CPFTA Phase-II: a new milestone in Pak-China economic, trade cooperation
by Wang Zhihua
Wang Zhihua, the minister counselor, Economic and Commercial Section, Chinese Embassy in Pakistan.[Photo/People's Daily]
The signing and implementation of the CPFTA has led to the rapid development of bilateral economic and trade relations. According to the statistics of Pakistani customs, within the first phase of CPFTA, Pakistan’s exports to China have increased to US$1.85 billion (FY19) from US$575 million (FY07), and the bilateral trade volume has jumped from around US$4 billion to US$15.6 billion accordingly.
So far, China has been Pakistan’s largest trade partner and the second export destination country for 5 consecutive years, and topping the FDI original country for 6 consecutive years.
Alongwith the constant upward trend of China-Pakistan trade, a rising concern on trade deficit with China has been echoing in the Pakistani business communities.
It is pertinent to mention that the main reason behind the trade imbalance has to be the structural problems in nature between industries of two countries.
China has a strong manufacturing base to export goods as compared to import. Up to now, China turns to be the largest trading partner of more than 120 countries and regions in the world, and China has never intentionally pursued the trade surplus, not with any trade partner.
To address the major concern of Pakistani side, China has proactively taken a lot of measures to maintain a balanced trade relation with Pakistan.
In cooperation with Pakistani counterpart, China is keen to expand more market access for Pakistani products and organizes varieties of trade promotion activities in Pakistan and China every year.
In the meanwhile, in pursuit of a higher level of trade liberalization, the second phase of negotiations of CPFTA was launched in 2011, and successfully concluded after 11 rounds of talks.
Witnessed by the two countries’ leaders this April, the protocol of the CPFTA Phase II was signed at the second Belt and Road Forum for International Cooperation held in Beijing and will take effect in due course.
The second phase of CPFTA is a substantial upgrade of the original one and is expected to be a milestone in the history of the two countries’ economic and trade development.
The two sides will, based on the original FTA, significantly reduce the tariff between the two countries and further expand the liberalization of trade in goods. After the Protocol takes effect, the level of bilateral trade liberalization will increase from the previous 35% to 75% in terms of tariff lines elimination.
In the respective of trade volume, China would offer Pakistan 90 percent of its market access and in return asked for only 67 percent of Pakistan’s market access for its products. Within the negotiations of CPFTA Phase II, China accommodates to the major concerns of Pakistan, and consents to offer liberation on 313 top high potential export tariff items including cotton yarn, leather, clothing, aquatic products and nuts etc.
Additionally, the CPFTA Phase II will provide a new impetus to China-Pakistan mutual investment.
The two sides agreed to encourage mutual investment and strengthen cooperation to provide investors with a stable, transparent and predictable investment environment, which will definitely promote the construction of the China-Pakistan Economic Corridor, bring more concrete benefits and welfare to Pakistani enterprises and people.
It is with full expectations that CPFTA Phase II turns to be a new breakthrough in the development of China-Pakistan economic ties, and bound to enhance the bilateral trade, increase the business to business exchanges and bring more benefits to the people of both countries, and thus to further enrich the all-weather strategic cooperative partnership between the two countries.