Pakistan, China agree to open bank branches

ISLAMABAD: Pakistan and China Thursday agreed to soften requirements for establishing braches of banks in each other’s country.
As per understanding reached between the two countries, for establishing a branch, asset requirement would be reduced to $15 billion from $20 billion for all Pakistani banks, at end of the year prior to the submission of application. The Pakistani banks can also open their businesses in RMB (Chinese currency) after one year of their business in China which was previously three years and the requirement for having been profitable for two consecutive years prior to the application been removed.
The decision to this effect was made in the third meeting of the second phase negotiations of China-Pakistan Free Trade Agreement (CPFTA) here on 6th, 7th and 8th January, 2015.Pakistani delegation was led by Additional Secretary-I, Ministry of Commerce, Pakistan, Robina Ather. Deputy Director General, Ministry of Commerce, China, Yao Wenliang led the Chinese delegation.
The negotiations made a great headway in the banking sector as the two sides agreed to soften up the requirements for establishment of branches of banks in each other’s country.Presently, the inward remittance/LC is routed through foreign banks. Once the Pakistani banks are opened in China, the financial transactions would be routed through our own banks. It is expected that a substantial amount of money would move through our own banks which will benefit not only the reserves in the country but would also help in expansion of the economy and GDP.
The Chinese investments for the Economic Corridor will be channelised through Pakistani banks. It is expected that the current account deficit would be curtailed to substantial levels which would be an enormous achievement through this FTA of the Ministry of Commerce.
Working Group on Customs shared some information on modalities of establishing Customs electronic data exchange related to the implementation of CPFTA. Both sides agreed that this Working Group would have first face-to-face meeting in January 2015 in Beijing. The group would mutually agree on the frequency of the meetings and present their recommendations in the next meeting of CPFTA. On the basis of the information shared, it is expected that the above online system can be launched in 2016.
On matters of Sanitary and Phytosanitary (SPS)/Technical Barriers to Trade (TBT) and Mutual Recognition Agreement (MRA), both sides agreed that SPS and TBT Committees which had already been referred under Articles 34 and 41 of CPFTA might be made functional. It was further agreed that both sides would exchange the names of focal persons and relevant departments by the end of January 2015 and a SPS and TBT Committee meeting might be held before the next CPFTA meeting. Chinese side also agreed to consider Pakistani exporters’ concerns regarding the inspection and quarantine process of Rapeseed Meal and Canola Seed based on Pakistan’s cooperation.
It was noticed that the trade figures quoted by both sides differed greatly. Both sides agreed that a study might be conducted respectively to find out the reasons for this discrepancy and the outcome of the study would be shared by the end of January 2015.
In evaluating the first phase of CPFTA, both sides raised concerns regarding insufficient utilisation of concession, influence to local industry as a result of concession and misuse of certificate of origin which could be addressed in the second phase.
Based on the understanding that the Tariff Reduction Modalities (TRMs) of the second phase of CPFTA will be independent of the first phase TRM, both sides offered their respective TRM schedule. It was agreed that offers would be discussed further in the next meeting of the CPFTA negotiations scheduled to be held at the end of March 2015 in Beijing. Both sides agreed to try their level best to narrow down the gap between both TRMs. Both sides also agreed to further analyse these offers including the trigger mechanism for special safeguard measures and give their recommendations by mid-February 2015.It was agreed to establish a Working Group on trade in services and investment, which would meet with the next CPFTA meeting, scheduled to be held at the end of March 2015.