Talks with China: Pakistan unlikely to make more tariff reduction
Second phase of talks under free trade deal begins with Beijing.
Second phase of talks under free trade deal begins with Beijing. STOCK IMAGE
ISLAMABAD:
As the second phase of talks began under the China-Pakistan Free Trade Agreement, Pakistan would resist the demand for more tariff concessions after its many industries became uncompetitive due to the relaxation given in the first round of talks.
The free trade agreement that came into force in 2006 has kept the balance of trade in favour of China while Pakistan could not fully enjoy the preferential treatment due to Beijing’s similar trade agreements with Asia-Pacific countries.
After the first phase, China desired that Pakistan should implement the second phase that would allow its exporters concessions of up to 90% of total tariff lines, said an official of the Ministry of Commerce, who was part of the negotiations.
He said Pakistan would prefer to invoke Article 8 of the treaty under which tariff reduction would be offered on selected product lines instead of general concession on all imports.
If Pakistan implements the second phase, as desired by China, its textile sector will become uncompetitive. Many industries have already been wiped out over the last six years as domestic markets are flooded with cheap and low-quality Chinese products. As a result, the balance of trade has heavily been in China’s favour.
Furthermore, there is difference of opinion over the size of bilateral trade. The volume is said to be in the range of $10 billion to $14 billion as Pakistani importers show a lower value of their goods in an attempt to evade taxes and duties.
The first round of three-day talks between Pakistan and China was held on Tuesday to assess the developments that had taken place in the wake of the FTA and propose necessary changes for the benefit of the two countries. Pakistan is expected to adopt a tough stance in order to avoid further damage to the economy from free trade.
This was the third meeting of the second phase of negotiations in which Pakistan’s delegation was headed by Ministry of Commerce Additional Secretary Robina Ather and accompanied by officials of the Federal Board of Revenue, Ministry of Industries, Ministry of Textile Industry and Ministry of National Food Security and Research.
A 10-member Chinese delegation was headed by Yao Wenliang, Deputy Director General of the Ministry of Commerce.
Pakistan expressed concern over the dilution of the margin of preference due to China’s free trade accords with other countries, especially members of the Asean grouping, according to a handout issued by the ministry.
It added the cost of exemption that the national exchequer had to bear due to the tariff concessions also came under discussion. Pakistan conveyed concerns of the domestic industry, which had to compete with Chinese products despite a persistent energy crisis in the country.
The Ministry of Commerce also voiced concern over insufficient utilisation of the facilities provided under free trade in which only a few sectors had been able to reap the fruits of preferential tariffs.
Pakistan emphasised the importance of broadening the export base by encouraging exports from all sectors, which were covered under free trade and sought to enhance facilities and concessions on high value-added products.
Both sides agreed that the concerns of each other would be taken into consideration with a thorough review of the FTA provisions and the possibility of readjustment.
Published in The Express Tribune, January 7th, 2015.
As the second phase of talks began under the China-Pakistan Free Trade Agreement, Pakistan would resist the demand for more tariff concessions after its many industries became uncompetitive due to the relaxation given in the first round of talks.
The free trade agreement that came into force in 2006 has kept the balance of trade in favour of China while Pakistan could not fully enjoy the preferential treatment due to Beijing’s similar trade agreements with Asia-Pacific countries.
After the first phase, China desired that Pakistan should implement the second phase that would allow its exporters concessions of up to 90% of total tariff lines, said an official of the Ministry of Commerce, who was part of the negotiations.
He said Pakistan would prefer to invoke Article 8 of the treaty under which tariff reduction would be offered on selected product lines instead of general concession on all imports.
If Pakistan implements the second phase, as desired by China, its textile sector will become uncompetitive. Many industries have already been wiped out over the last six years as domestic markets are flooded with cheap and low-quality Chinese products. As a result, the balance of trade has heavily been in China’s favour.
Furthermore, there is difference of opinion over the size of bilateral trade. The volume is said to be in the range of $10 billion to $14 billion as Pakistani importers show a lower value of their goods in an attempt to evade taxes and duties.
The first round of three-day talks between Pakistan and China was held on Tuesday to assess the developments that had taken place in the wake of the FTA and propose necessary changes for the benefit of the two countries. Pakistan is expected to adopt a tough stance in order to avoid further damage to the economy from free trade.
This was the third meeting of the second phase of negotiations in which Pakistan’s delegation was headed by Ministry of Commerce Additional Secretary Robina Ather and accompanied by officials of the Federal Board of Revenue, Ministry of Industries, Ministry of Textile Industry and Ministry of National Food Security and Research.
A 10-member Chinese delegation was headed by Yao Wenliang, Deputy Director General of the Ministry of Commerce.
Pakistan expressed concern over the dilution of the margin of preference due to China’s free trade accords with other countries, especially members of the Asean grouping, according to a handout issued by the ministry.
It added the cost of exemption that the national exchequer had to bear due to the tariff concessions also came under discussion. Pakistan conveyed concerns of the domestic industry, which had to compete with Chinese products despite a persistent energy crisis in the country.
The Ministry of Commerce also voiced concern over insufficient utilisation of the facilities provided under free trade in which only a few sectors had been able to reap the fruits of preferential tariffs.
Pakistan emphasised the importance of broadening the export base by encouraging exports from all sectors, which were covered under free trade and sought to enhance facilities and concessions on high value-added products.
Both sides agreed that the concerns of each other would be taken into consideration with a thorough review of the FTA provisions and the possibility of readjustment.
Published in The Express Tribune, January 7th, 2015.