KARACHI – Pakistan, which remains at highly disadvantageous position under the existing ‘Sino-Pak Free Trade Agreement (FTA)’, is likely to propose a uniform tariff and inclusion of greater items in the FTA. Pakistan would propose the neighboring country to include those items from Pakistan into the Sino-Pakistan FTA, which China imports from the ASEAN countries under the China-ASEAN (Association of South East Asian Nations) FTA, sources told Pakistan Today.
As the two neighboring countries are going to revise the FTA shortly, Pakistan, which, under the present trade deficit is at an unfavourable position, would demand some changes in the agreement, they said. According to sources, in order to get more benefits from the existing FTA, Pakistan needed to have more products into the agreement, while creating uniformity in tariff as, unlike the ASEAN countries, Islamabad’s importable products had different tariff criteria.
To avoid the negative implication of the trade with China, the FTA needs to be reconsidered as Beijing is considering some more products/ goods of ASEAN countries which the country, earlier, was importing from Pakistan. According to sources, though, the benefits to ASEAN countries due to this FTA are already visible as ASEAN’s trade surplus with China skyrocketed to $2.7 billion from $300 million last year; Pakistani products were facing tough competition in Chinese market.
“If the Pak-China FTA, which is already more favoring the foreign country, is not revised after the China-ASEAN FTA while demanding some changes in the tariff structure plus increase in the list of trade item in the foreign country, many of the country’s products are feared to lose the important markets in the neighborhood,” experts said. As the cost of doing business is comparatively high due to reasons like electricity/gas shortages and law and order situation, products of ASEAN countries are getting more places due to their lower cost.
According to experts, besides enjoying more tariff concessions than Pakistan, the ASEAN countries are also being benefited by the geographical proximity which provides advantage in freight. Despite the FTA signed by the two countries in January 2006, Pak China trade has still not developed up to its potential. “Though China’s global imports now totaling over $1.0 trillion, Pakistan’s export to China is still short of the billion dollar mark. Moreover, only 3.6 percent of Pak exports are directed to China, despite the proximity of the two countries.”
It is worth mentioning here that Pak-China FTA, which was signed in November 2006, was likely to be revised with required changes this month. The exporters/businessmen were showing their serious reservations over the increasing bilateral trade deficit which has crossed $3.0 billion last year in Beijing’s favour despite the agreement, sources said. China was holding a massive $3.256 billion trade surplus with Pakistan, which was also rising after the signing of the agreement in 2006.
According to the Federal Bureau of Statistics, bilateral trade had grown to $5.563 billion in 2009-10. Beside the FTA, the agreement on services, signed last year, was also providing more market access to Chinese service providers on a preferential basis.
