Pakistan has failed when it comes to trade with China

Commerce ministry reviewing first phase of FTA, finds country exported in 253 out of total 7,550 tariff lines


Peer Muhammad June 25, 2016
Commerce ministry reviewing first phase of FTA, finds country exported in 253 out of total 7,550 tariff lines. PHOTO: REUTERS

ISLAMABAD: Pakistan has been unable to fully tap and utilise the concessions granted by China under the China-Pakistan Free Trade Agreement (CPFTA) and only used 3.3% of the total tariff lines, said a review of the first phase of CPFTA.

According to official sources, the Ministry of Commerce is reviewing the first phase of the CPFTA, which revealed that Pakistan could only export in 253 tariff lines out of the total 7550, where average export value was $500.

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“Pakistan mainly exported raw materials and intermediate products such as cotton yarn, woven fabric and grey fabric while value-added products were completely missing,” they said. “This is why Pakistan has not benefitted from the CPFTA. Some of the value-added products like garments are included in the concessionary regime.”

The officials said that Pakistan shared its concern regarding the insufficient utilisation of concession and competition faced by the local industries due to cheap imports from China. They said it was agreed that the tariff reduction modalities of the second phase would be designed in a way to accommodate all the genuine concerns of both countries adequately.

Pakistan and China are already negotiating for the second phase of Pak-China FTA since 2011, however, Minister for Commerce Khurram Dastgir recently said that the negotiations had been halted as Pakistani businessmen were protectionists and Chinese wanted more liberalisation.

The CPFTA on trade in goods was signed on November 24 2006 and implemented on July 7, 2007. The FTA on trade in services was signed on February 21, 2009 and in operational since October 10, 2009.

Under the Trade and Service Agreement, Pakistan will open the first banking channel of Habib Bank Limited in China by the end of this year and the Chinese authorities have already given the approval by relaxing the reserve limit from $20 billion to $15 billion.

Is Pakistan really a dream destination for China?

Bilateral trade volume, which amounted to $4 billion in 2006-7, reached an all-time at $12 billion in 2014-15. Pakistan’s exports jumped to $2.1 billion in 2014-15 from $575 million in 2006-07. Correspondingly, China’s exports to Pakistan increased to $10.1 billion in 2014-15 from $3.5 billion in 2006-07.

Pakistan’s major exports to China are cotton yarn/fabric, rice, raw hides and skins, crude vegetable material, chemical material, fish and fish preparations and crude mineral. Major imports from China are machinery (all sorts) and its parts, fertiliser manufactured, chemical element, yarn and thread of synthetic fibre, iron and steels, chemical material and product, vegetable and synthetic textile fibre, road vehicles and their parts, non-ferrous metals, tyres and tubes of rubber.

Published in The Express Tribune, June 26th, 2016.

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COMMENTS (16)

bharat | 7 years ago | Reply Had the Kashmir issues been solved,trade would have been no issue but since Kashmir is not solved, trade continues to remain low and weak
Sunil | 7 years ago | Reply Apart from meat, agricultural, some mined stuff and Jihad. What value added, hi-tech, services, etc. do you have to offer China or the world?
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