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Free trade regime between Pakistan and China from Jan 1

Daily Times, Pakistan

Free trade regime between Pakistan and China from Jan 1

30 December 2005

BEIJING: Pakistan and China are set to launch the much awaited free trade regime under the Early Harvest Programme (EHP) from January 1.

The trade under the EHP includes arrangement on the basis of mutually agreed lists of items.

The first list includes fruits and vegetables and marble. Both nations will reduce tariff on these items to zero gradually, but not later than end of 2007.

The second list includes home textiles, towels, chewing gum, cotton fabric, cutlery, surgical goods and sports goods for Pakistan and machinery and chemicals for China. These items would also be zero-rated gradually.

Items in the third list provide tariff concession on the basis of margin of preference.

Against the Most Favoured Nation status (MFN) tariff of 15%, the Pakistani mangoes and oranges will be exported to China at 5% tariff from next month and from Jan. 2007 these could be exported to China at zero duty. Similarly, Chinese-made textile machinery and organic chemicals will also enjoy preferential duty next year and duty-free access in Pakistan from 2007.

Chinese government has also allowed import of Pakistani rice on 1% duty from the new calendar year, starting from January, 1. These are benefits brought by the EHP between the two countries, signed formally early this month in Beijing. This also reflects the two countries’ resolve resorting to economic diplomacy in order to transfer fruits of their decades’ old deep-rooted diplomatic partnership to their people.

The EHP is a significant step towards the free trade agreement (FTA) between the two economies, said a Chinese official in an interview. According to the EHP, more than 3,000 categories of products will have zero tariff from January 1, 2006. 486 categories of Chinese goods exported to Pakistan will enjoy the zero-tariff treatment, mainly vegetables, fruit, stone materials, textile machinery and organic chemical products.

Meanwhile, China will give zero-tariff status to 769 categories of goods imported from Pakistan, mainly vegetables, fruit, stone materials, cotton fabrics and man-made fabrics. For those products with lower tariffs, China will cut its tariffs by 27 per cent on 1,671 kinds of products from Pakistan, and Pakistan will cut tariffs by an average range of 22 per cent on 575 kinds of products from China.

The bilateral trade between the two countries has been expanding

rapidly this year. In the first 10 months, the total exports and imports reached US $3.4 billion, soaring 44 per cent year-on-year. But the trade is severely imbalanced. China had a trade surplus of US $1.9 billion last year compared to a total trade volume of US $3.1 billion.

Bo Xilai, the Minister of Commerce, said China noted the situation and he believed the FTA, which may have many contents in favour of Pakistan, will help to ease the problem of trade imbalance.

“And we also encourage Pakistani companies to engage in more market promotion in China, and the Chinese Government will give as much support as possible,” Bo said in a statement.

China’s overall level of import tariffs will remain at 9.9 percent in

2006, compared with 10.4 percent in 2004. The country will impose more preferential import tariffs on products from the 10 members of the Association of Southeast Asian Nations (ASEAN) as of 2006 according to the agreement on the China-ASEAN free trade area. Similar preferential import tariffs will also be available for products from Pakistan and Hong Kong and Macao, the official added.

Pakistan Embassy Commercial Counsellor Shahid Mahmood said Pakistani exporters needed to undertake an aggressive and consistent campaign to find potential buyers. He hoped that the country’s private sector would work out a proper and long-term strategy to seize the opportunities available in the Chinese market.It may be pointed out Pakistan Consulate also started functioning early this year to facilitate the businessmen of the two countries to develop economic partnership for their common benefit.