The Commerce Division, in its in letter to Presidents of 16 chambers and Associations, has conveyed that the meeting would be part of the consultative process with the local industry on the China-Pakistan Free Trade Agreement (CPFTA) phase -II. The business community has been requested to share their input during the session on the following points: (i) products on which market access in Chinese market is required; and (ii) products which need to be protected in the FTA with justification.
During the 9th round, one of the major demands of Pakistan, ie, zero duty on 68 items of its interests to further on phase- II remained inconclusive. China-Pakistan trade volume which stood at $ 4 billion per annum in 2006-07 reached an all-time high of around $ 15.6 billion in 2016-17. Pakistan''s exports have jumped to $ 1.46 billion in 2016-17 from $ 575 million in 2006-07. China''s exports to Pakistan have increased to around $ 14.13 billion from approximately $ 3.5 billion in 2006-07.
Pakistan''s major exports to China are, cotton yarn/fabric, rice, raw hides and skins, crude vegetable material , chemical material, fish and fish preparations and crude minerals etc. While, our major imports from China are machinery (all sorts)and its parts, manufactured fertilizer ,chemical elements, yarn and thread of synthetic fibre, iron and steel, chemical materials and products, vegetable and synthetic textile fibre, road vehicles and their parts, non-ferrous metals, tyres and tubes of rubber etc.
The sources said, during the 9th round, both sides agreed to conduct intensive discussions on tariff reduction modality and key requested products; the divergence between two sides has narrowed down. Both sides agreed that the outcome of the meeting will serve as the basis of future negotiations with a view to concluding the second phase CPFTA in the near future.
According to sources with respect to 75 percent tariff lines offered by Pakistan, China requested Pakistan to include the majority of 1394 key products of China. Both sides agreed that Trade in Services negotiation can be excluded in the second phase of CPFTA outcome. However, the two sides shall continue their discussion on Trade in Services separately after the second phase CPFTA (Trade in Goods) is concluded.
Both sides conducted intensive discussions on Bilateral Safeguard Measures to develop consensus. With regard to pending issues, as a package deal, Pakistan agreed to remove the content of material retardation, and China as a response agreed on transition period (10 years for EIF, 8 years for remaining tracks) and application period (3 years for initial measures and 2 years for extension) of Bilateral Safeguard Measures.
The sources further stated that the two sides discussed the text on this issue and reached an agreement in principle that the two sides will adopt wording consistent with the WTO rules and other international institutions. China will circulate the new text inter-sessionally for Pakistan''s confirmation.
The sources further stated that both sides, after discussing the draft MoU on the Electronic Origin Data Exchange System (EODES) between China Customs and Pakistan Customs, including related data exchange elements, have agreed on the draft text of MoU. It was further agreed that both sides will coordinate to finalize the respective internal approval process for the said MoU before the implementation of EODES on 2nd April, 2018. China side had raised the issue of the need to amend rules of origin to enable China Council for the Promotion of International Trade (CCPIT) to issue certificates of origin besides existing authority under CPFTA. Chinese side accordingly provided draft amendment in rules of origin, together with introductory material on CCPIT. Pakistan side will revert after examining the said proposal.
Both countries had discussed other text of the China-proposed protocol as the outcome document of the 2nd phase negotiations. Both sides reached an agreement in principle on contents of preamble, tariff elimination and final provisions.
Informed sources told this scribe that in the 9th round safeguard measures and Tariff Related Modalities (TRM) were discussed but not finalised. Pakistan proposed liberalization of 75 per cent tariff lines with 25 per cent on the sensitive list including a five per cent Margin of Preference (MoP.)
The source further stated that an agreement was reached: (i) regarding 5 percent tariff lines with Margin of Presences (MoP), Pakistan proposed MoP of 20 per cent for both Pakistan and China; (ii) Pakistan proposed the tariff elimination of its category II to start from the second year and category III from 5th year; (iii) China insisted that Pakistan should not clawback. However, Pakistan requested clawback independent of Tariff Related Modalities (TRM), if China in response proposes to withdraw same amount of tariff lines out of 57 per cent, it should be of equal trade value as well; and (iv) the TRM is subject to further discussion and confirmation of both sides.