ISLAMABAD – Pakistan and China, on Thursday, started negotiations on the second phase of the Free Trade Agreement (FTA), with the aim of reducing Pakistan’s trade deficit in bilateral trade and tariff concessions. The first phase of the FTA would conclude on December 31, 2012 and respective organisations of the two governments have started talks to finalise modalities for the second phase – to be implemented from January 2013. The current discussion would focus on devising a comprehensive plan to encourage exports from Pakistan to China and help reduce the huge trade gap between the two neighboring countries.
Although the trade between the two countries has grown after signing of the FTA, however, the balance is very much in favour of China, exports of which have increased by an annual 36 percent. The overall trade between the two countries, in 2010, was $8.67 billion, showing an increase of 28 percent, said Chinese Ministry of Commerce Deputy Director Zhu Hong, while addressing the inaugural session. Out of the total trade, Chinese exports to Pakistan stood at $6.9 billion, showing an increase of 36 percent while its imports from Pakistan were recorded at $1.78 billion, showing an upward trend of 37 percent, Zhu Hong added.
He said that tariff concessions would be negotiated for the second phase of the FTA to help Pakistan boost its exports to China. He said that both countries would take steps to further enhance their bilateral trade and the friendship, adding that China attaches great importance to bilateral trade. According to sources from the Ministry of Commerce, both parties would endeavor to eliminate tariffs of no less than 90 percent of products, both in terms of tariff lines and trade volume within a reasonable period of time.
Earlier, speaking on the occasion, Ministry of Commerce Senior Joint Secretary Rehmatullah Khan said that Pakistan was passing through difficult times following the war on terror, recent floods and the global economic meltdown that had impacted country’s exports. He highlighted the importance of evaluating implementation of the first phase of FTA to ensure that the second phase of the agreement improves efficiency and helps provide greater benefits to both countries. He said that increasing trade volume was a healthy sign, adding that exports from Pakistan have reached to $1.5 billion while the overall trade would touch $10 billion.
He, however, showed concern over the increasing trade deficit of Pakistan in bilateral trade and stressed the need for enhancing Pakistan’s exports to China. He maintained that negotiations of the second phase would focus on this important issue. Pakistan and China signed the Free Trade Agreement (FTA) in June 2006 – which came into implementation from July 2007. The FTA was aimed at reducing tariffs on each other’s imports in two phases.
