By Muhammad Luqman
Pakistan and China have agreed to revise the bilateral trade agreement under which Pakistani exporters will get the same tariff concessions China gives to its trading partners in the ASEAN region.
The amended China-Pakistan Free Trade Agreement (CPFTA), which was initially signed in 2006, is expected to be signed next month in Islamabad, officials of Pakistan’s Commerce Ministry said.
The negotiations to revise the trade pact were launched in 2012 in an effort to address the rising imbalance in bilateral trade. The trade deficit between the two countries rose from $4.7 billion in fiscal year 2014-15 to $8.9 billion in 2016-17, according to the State Bank of Pakistan data.
During the first six months of the current fiscal year, Pakistan imported goods valued at more than $5.4 billion from its largest trading partner but exported back goods worth $0.78 million only.
Pakistan believes the huge deficit is due to the import of machinery from China for the CPEC-related projects.
Another factor which impacted Pakistan’s exports to China was the duty concessions granted by China to ASEAN countries.
China’s decision to give preferential treatment to Asia Pacific countries eroded the competitive and preferential advantage that Beijing had committed to Pakistan. The goods that were subject to 3% custom duties on import from Pakistan to China can be imported from the Pacific neighbours by Chinese people at zero duties.
During the ninth round of negotiations on China-Pakistan FTA held in China on February 7-8, the Pakistani delegation led by Secretary Commerce Mohammad Younus Dagha presented the demands of Pakistani exporters and industries for accommodating in the final draft of the CPFTA.
The demands included those from exporters to provide tariff concessions equivalent to the ASEAN countries. The Pakistani side also suggested incorporating clauses for safeguarding the industries and the economy from any undue pressure on the balance of payments position.
China also agreed on electronic data exchange which will help reduce chances of under invoicing, another major concern of Pakistani industry.
