Ministry of Commerce (MoC) has taken the suggestions of traders with regards to the revision of Pakistan-China Free Trade Agreement (FTA) which will be carried out this year. In a meeting held recently at the head office of Trade Development Authority of Pakistan (TDAP), the ministry has taken the views and suggestions over the proposed amendment in the existing Sino-Pak FTA to create at least some balance in bilateral trade, which, under the present form, is highly in favour of China. The trade volume after the FTA has grown but China presently garners the lion share of overall trade exporting $7.5 billion worth of goods. In comparison, Pakistan only exports a paltry $1.2 billion the other way.
Efforts were made to ensure further preparation from the Pakistani side to present a stronger case in the forthcoming second round of dialogue on FTA (Phase-II) to be held in China this month, sources said. A delegation of MoC representatives and customs officers was also scheduled to visit China in June 2011, sources informed. It is worth mentioning that the first round of talks for FTA Phase-II was held in March 2011 in Islamabad. The FTA between Pakistan and China was implemented on January 1, 2007 and was expected to expire by the end of this year.
According to sources, the traders/exporters were of the view that Pakistan under the present form of the FTA has been on the losing side as it has caused an influx of Chinese goods in local markets due to shortsightedness of the concerned authorities. A major example of the agreement’s negative impact was an import of over 9 million cellular phones from China without regulatory duty. These widely used Chinese cellular phones were causing a drastic reduction in income made through regulatory duty applied on other phone sets of various companies from different countries.
However, some experts also gave an alternative perspective on the trade imbalance by pointing out that the FTA with China is grossly tilted in its favour due to the competitiveness of its manufacturers. “No one had thought that cell phones made in China would capture a large portion of the local market when the FTA was signed a few years back,” they added.
According to sources Islamabad wants to amend and revise the agreement in its favour as bilateral trade between the two neighbouring countries is largely imbalanced. Under the proposed revision for the agreement, sources said, Pakistan was willing to include a list of new items for exports to enhance its trade share. The list was prepared by the ministry and presented to Chinese authorities included over 250 items like fish products, milk and
dairy products, vegetables, fresh and dry fruits, poultry items, paper and those textiles items which China does not currently import from Pakistan. Other topics of discussion will include an offer and a negative list. A negative list would also be shared between the two countries which will consist of items that would not be traded, sources added. China has already denied a unilateral trade concession to Pakistan as the mentioned concession could only be given to Least Developed Countries (LDCs). Thus, the Pakistan can only request its neighbouring nation to allow the import of those items which it currently imports from other countries, especially ASEAN nations under the China-ASEAN FTA. However the China has given a positive gesture to Pakistan’s latter demand for inclusion of new items in the existing Pak-China FTA under existing duty criteria, sources claimed.
Apart from FTA related issues, the two countries are also celebrating their friendship year in 2011 by organising various business related activities, aimed to further promote bilateral trade. Traders and businessmen from both sides were also attending various exhibitions and trade shows scheduled to take place in Beijing and Islamabad.
Trade imbalance to be taken up with China
