BEIJING: Pakistan, China trade will get a big a boost with the implementation of second phase of their free trade agreement from Sunday, December 1.
As agreed by the two governments, the second phase of China-Pakistan FTA (CPFTA) is to get implemented from December 2019.
According to China Economic Net, it will be a big way forward to correct balance of trade between the two countries that is currently heavily in favour of China.
The free trade arrangements reflect the desire of the Chinese top leadership to promote their trade ties with Pakistan on equal basis and to have a win-win situation in their economic relationship.
China has agreed for the immediate elimination of tariffs on 313 most priority tariff lines of Pakistan’s export interest giving treatment on a par with ASEAN.
These 313 tariff lines cover over US$ 8.7 billion worth of Pakistan’s worldwide exports and US$ 64 billion worth of Chinese global imports. While this will help to lessen Pakistan’s trade deficit, it also provide a support to the country’s overall economic growth.
In terms of the complete offer made by China, over US$ 19 billion of Pakistan’s exports will be covered, which corresponds to US$ 1.6 trillion of the Chinese global imports.
Read more: Pakistan, China trade volume jumps to $15.6 billion under FTA: Officials
The major products on which tariff have been eliminated are textiles, garments, seafood, meat, other animal products, prepared food, leather, chemicals, plastics, oilseeds, footwear as well as engineering goods including tractors, auto parts, and home appliance machinery, etc. officials told China Economic Net on condition of anonymity.
Increase in the sensitive list from 10% to 25% which comes to 1760 tariff lines and covers 37% of Pakistan’s imports from China. This will give a fair amount of production to Pakistan’s domestic industry from import from China.
The major protected industry includes textiles and clothing, iron and steel, auto, electrical equipment, agriculture, chemicals, plastics, rubber, paper and paper board, ceramics, glass and glassware, surgical instruments, footwear, leather, wood, articles of the stones and plastics and miscellaneous goods.
It’s worth mentioning that the Phase-1 of FTA between the two neighboring countries was signed on 24th November 2006 and became operational in 2007, while negotiations for the second phase of the CPFTA were started in 2011.
After eleven rounds of negotiations, both sides concluded the agreement on April 2019 in Beijing. Under the second phase of CPFTA, Pakistan has secured enhanced and deeper concession on products of its exports interest revision of safeguards mechanism for the protection of the domestic industry, the inclusion of the balance of payment clause as a safety valve against the balance of payment difficulties and effective enforcement of the electronic data exchange.
Moreover, the Chinese side also has agreed to accommodate Pakistan’s request for immediate market access on its priority products, tariff reduction modality based on the principles of “less-than- reciprocity” longer phased out period for tariff reduction and effective safeguard measures for protection of the domestic industry.
