The China-Pakistan Free Trade Agreement Phase-II stipulates that the proportion of tariff lines for products that implement zero tariffs between China and Pakistan will gradually increase from 35% to 75%, Chinese Foreign Ministry’s Spokesperson Geng Shuang said on Tuesday.
“The “Protocol” stipulates that the proportion of tariff lines for products that implement zero tariffs between China and Pakistan will gradually increase from 35% to 75%,” he said while responding to a question of APP during his regular briefing held here.
In addition, the two sides also implemented a 20% reduction in taxes on other products that accounted for 5% of their respective tax items. The tariff elimination measures started to be implemented from January 1, he added.
The spokesperson said the amending protocol to the FTA between China and Pakistan had entered into force on December 1, 2019, adding, the protocol upgrades and revises the contents of the original FTA on market access and tariff reduction schedules, rules of origin, trade remedies and investment.
“It adds a new chapter on customs cooperation. The core content is to substantially increase the level of liberalisation on trade in goods on the basis of the original agreement,” he added.
The second phase of CPFTA allows the Pakistani manufacturers and traders to export around 313new products on zero duty to the Chinese market.
Pakistan was already enjoying zero duty on export of 724 products to China under the first FTA signed between the two countries in 2006. After the implementation of the second phase of FTA, Pakistan has been allowed to export a total of 1047 products to China on zero duty.
The new facility will particularly benefit the textile sector to enhance its export to China as textile exports to China will virtually be duty free.
There are a number of other items particularly leather and agriculture products as well as confectionery and biscuits etc which Pakistani manufacturers can export to China.
Geng Shuang said China and Pakistan were all weather strategic cooperative partners with sound momentum in our bilateral relations.
“We will continue to deepen our political mutual trust, deepen all dimensional cooperation for greater quality development of China-Pakistan Economic Corridor (CPEC), and to deliver more benefits to our peoples,” he added.
With the implementation of CPFTA-II, Pakistan, can now increase its export around US$ 1 billion in the short term while the export of these items are likely to touch US$ 4-5 billion in the medium term after setting up a new industry in the special economic zones being constructed in Pakistan under the China-Pakistan Economic Corridor (CPEC) flagship project.
In the long-term, Pakistan can enhance its exports to China up to US$ 10 billion in the next few years as the volume of the Chinese import market is around US$ 64 billion.
China wants to import quality products from different countries including Pakistan.
“If our traders actively participate in different trade fairs in China to market their goods, they can get import orders with good price.”
The present government has resolved export rebate issue and it is giving subsidy to exporters on electricity and gas. The State Bank of Pakistan has also increased funds limits for the traders and manufacturers under export refinance scheme which will help increase the exports.
Currently, cotton yarn, copper, rice, chromites nephrite, seafood and ethylene alcohol are main products being exported to China.