Home Business FTA Phase-II sets in motion correcting China-Pak trade imbalance

FTA Phase-II sets in motion correcting China-Pak trade imbalance

FTA Phase-II sets in motion correcting China-Pak trade imbalance

Observer Report


Business community of Pakistan and China believes that the 2nd phase of Free Trade Agreement (FTA) has set in motion the long-standing need of correcting balance trade between the two brotherly countries.
According to a report published by China Economic Net on Thursday, the business community hoping that their expors to China will have an upward trend during the year. The volume of trade has been heavily in favour of China over the years
In spite of the fact that there is a long and strong friendship between the two countries, Pakistan was lacking behind in trade and business relations as compare to China’s other trade partners. This aspect has been tried to resolve with the signing of second phase of free trade agreement between China and Pakistan (CPFTA). Now exporters would have to avail this opportunity to best of their abilities.
Pakistan was already enjoying zero duty on export of 724 products to China under the first phase of FTA signed between the two countries in 2006. After the implementation of the CPFTA Phase 2, Pakistan has been allowed to export a total of 1047 products to China on zero duty.
Under CPFTA-II China has eliminated tariffs on 313 tariff lines, giving Pakistan benefits at par with those of ASEAN countries. These 313 items include textiles, engineering, chemicals, leather, food items, meat, and fisheries besides other which comprise the major chunk of exportable items of Pakistan.
The tariff structure offered to Pakistan under CPFTA-2 is a marked improvement over CPFTA-1. On over 80 per cent of the CPFTA-2 product lines that China imports, Pakistan is now offered tariffs that are lower than or equivalent to China’s main trade partner.
Therefore, In the long-term, Pakistan can enhance its exports to China up to US$ 10 billion in the next few years as the volume of Chinese import market is around US$ 64 billion.
Talking to a seminar on CPFTA organized by Ministry of Commerce and TDAP recently, Advisor to the Prime Minister for Commerce, Textile, Industry & Production and Investment Abdul Razak Dawood also highlighted that the CPFTA Phase II can be weighed as better negotiated than the previous phase due to enhanced protection given to businessmen and will help Pakistan increase its exports and slash down the trade deficit
The Phase-II of CPFTA not only caters towards protection for our domestic industry through tariffs on domestically produced products but also provides an additional safety valve through inclusion of more robust safeguard measures and the inclusion of the Balance of Payments clause.
The safeguard measures for the local businesses and industries had elapsed under the CPFTA Phase-I. The Ministry of Commerce has therefore successfully revised the safeguard remedial measures under the Phase–II of CPFTA implying that our industry will have a maximum protection of 23 years against an imports surge that may cause injury or threaten to cause injury to the industry.
The measures also allow us to put in place provisional safeguards for 160 days before even proving the injury or the threat to the injury. Balance of Payments clause under the Phase-II has now been introduced, which was a miss in the Phase-I, it would now allow a partner country in a balance of payments difficulty to raise tariffs in a bid to control imports.
Electronic Data Exchange (EDE) of the trade data between Pakistan and China would help in curbing reducing misreporting & under-invoicing of imports from China.


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