ISLAMABAD – China is likely to make Pakistan an additional offer worth $1billion in exports under the revised Free Trade Agreement, it has beenrevealed.
China is likely to extend unilateral concessions to Pakistan in rice, sugarand yarn contingent on the successful conclusion of second phase of FreeTrade Agreement (FTA), well informed sources told *Business Recorder.* The10th round of China Pakistan Free Trade Agreement (CPFTA) is expected to beheld during second week of February 2019 for which agenda is beingfinalised at the highest level, the sources added.
First phase of CPFTA has been completed in 2012 and the two sides arepresently negotiating the second phase for further trade liberalization.Private sector stakeholders are confident that China would allocate a quotafor rice, sugar and yarn for Pakistan prior to finalization of second phaseof FTA. However, officially confirmation of this plan was not available.
Pakistan has urged China to extend unilateral concessions on its priorityexport items to restore eroded Margin of Preference (MoP) which was theresult of subsequent China FTA’s with other countries especiallyAssociation of Southeast Asian Nations (ASEAN) in 2011. Pakistan has alsorequested China to increase quota of rice and yarn in addition to inclusionof sugar in FTA-II.
“Things are not yet clear, but such matters are being discussed at thehighest level,” said an official.
Experts maintain that allocation of quota by any country to a tradingpartner is a clear violation of World Trade Organisation (WTO) rules andtherefore no country can extend a benefit to any other country as per theserules. However, insiders argue that any concession from China with respectto market access would be linked to successful finalization of second phaseof FTA.
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Pakistan has underscored the need for a win-win situation for bothcountries in the second phase as the outcome of the first phase has beenasymmetrical resulting in huge trade deficit.
Last year while discussing second phase of FTA, the two had reached aconsensus that each country shall eliminate 75 per cent of its tarifflines, covering 67 per cent of Pakistani import value from China and 90 percent of China’s import value from Pakistan and would respectively conductpartial tariff reduction on another 5 per cent of tariff lines; and partialreduction would consist of 3 sub-categories: (i) Margin of Preference (MoP)20 per cent in force on the day that the second phase CPFTA comes intoforce; (ii) MoP 20 per cent in force on the first day of 2022; and (iii)MOP 15 per cent in force on the day that the second phase CPFTA comes intoforce.
During the first official of Prime Minister Imran Khan in November 2018 toChina, matters related to trade and investment cooperation were discussed.The two sides noted the growing volume of bilateral trade and agreed totake concrete measures to address trade imbalance that would includeexchange of trade missions, broadening market access and simplifyingcustoms, quarantine and phytosanitary procedures.
Pakistani team headed by Secretary Commerce discussed the share of eachitem of Pakistan’s interest with Chinese officials within the offeredcushion of $ 1 billion or $ 1.2 billion per annum exports while China’sexports to Pakistan are around $15 billion.
