Pakistan in a weak position in FTA with China

Published: August 11, 2018
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The exporters, who export raw material in the form of cotton and yarn, have been criticised for their inability to export finished and value-added goods.

PHOTO:REUTERS

The exporters, who export raw material in the form of cotton and yarn, have been criticised for their inability to export finished and value-added goods. PHOTO:REUTERS

Although China calls Pakistan and itself iron brothers, when it comes to trade, Pakistan stands at a weaker position in comparison to India, which is Beijing’s adversary in regional politics but has a better free trade agreement (FTA).

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) held a nationwide online roundtable conference on Pak-China FTA in an effort to prepare itself for a meeting with Asad Umar, the man tipped to be next finance minister.

The conference was attended by representatives of the business community, academia and government departments.

It was briefed that Pakistani exporters had been struggling to make their presence felt in China because their competitors were enjoying zero-rated tax, which left Pakistani goods uncompetitive.

The exporters of Pakistan mainly lose competitive edge in the case of Association of Southeast Asian Nations (Asean) which has a very strong FTA with China and its products are taxed at a lower rate than Pakistan’s.

Therefore, a huge chunk of Pakistan’s textile exporters has been forced to export raw material to Asean member countries like Vietnam, which exports finished goods to China. Exports through this channel are less costly and competitive in Chinese markets.

The exporters, who export raw material in the form of cotton and yarn, have been criticised for their inability to export finished and value-added goods.

Pakistan to get benefits worth $200m 

FPCCI Director Research Dr Bilal Ahmed said Pakistan ranked 16th on the list of China’s export partners while it stood at 61st position in its import partners. According to Ahmed, even countries like Kenya are ahead of Pakistan in the exporters’ list.

FPCCI’s Standing Committee on Banking Chairman Mirza Ikhtiar Baig, who led the roundtable talk, told The Express Tribune that the business community had great reservations about Pakistan’s FTA with China.

“It seems that the FTA was struck in haste and we believe that there’s immense need to revisit it,” said Baig. “We will prepare recommendations after the roundtable talk, which we will discuss with Asad Umar.”

China eager to expand FTA with Pakistan

The FPCCI expects to meet Umar after August 15.

He highlighted that Pakistan’s imports from China stood at a whopping $18 billion while exports were a meagre $2 billion, which tilted the balance highly in favour of China by a massive $16 billion.

The moot was told that even India had a better FTA with China under an agreement called Bangkok Agreement, which had now evolved into the Asia-Pacific Trade Agreement. Bangladesh, China, India, Laos, Mongolia, South Korea and Sri Lanka are part of this agreement.

Pakistan delays FTA-II signing with China at eleventh hour

There was a consensus during the conference that if Pakistan was unable to strike a revised FTA with China similar to that of Asean, then the country should avoid doing free trade with Beijing altogether. It would save domestic industries.

Published in The Express Tribune, August 11th, 2018.

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Reader Comments (5)

  • rk singh
    Aug 11, 2018 - 10:02AM

    Pakistan should stop this charade of friendship with China before it is too late. Otherwise it will be colonized by them. Pakistan never seems to realise who their well wishers are.Recommend

  • Zaida Parvez
    Aug 11, 2018 - 11:41AM

    Pakistan should sign FTA with China at the earliest !!
    This is the only way to prosperity.Recommend

  • confused
    Aug 11, 2018 - 11:51AM

    What’s new about it? haven’t most of our friendships been marred with similar one sided burdens? Pakistanis to prove their resilience to the world have forgotten that there is a limit to everything including their resilience. Mr. Imran Khan’s government must review all such one sided agreements and renegotiate them keeping Pakistan’s national interest supreme. Recommend

  • BrainBro
    Aug 11, 2018 - 12:01PM

    There isn’t any position. China rules. Recommend

  • Insafi
    Aug 11, 2018 - 4:27PM

    In international negotiations, you need to have something to give to get something back. Pakistan has nothing to bargain with except the land and location.Recommend

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