ISLAMABAD: Rising disparity in bilateral trade and revenue losses will be witnessed as both Pakistan and China have reached an agreement to offer zero percent duty on 70 percent tariff lines to each other under the revised Free Trade Agreement (FTA).
A senior official aware of the developments revealed Pakistan and China are expected to sign a deal soon, reported Dawn.
The effort from Pakistan to get unilateral concessions from China failed as China showed reluctance to open its market unilaterally and demanded similar compromises from Islamabad.
This will add to Pakistan’s woes, as it will be divested from customs duty collections. Pakistan suffered losses of Rs32 billion in FY 2016-17 due to duty exemption on imports from China.
Pakistan’s revenue losses could double in case of provision of further exempt duty on imports considering the government is facing challenges on budget deficit front.
In a high-level meeting conducted on Thursday in Commerce Division, all the relevant parties were apprised regarding the details of the deals.
This understanding between the two sides was reached recently in 9th round of negotiations on China-Pakistan FTA in Beijing recently.
The source shared China agreed to requite zero percent duty on 70 percent tariff lines under the second phase.
According to the suggested plan, Pakistan would decrease customs duty to zero percent on 70 percent tariff lines over 15 years, while China would reciprocate the same to it in five years’ time.
Although, the source stated the timelines weren’t finalized and will be debated further.
A written query has been forwarded to the Commerce Division regarding exact number of tariff lines to be offered for duty decreases.
Mohammad Ashraf, Commerce Division Spokesman stated that talks were still being conducted and details would be provided at a relevant time.
The source told Pakistan had been able to safeguard its interest by getting more items of its interest added in the suggested deal.
As per this suggested agreement, China would provide 90 percent tariff lines in value terms of Pakistan’s total exports for duty decrease.
And Pakistan would provide 60 percent tariff lines of total Chinese exports value to the country.
The source added that Pakistan had provided no assurance on levying of regulatory duties on items which come under purview of the FTA.