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China agrees to accommodate Pakistan’s concerns on FTA

China has agreed to give into the demands of Pakistani exporters in amended FTA which is expected to be signed next month. The issues of local exporters were debated during the 9th round of two-day negotiations on China-Pakistan FTA. The Pakistani delegation was led by secretary of commerce Mohammad Younus Dagha and the Chinese side was led by vice minister for commerce Wang Shouwen. The requirements include: provision for tariff concessions equivalent to Asean countries.

Dagha suggested incorporating clauses for safeguarding Pakistani industries and the economy from any undue pressure on the balance of payments position, the release added. Various domestic business organisations have complained that products where Pakistan enjoys a competitive advantage are not covered by Chinese officials, which has wider access to Pakistan’s markets. China is now the largest source of Pakistan’s imports, which stand at 29 per cent of total imports.

A recent paper by the State Bank of Pakistan reports over half of the country’s imports of electrical equipment and machinery come from China. An SBP study notes that under the 2006 FTA, China granted concessions on 7,550 tariff lines to Pakistan of which 35pc of the products covered by those lines were zero rated, however, 15pc of the products were given no concession, which include fish, cotton, paper, plastic and textile items.

The report noted Pakistan gave concessions on 6,803 tariff lines to China in that same agreement, where electric and electronic products, machinery and chemicals and other raw materials were zero rated. “Pakistan excluded a list of products (92 tariff lines), which mainly include alcohol, drugs, arms and ammunitions.” It reports the surge in imports from China were mainly due to growing imports of machinery and the diversion of imports from other trading partners.