FTA bearing fruit: Bilateral trade volume grows, still in favour of China

From $6b in 2006, volume has increased to $16b.

ISLAMABAD: The Free Trade Agreement (FTA) signed between Pakistan and China has shown positive results as the bilateral trade volume increased from around $6 billion in 2006 to $16 billion in 2014.          

The China-Pakistan Free Trade Agreement (CPFTA), which was inked in 2006 and enforced in 2007, brought maximum opportunities for businessmen and consumers of the two countries.

Pakistan was the first developing country, which signed the FTA with its time-tested friend to boost its economy. The agreement comprehensively covers trade in goods and services along with investments.

Currently, the balance of trade tips in favour of China but efforts are being made to increase exports and decrease imports, said sources in the Ministry of Commerce.

The sources added that negotiations between the two countries were continuing regarding the second phase of CPFTA. Four meetings have already been held in that regard.

Under this phase, the agreement would not cover matters on reciprocal basis rather Pakistan would get more incentives than China, they added.

The sources said the two sides were focusing on more incentives for Pakistan to make up the losses it suffered due to dumping of cheap Chinese products in its markets.

During the last round of talks, Pakistan suggested to reducing duties to zero on not more than 50% of products immediately which was less than 90% as agreed earlier. Additionally, China offered tariff reduction to zero on 70% of products immediately and on the remaining 20% gradually in the next five years.

According to the agreement, Pakistan and China had also agreed to open branches of each other’s banks on their soil, the sources said.

With the opening of Pakistani banks in China, it is expected that a substantial amount of money would move through them, raising not only the country’s foreign exchange reserves but also help boost its economy and gross domestic product (GDP) growth.

Chinese investment for the China-Pakistan Economic Corridor would also be channelised through these Pakistani banks.

Published in The Express Tribune, April 19^th, 2015.

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