Pakistan obtains duty free access to 313 Chinese items

ISLAMABAD: Pakistan has obtained favourable duty free access on 313 products to fetch $500 million jump in exports at initial stage with implementation on second phase of China Pakistan Free Trade Agreement (CPFTA).

However, Pakistani authorities are reluctant to share exact estimates that how much import from China would increase after implementation on CPFTA-II at a time when Pakistan’s trade deficit with China stood at $15 billion out of total trade gap of $32 billion.

Adviser to PM to Commerce Abdul Razzak Dawood said that Pakistan would grant incentives to Chinese products on 60 percent tariff lines but it would be fully implemented in next 15 years. “The CPFTA-IIwill be back loaded instead of front loaded. Now there is major change in second phase of CPFTA as Pakistan can now use all safeguard measures to protect its industry in case of finding out Chinese imports hurting our businesses which was not available in phase one of CPFTA. China will share trade data of 95 percent tariff line under EDI (Exchange of Data Information) with implementation of CPFTA-II from April 28, 2019 when both sides would sign on it,” Abdul Razzak Dawood and Chairman Board of Investment Haroon Sharif said while talking to a select group of reporters here on Tuesday.

He said that Prime Minister Imran Khan would attend Belt and Road Forum (BRF) on April 26, 27 and 28 till noon after which the trade and investment forum would be held to promote economic ties. He said that around 130 businessmen would be visiting China on their own expense to establish joint venture where 500 Chinese companies showed their interests to participate into trade and investment forum scheduled to be held at Beijing on April 28 afternoon.

Razzak Dawood said that Chinese imports on 313 products where they granted duty free access to Pakistan stood at $64 billion per annum and if Islamabad could manage its share of 10 percent it could increase its exports by $6 billion.

When asked what Pakistan would provide in return to China under CPFTA-II, he said that CPFTA-II would provide incentives similar to ASEAN countries but now it would be challenge for Pakistani side to compete with Vietnam in terms of quality and price to get its share. The new door of opportunity has opened up and there is yet to see how much benefits Pakistani exporters could grapple in months and years ahead.

When asked about kick-starting on second phase of CPFTA, he said that the cabinet would grant approval today so the deal was done from our side. It is not yet known how much times the Chinese side will take to complete all procedural requirements, he added.

He said that Pakistan made request to China in last September 2018 to provide duty free access on 313 items but in November they were unwilling to accept our request. “Now they have agreed to accept Islamabad’s request that is not specific to textile only,” he said and added that the duty free access provided on leather, chemicals, furniture, auto parts, plastic, surgical goods, woods, washing machines, sea food, meat and home appliances etc.

He said that the safeguard measures were not part of phase one of CPFTA so Pakistan made request to correct the safeguard measures. Now Pakistan can protect interest of its industry if found free trade agreement was hurting any specific sector, he added.

He said that all businessmen got worried when Pakistan had signed first phase of free trade agreement with China because no consultation was done at that time. But they kept all stakeholders on board and even included last minute request from chemical sector to get incentives on their raw material, he maintained. He said that overall imports slashed down by $3.5 billion and bulk of imports was coming from China so it reduced proportionally. He said that he got disappointed with the performance of exports in March 2019 but showed his confidence that it would pick up in coming months.

Chairman Board of Investment Haroon Sharif said that the concession agreement for establishment of Special Economic Zone (SEZ) at Rashakai done as 22 Chinese companies showed their interest to invest in Pakistan. He said that there were around 100 companies from different parts of the world but there was a need to spare lands for potential investers along major cities of the country.