Daily Times, Lahore
First round of trade talks with China from Aug 15
14 August 2005
ISLAMABAD: The first round of negotiations on a Free Trade Agreement between Pakistan and China is scheduled to be held on August 15 and 16 at Urumqi, China.
Shahid Bashir, Joint Secretary, Ministry of Commerce, will lead an inter-ministerial delegation to participate in the crucial meeting. The assistant minister, Yi Xiaozhun, will lead the Chinese delegation. During this meeting, the Rules of Origin are expected to be finalized which are essential to operationalizing the Early Harvest Programme which was concluded and signed during the Chinese Premier’s visit to Pakistan in April 2005.
According to the understanding reached between the two countries on April 6, 2005, Beijing and Islamabad would initiate trade under Early Harvest Program (EHP) from January 1, 2006, under which China will extend zero-rated tariffs on 767 items while Pakistan would reciprocate by extending the facility on 464 items.
Both the countries had agreed that the first reduction in tariff will take place on January 1, 2006, and by January 1, 2008, tariff will be brought to zero on all items. This decision would help bring the trade balance in favour of Pakistan to a large extent as the existing trade under the Preferential Trade Agreement is in favour of Beijing.
However, under the EHP, some of the items would also be finalised for zero-rated duty between the two countries, keeping in view the respective export interests. Under this arrangement, the trade will also be accelerated from January 1, 2008.
Early Harvest Programme between Pakistan and China consists of two lists of items (Common List and Separate List) for bringing customs duty to zero even prior to negotiations and conclusion of the Free Trade Agreement between the two friendly countries.
Early Harvest Program has two aspects: (i) A common List of items on which both sides will bring the tariffs to zero; (ii) A separate list by each country consisting of items of respective export interests. Duty on these items will also be reduced to zero. “Under this arrangements China would give zero duty to Pakistan on 767 items while Pakistan will give zero duty on 486 items.”
Under the deepening and broadening of the PTA between Pakistan and China, both the countries had reduced tariff on margin of preferences, i.e. a percentage of the normal tariff has also been extended. Under this decision China will give tariff concession to Pakistan on 1,671 items against the existing 917 items and in return Pakistan will give tariff concessions to China on 575 items against the existing 188 items.
This extended list will also be made part of the Early Harvest Programme and accordingly the bilateral PTA will merge into a bilateral Free Trade Agreement from January 1, 2006. In the Early Harvest Programme both sides have also undertaken to bring the duty to zero on a reciprocal basis on certain vegetables, fruits and mineral products. Pakistan has offered zero duty to china on machinery and chemicals that are already on the import list of Pakistan. staff report