Pakistan, China ratify second phase of free trade agreement

KARACHI: Pakistan and China on Sunday signed the second phase of a free trade agreement (CPFTA-II) providing Pakistani products duty-free access to 90 percent of the Chinese market and adding a protection mechanism to correct a lopsided trade balance.
Under the first phase of the trade deal which came into effect in 2007, Chinese exports to Pakistan grew from $4.2 billion to around $12 billion, whereas Pakistan’s exports to China only moved up marginally from $0.6b billion to $1.6 billion. Without trade or import safety measures in the first phase, Pakistan lost more than Rs32 billion due to free trade agreement imports from China, according to the Pakistani Federal Board of Revenue.
On Sunday, officials of the two countries signed a revised trade agreement in the presence of Prime minister Imran Khan and his Chinese counterpart Li Keqiang at the Diaoyutai State Guesthouse in Beijing.
“With the signing of the second phase of the FTA, China has opened its doors to more than 300 products from Pakistan,” Haroon Sharif, the chairman of Pakistan’s Board of Investment, told Arab News via telephone from Beijing. “Pakistan has also taken special measures to protect its local industry from the adverse inflow of Chinese good.”
The list of Pakistani products includes textiles, chemicals, food items, footwear and plastics.
“Pakistan and China have agreed to 75 percent tariff lines for duty-free access,” Khan’s Adviser on Commerce Abdul Razak Dawood said while talking to the media after the ceremony. “The country’s exports to China in the next five years will increase by $6.5 billion.”
According to the Pakistan Chambers of Commerce and Industry, bilateral trade volume between Pakistan and China stood at $19.14 billion 2018, with only $2.18 billion in exports.
Pakistani exporters have long asked for the same conditions for Pakistani goods that China has granted ASEAN nations. Volume of trade between China and ASEAN countries reached $514.8 billion, with a year-on-year increase of 13.8 percent, in 2017.
On Sunday, PM Khan also met with the chairman of Huawei Technologies and requested him to support Pakistan in setting up artificial intelligence centers and shift some of its assembly lines to Pakistan, Haroon Sharif said.
Apart from the revised trade pact, Pakistan signed 16 memoranda of understanding (MoUs) and agreements with China, including to set up the first cloud center in Pakistan for the finance and media industry in collaboration with Huawei Technologies and Airlink Communication.
A theatrical distribution agreement was also signed between M&D Films Pakistan and Fire International Media of China for the release of a film, Parwaz Hay Junoon.
Similarly, a financial agreement between HUBCO and Thalnova for the development of a 330MW coal power plant in Thar Block 2 was also signed at a ceremony held at the end of the three-day-long Road and Belt Forum.