The operationalization of the second phase of Free Trade Agreement with China is the success of the government and an opportunity to resolve many pressing economic issues.  Under the Phase-II of China Pakistan Free Trade Agreement (CPFTA) both the friendly countries will come closer and it will help mitigate losses resulted by the ill-negotiated FTA with China in 2006.


On December 1, 2019, the Protocol to Amend the Free Trade Agreement between China and Pakistan entered into force, making substantial revisions to the China-Pakistan Free Trade Agreement (CPFTA) first signed in November 2006. (The full text of the protocol can be found here in English and here in Chinese).


The Amending Protocol, also known as Phase-II of the CPFTA, intends to deepen trade relations between China and Pakistan through increasing liberalization of trade in goods, safeguarding mechanisms for its domestic industry, and facilitating intercountry balance of payments and electronic data exchange.


Under the deal, 313 Pakistani items will not be subjected to any taxes or duties while 75 percent of the Pakistani exports will be given free access to the Chinese market in a gradual manner. The agreement will not only increase Pakistani exports to China but it has also safeguards to safeguard the local industry. It will also help eliminate misdeclaration and under-invoicing and exchange of information which will streamline trade.


The FTA signed in 2006 resulted in heavy losses to Pakistani economy as imports from China resulted in 34 percent of overall deficit which was 78 percent of the total current account deficit in 2018. China has become a major economic power importing and exporting goods worth trillions of dollars with a surplus of over 475 billion dollars. If Pakistan can get only one percent share in the Chinese imports, it will translate into billions of dollars relieving the export-starved country of many economic problems.


The government as well as the private sector should join hands to derive maximum benefit from the deal for which increased production, quality, value addition and research and development should be focused while trade barriers should be removed without delay.

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