ISLAMABAD: As China has agreed to resume talks for phase-II of Free Trade Agreement (FTA) with Pakistan to slightly balance the highly imbalanced bilateral trade, formal negotiations for FTA-II are going to start in China on Wednesday.
Commerce Secretary Muhammad Younus Dagha and others officials will participate in the negotiations from Pakistan’s side.
If the demands from Pakistani side are accepted, Islamabad’s exports to China would increase by $ 3 billion making the total exports to the neighbouring country $ 5 billion against the huge imports of $ 12 billion, sources told Pakistan Today.
“Though balancing the bilateral trade is not apparently possible keeping in view the increasing imports from China especially after the progress on China-Pakistan Economic Corridor (CPEC) projects, Pakistan will request China to give maximum access to its products in the Chinese market,” said the sources.
China had recently offered to re-initiate the stalled talks on FTA-II in February 2018. Both the sides have so far failed to strike an agreement over the second phase of duty reduction under the FTA despite a lapse of three years. As per the original plan, the second phase was supposed to be implemented from January 1, 2014. Both countries started negotiations for the second phase in 2011. However, both the sides successfully concluded the 8th round wherein a breakthrough was achieved in the shape of China’s assurances to favourably address Pakistan’s concerns in phase II. Pakistan side was able to convince Chinese side to revise the bilateral safeguard chapter of FTA, which would be helpful in protecting the local industry against the import surge from China.
The government is optimistic that the upcoming 9th round of Pak-China FTA-II would be meaningful. “The preparatory work for the next round is on track and the two sides are frequently consulting each other to reach a mutually beneficial early conclusion. In order to firm up Pakistan’s position, the Ministry of Commerce has held wide-ranged consultations with public and private sector stakeholders, including sectoral associations, chambers, relevant ministries and government departments and in turn the negotiations with the Chinese are moving ahead as planned,” said an official handout released by the Ministry of Commerce.
Pakistan is presently facing a $ 10 billion trade deficit with China, as imports from China are around $ 12 billion, whereas Pakistan’s exports to China are only $ 2 billion.
Chinese Ambassador Yao Jing had recently claimed that the actual difficulty in balancing trade was the identification of import items from Pakistan. He was of the view that China could extend every relaxation in tariff but ensuring that other agreements signed by China with different countries are not violated or undermined is also important.
According to a statement of Pakistan Business Council (PBC), Pakistan could export an additional $ 3.3 billion worth of goods to China if the country manages to get tariffs reduced to zero on certain goods under the FTA.
In this regard, the PBC has shared a list of top 25 products with the Ministry of Commerce, suggesting the government to secure zero tariffs on these goods in negotiations with China in the second phase of the FTA. According to the PBC, Pakistan can increase exports of rice, textiles, seafood, footwear and leather products to China.
