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Ministry initiates second phase of Pak-China FTA talks

By our correspondents
November 25, 2017

KARACHI: The ministry of commerce has initiated sectoral public consultation campaign, as the proposal for the second phase of China-Pakistan free trade agreement is being formulated, which the government wants to keep in favour of Pakistan.


According to a letter issued by the commerce division to all registered trade bodies, a series of meetings with all stakeholders will be held on November 28, 2017 onwards to discuss tariff lines (items), which local businesses are desirous of gaining market access in China.


An official said the government intends to protect the local industry and tariff lines, in which local trade bodies who want to be protected would be proposed to be incorporated in the exclusion list.


Trade associations are advised to convey their recommendations to the ministry, including the tariff lines in which these associations were desirous of Phase-II liberalisation, ie, over the period of 10 to 15 years.


Chinese officials claim after conclusion and implementation of the second phase of China-Pakistan Free Trade Agreement, Pakistan will be able to expand its exports to China with the help of low tariff and attract more Chinese investment in the next five years.


However, officials in the ministry of commerce in Islamabad emphasise the gains for both the sides should be equal at least. Following the FTA, Pakistan’s trade deficit with China widened markedly, surging from $2.9 billion in 2006/07 to $12.7 billion in 2016/17.


Last year, imports from China alone accounted for 36 percent of Pakistan’s global non-oil imports. Earlier, Pakistan and China had agreed to revise the FTA by the end of December 2015; however, Chinese authorities were reportedly unwilling to accept Pakistan’s demand to revive preferential treatment for exportable products under the second phase of the FTA.


As per the original agreed plan, the second phase was supposed to be implemented from January 1, 2014. Local businesses, time and again, have expressed concerns regarding insufficient utilisation of concessions given by China to Pakistan and competition faced by the local industries due to cheap imports from China.


According to a report, Pakistan could not utilise the concessions granted by China under the first phase, as it only exported 253 tariff lines, where average export value was $500 or more, which was around 3.3 percent of the total tariff lines (7,550) on which China granted concessions to Pakistan. Pakistan’s key exports to China were raw materials and intermediate products, such as cotton yarn, woven fabric, grey fabric, etc. Value-added products were missing, despite the fact that some of these products such as garments were included in the concessionary regime.