The technical experts from Pakistan are engaged with their Chinese counterparts to discuss the technical issues of the agreement, whereas the Secretary Commerce Younus Dagha, will join the team on 7th & 8th February, 2018. He will have detailed discussion with their Chinese counterparts on the TRM, customs and other issues related to balance of payment, etc with the emphasis to reduce the trade gap which is increased to $12.7 billion in 2016-17 from $ 2.9 billion in 2007-08.
Sources from Ministry of Commerce has confirmed that this round of negotiations may become very tough round because in 8th round of negotiations, held in China (Beijing) from 14-15th, September, 2017, both the sides conducted intensive discussions on tariff concessions in a frank and cooperative manner and reached many consensuses on Tariff Reduction Modality (TRM) given as under subject to: i) Immediate market access on 68 products at 6 digit of Pakistan''s export interest shall be favourably examined upon receipt of the 8 digit tariff lines from the Pakistani side, ii) Both Pakistan and China should liberalize consider liberalizing more or less 80% of products in terms of trade value and iii) both sides will discuss the possibility of amendments in the Chapter on Safeguard of CPFTA and addition of Article on Balance of Payment in line with WTO provisions. It was also agreed that both sides will further exchange views on TRM inter-sessionally.
To libraries the tariffs to 80 percent, of the total tariff lines, the Ministry of Commerce, in the consultation with EDB started a detailed consultative process with the associations, chambers, and private industrial stake-holders to work out the Pakistan and China priority lists. However, after the consultative exercise the Ministry of Commerce reached on a position to consider tariff reduction on only 70 percent of tariff lines instead to go for 80 percent reduction.
The sources further stated during formulation of lists for 2nd phase of CPFTA, interests of local industry are ensured to be safeguarded. Automotive sector is still out of the FTA concessions due to Automotive Development Programme (ADP-2017-21). First Phase of China-Pakistan Free Trade Agreement was signed on 24th November, 2006 and entered into effect in July 2007, which included Trade in Goods, Investments and Services.
During 1st Phase of China-Pak FTA it was agreed that both Parties shall endeavour to eliminate the tariffs of no less than 90% of products, both in terms of tariff lines and trade volume within a reasonable period of time on the basis of friendly consultation and accommodation of the concerns of both Parties.
During second phase negotiations Pakistan side is focusing on to adjust the concerns on the products suffering during the 1st Phase. In this regard it was also agreed during the 4th meeting of 2nd round that "2nd phase negotiation would be done on less than equal reciprocity principle in favour of Pakistan." However, during the 6th meeting it transpired that both sides had different interpretation of the above two principles. Pakistan side felt that since her concerns won''t be addressed, she once again request for readjustment in the 1st phase.
During 7th meeting of 2nd round Pakistan side highlighted that Chinese exports have benefited immensely from the concessions granted by Pakistan whereas the concessions given to Pakistan were not meaningful and the margin of preference was eroded due to subsequent FTAs signed by China. Pakistan side also emphasized referring 2nd meeting of 2nd phase wherein it was agreed to take into positive consideration the concerns expressed by Pakistan by re-adjustment and review of FTA through provision of Clause 8 of the CPFTA.
During 8th round Pakistan requested for meaningful market access and an end to the preference erosion of Pakistani exports. Pakistan total trade volume with China is $ 15.38 billion during 2016-17, with trade deficit of US $ 12.7 billion. 24 percent of Pakistan''s global imports are from China.