ISLAMABAD: Pakistan and China have agreed to enter into second round of Free Trade Agreement (FTA) with the latter willing to address four concerns raise by the former in evaluating the first phase of the agreement.
Addressing a press conference here, Federal Minister for Commerce Khurram Dastgir Khan said that Pakistan and China held review talks on Free Trade Agreement from January 6 to 8 in Islamabad. He said that the second phase of FTA would help to reduce balance of trade with China, as Islamabad was not reaping expected results from first phase. The second phase would be independent from the first one as it was not in favour of Pakistan, he claimed, adding that both sides had agreed to form five working groups to review the FTA. Both countries would meet in March for further negotiations, he added.
He informed that one of the concerns of Pakistan was over the insufficient utilisation of the facilities provided under the FTA in which only few sectors have been able to reap the fruits of the favourable tariffs, as Islamabad emphasised the importance to broaden its export-base to China by encouraging exports from all the sectors.
“The first phase of FTA was signed in 2006 between the two countries wherein tariff reduction provided by China to Pakistan was insufficient as Pakistan could not get maximum benefit”, said Dastgir.
Sharing details of the FTA talks, the Commerce Minister said that Pakistan and China also agreed on three principles including the second phase of FTA would be independent from the first one, it would have nothing to do with the previous one. The two sides have also agreed that tariff reduction would not be on reciprocal basis and it would be in favour of Pakistan.
Similarly, he informed that Pakistan and China also agreed that if imports of any country increase, both the countries would have the right to put safeguard measures and quotas on that particular product. He said the two sides agreed to soften up the requirements for establishment of branches of banks in each other’s countries. As per the understanding reached between the two countries, asset requirement for the establishment of a branch would be reduced to $15 billion from $20 billion, for all Pakistani banks.
To a question, he informed that Pakistan’s exports had increased due to the FTA. Commerce Minister said that Habib Bank Limited, United Bank Limited and National Bank of Pakistan were working to open their branches in China.
Sharing the trade figures with neighbouring country, the minister said that according to our data, currently Pakistan exports to China were $2.5 billion while the import from China were $7.5 billion while according to Chinese documents the exports to Pakistan were around $14 billion while the imports from Pakistan to China were around $10 billion. Speaking on occasion, Robina Ather, Additional Secretary Ministry of Commerce who is currently leading the Pakistani side for bilateral dialogues with China said, “Now in the second phase both sides have proposed to increase tariff concessions from existing 35 percent to 90 percent. She further said tariff reduction would be in favour of Pakistan.
