BEIJING, April 30 (China Economic Net) - On April 28, 2019, in the presence of Prime Minister Imran Khan and Chinese Premier Li Keqiang, Yu Jianhua, Vice Minister of Commerce and deputy China international trade representative with the Ministry of Commerce (MOC), and Masood Khalid, Pakistan’s ambassador to China, signed the Protocol between the Government of the People's Republic of China and the Government of the Islamic Republic of Pakistan on the revision of the Free Trade Agreement.
From the Ministry of Commerce of the People s Republic of China Department of International Trade and Economic Affairs, China Economic Net learnt that:
The Protocol upgraded and revised the market access for goods, schedules of tariff concessions on goods, rules of origin, trade remedy, investment, and so on. It also added the chapter of the customs cooperation. The core content is to further liberalize trade in goods between the two countries on the basis of the original FTA.
After the protocol comes into effect, the ratio of zero tariff goods tax items between China and Pakistan will increase from 35% to 75%, doubling the level of trade freedom.
In which, China will eliminate 45% of the tariff items on Pakistani products immediately and phase out 30% of the tariff items within five years (15% of the tariff items) and 10 years (15% of the tariff items). Pakistan will also eliminate 45% of the tariff items immediately after the agreement comes into effect, and phase out 30% of the tariff items within seven years (15% of the tariff items) and 15 years (15% of the tariff items), respectively.
In addition, the two sides will each impose a 20% tax cut on 5% of the other products.
On the basis of mutual benefit and win-win result, China and Pakistan each have included 80% of their tariff items in the tariff concessions, and given full consideration to each other’s major export products.
Pakistan included in the tariff reduction the export competitive products of electromechanical products, furniture, textiles, phosphate fertilizer, glass products, automobile and motorcycle parts, which are of major concern to China. China has included cotton yarn, leather, clothing, aquatic products, nuts and other export products of major concern to Pakistan in the tariff reduction.
In the area of investment, the two sides agreed to carry out negotiations in due course to upgrade the investment section in the future.
In the chapter of the customs cooperation, the two sides formulated relevant provisions on Customs electronic data interchange and were committed to ensuring the implementation of the memorandum of understanding on electronic data exchange signed by the customs authorities of Pakistan and China.
The two countries reached the Free Trade Agreement in November 2006. The Agreement took effect in July 2007, and mainly covered trade in goods and investment. In February 2009, China and Pakistan signed the Agreement on Trade in Service of the China-Pakistan FTA which entered into force since October 2009.
The signing and implementation of the Free Trade Agreement between China and Pakistan promoted the rapid development of their bilateral economic and trade relations. According to China's Customs statistics, the bilateral trade between China and Pakistan reached 19.08 billion US dollars in 2018, 3.6 times the volume before the implementation of the FTA.
China is currently Pakistan's largest trading partner, largest source of imports, third largest export market and largest source of investment.
Pakistan is China's second largest trading partner in South Asia.
China and Pakistan initiated the second phase of the FTA negotiations in March 2011, and held 11 meetings. In particular, since September 2017, the negotiation process has been accelerated and the two sides have made important progress on the market access for goods, rules of origin, customs cooperation, investment and other topics.
In November 2018, Pakistan Prime Minister Imran Khan paid his first official visit to China and during which the two countries issued a joint statement that two sides agreed to complete the second phase of the FTA negotiations at an early date. Since then, the negotiating teams of the two sides conducted intensive consultations and recently reached an agreement on all the topics for the second phase of the FTA negotiations and the contents of the Protocol.
Next, the two sides will go through their respective domestic legal procedures to push for the early entry into force of the Protocol.