenges for the local industry. “The interest rate is very high at the moment and government should come forward to provide loans to export industry at cheap rates. The State Bank of Pakistan should also open a special window for providing loans to industry for expansion of capacity,” he said. He was however optimistic about increasing $6-8 billion worth of export to China within next 2-3 years.

Commenting on the free market access for Pakistani product, Muslim Mohamedi, vice president Federation of Pakistan Chambers of Commerce & Industry (FPCCI), said it was a breakthrough as far as increasing stagnating exports of the country with signing proposed FTA with China as it would grant exemption from duties to 313 items at par with other ASEAN countries.

“Indeed, it is great success that seafood sector has also been enlisted in the 2nd phase of Pakistan China FTA,” Mohamedi said.

The FPCCI team succeeded in getting market access for seafood having about 500 million dollars of exports, said Mohamedi, who is also Director, Fisheries Development Board and former chairman of Pakistan Fisheries Exporters Association.

He said the FTA would eliminate the menace of under-invoicing and routing material through third countries. Mohamedi expressed the hope that Pakistani exporters would get better chunk of world’s biggest food market after having duty-free access.