ISLAMABAD – Pakistan and China have enjoyed an ideal friendship in allspheres, including trade and commerce, since the early days of establishingformal diplomatic relations. However, to boost it further, both countriesopted to sign a Free Trade Agreement (FTA). The first-ever FTA was signedbetween the two Iron Brothers in 2006 and was implemented in 2007.
Trade between China and Pakistan rose to $19 billion in 2018, as bothcountries worked together closely to identify measures to boost Pakistaniexports to China.
The China-Pakistan FTA phase-II was concluded after the 11th round ofnegotiations in April 2019, and was signed during Pakistan Prime MinisterImran Khan’s recent visit to China. The new agreement relaxed tariffs forPakistani exports and gave Pakistan duty-free market access on 313 tarifflines. It became effective from Dec. 1, 2019.
The two countries have completed all legal procedures and formalities tostart the implementation of the agreement.
Pakistan is already enjoying zero duty on the export of 724 products toChina under the first FTA, signed in 2006. After the implementation of thesecond FTA, Pakistan will be allowed to export a total of 1,047 products toChina on zero duty.
Currently, cotton yarn, copper, rice, chromite nephrite, seafood, andethylene alcohol are the main products Pakistan exports to China.
The new FTA will particularly benefit the textile sector, as textileexports to China will become virtually duty-free. Pakistani manufacturerswill also be able to export a number of other items, including leather andagriculture products, as well as confectionery and biscuits, to China.
Pakistan is passing through the worst economic crisis in the last sevendecades. The country’s foreign debt has crossed almost 100 billion USdollars. In fact, the value of Pakistan’s total exports stands at around $20billion, whereas its imports stand at approximately $50 billion. Pakistanfaces a difficult journey to narrow this trade deficit of almost $30billion.
It is believed that the implementation of the second phase of the tradeagreement will provide great relief to Pakistan in overcoming the tradedeficient.
The per capita income in China is around $10,000, while the averageperson’s purchasing power is gradually increasing. Pakistani policymakersgive China the highest importance concerning its target export market.
China is the only country in the world that has organized import expos,proving it wants to import quality products from different countries,including Pakistan. If Pakistani traders actively participate in varioustrade fairs in China to market their goods, they can achieve import ordersat a reasonable price. This, in turn, will continue the positiverelationship between Pakistan and China and help people from both countriestrade with each other.