Tag: Pak-China FTA

FPCCI fears no advantage for Pakistan under Phase-II FTA with China

KARACHI: Federation of Pakistan Chambers of Commerce & Industry (FPCCI) feared that Pakistan would not be able to take advantage of opportunities under Phase II of China Pakistan Free Trade Agreement (CPFTA-II).

Mian Anjum Nisar, President FPCCI and Sheikh Sultan Rehman, Vice President FPCCI said in a statement on Monday expressed fear that Pakistan may not be able to reap benefits under Phase II of China Pakistan Free Trade Agreement (CPFTA-II) despite elimination of duties on 313 tariff lines covering most of Pakistan’s exports.

He pointed out that during Phase I of China Pakistan FTA, the balance of trade remained greatly in favor of China which managed to export 57 percent of its product lines while Pakistan could take advantage of only 5 percent of its product lines.

Pakistan exported US $ 2.1 billion approx. while imports from China have reach more than US $ 17 billion approx. that created trade gap of US $ 15 billion approx. in favor of China.

While products included in this volume of Pakistan’s exports to China are cotton (US $ 872.85 million), Cereals (US $ 161.3 million), Copper (US $150.26), Beverages, spirits and vinegar (US $133 million), Fish, crustaceans, molluscs, aquatics invertebrates (US $ 91.21 million), Ores slag and ash (US $ 66 million), Machinery, boilers (US $45.9 million), Salt, sulphur, earth, stone, plaster, lime and cement ( US $ 43.36 million), Raw hides and skins (other than furskins) and leather ( US $ 35 million, Articles of apparel, knit or crocheted (US 30 million).

FPCCI Office Bearers expressed serious concern about Pakistan’s ability to benefit from Phase II, when Pakistan does not have surplus products to exportdue to a shrinking economy.

He further highlighted the fact that industrial output is declining because of de-industrialization in the last few years. Serious issues like, high interest rates, frequent increases in power and gas tariff, unavailability of gas to industries, abrupt changes in government policies, rampant smuggling, refunds to exporters and an overall hostile environment are making it difficult for industries to sustain their existence.

FPCCI Office Bearers urged Government of Pakistan to urgently develop a robust and holistic industrial policy that would lead to massive industrialization in the country, encourage R&D, innovation, diversification and development of new products, improve quality standards and enhance technical skills of labor.

He also urged Chinese companies to enter into joint ventures with Pakistani manufacturers and relocate their industries to Special Economic Zones. These efforts will significantly raise industrial output enabling Pakistan to take advantage from Phase II of China Pakistan FTA.

Otherwise, Pakistan will not be able to receive benefits from supposedly vast opportunities available to us and the fate of Second Phase of China Pakistan FTA will not be any different that the First Phase.

January 20, 2020
FBR implements duty exemption/concession under 2nd Phase Pak-China FTA

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday issued concessionary rates for 6,786 tariff lines for goods imported under Second Phase of Free Trade Agreement (FTA) between Pakistan and China.

The notified rates will be effective from January 01, 2020 for next 15 years i.e. December 31, 2034.

The FBR issued SRO 1640(I)/2019 to implement the revised customs duties for goods imported from China.

The SRO said:

“S.R.O.1640(I)/2019.- In exercise of the powers conferred by section 19 of the Customs Act,1969 (IV of 1969), and in supersession of Notification No. S.R.O. 659(I)/2007,dated the 30th, June, 2007, the Federal Government is pleased to exempt, with effect from the first day of January, 2020, unless specified otherwise, the import into Pakistan from Peoples Republic of China of the goods specified in column (3) of the Table below, falling under the Heading and sub-Heading numbers of the First Schedule to the said Act as specified in column (2) of the said Table, from so much of the customs duty specified in the First Schedule as on the 1st January , 2020 to the said Act as in excess of the rates specified in columns (4), (5), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17) or (18) of the Table with effect from the corresponding date:

“Provided that the goods are manufactured or produced and imported in conformity with the Rules of Determination of Origin of Goods and the operational certification procedures for the Rules of Origin notified by the Ministry of Commerce vide No. S.R.O. 1286(I)/ 2005, dated the 24th December, 2005 read with the Import Policy Order, 2016:-

The second phase of China-Pakistan FTA came into effect earlier this month, allowing Pakistani manufacturers and traders to export more than 300 new products to the Chinese market for zero duty charges.

The two neighboring countries have already completed all legal procedures and formalities to start implementation of the agreement.

Pakistan and China signed a protocol for implementation of the agreement during the last visit of Prime Minister Imran Khan to China.

Pakistan is already enjoying zero duty on export of 724 products to China under the first FTA signed between the two countries in 2006.

The major products on which tariff has been eliminated are textiles, garments, seafood, meat, other animal products, prepared food, leather, chemicals, plastics, oilseeds, footwear as well as engineering goods including tractors, auto parts, and home appliance machinery.

January 1, 2020
FPCCI hopes Pak-China FTA Phase II to be instrumental for bilateral trade

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) hoped that the second phase of China-Pakistan Free Trade Agreement (FTA) will be instrumental in enhancing the bilateral trade to its optimum potential.

FPCC president Engr. Daroo Khan Achakzai in a statement on Saturday appreciated the strenuous efforts made by the Prime Minister and his team in preparation of long awaited China-Pakistan Free Trade Agreement (CPFTA) – II in consultation and consensus of all the stakeholders and making it operational w.e.f. December 1, 2019 which will witness Chinese investment in all sector.

The FPCCI Chief hoped that the CPFTA-II would be instrumental in enhancing the bilateral trade to its optimum potential, exploring the new areas of joint ventures, transfer of Chinese technology to Pakistan as it had thin industrial based as compared to China, broadening and protecting indigenous industries and improving Pakistan’s trade balance with its counterpart.

He recalled that under FTA Part-I Pakistan had benefitted to the tune of only 4 percent whereas rest was derived by the China.

While commenting on the statement of the Advisor to the PM on Commerce, Textile, Industries and Production and Investment published in some section of newspapers, he clarified that FPCCI has always advocated / supported the decisions of the government in the best interest of Business Community and flourishing of business environment to make Pakistan economically stable and sound.

Being apex body of trade & industry of Pakistan FPCCI has all the capability and expertise to contribute in government efforts in expansion of all economic sectors such as manufacturing, investment, export etc. He said that the FPCCI status and its role should not be undermined as it has representation all members of trade and industry on its board across the country.

He also hailed the efforts of the government in the development plan of Balochistan and KPK under CPEC which will definitely eradicate their economic issues particularly unemployment and poverty and will bring least developed rural areas of Balochistan and KPK at par with the other part of Pakistan.

October 19, 2019
Pakistan, China agree FTA 2nd phase to lead more trade, investment opportunities

ISLAMABAD: The leaders of Pakistan and China on Tuesday agreed that the implementation of the 2nd phase of China-Pakistan Free Trade Agreement (FTA) would lead to more trade, economic and investment opportunities between the two countries.

Other areas of potential collaboration discussed between the two sides included railways, steel, oil and gas, industry and science & technology.

Prime Minister Imran Khan held wide-ranging bilateral talks with Chinese Premier Li Keqiang at the Great Hall of the People in Beijing on Tuesday.

The exchange of views particularly covered strengthening of bilateral economic partnership, says a press release received here today from Beijing (China).

On his arrival, the Prime Minister was presented a guard of honour, accompanied by 19-gun salute.

The Foreign Minister, Minister of Planning, Development and Reform, Minister of Railways, Advisor on Commerce, Special Assistant to Prime Minister on Energy, and Chairman BOI, Chief of Army Staff, DG ISI, and other senior officials were present.

The bilateral talks were followed by a banquet hosted by Premier Li. Extending felicitations on the 70th Anniversary of the founding of the People’s Republic of China, the Prime Minister underscored that the All-Weather Strategic Cooperative Partnership between Pakistan and China served the fundamental interests of the two countries and peoples and contributed to peace, development and stability in the region.

Prime Minister Imran Khan emphasized that expeditious completion of CPEC projects was the foremost priority of his government as this transformational project was pivotal to accelerating Pakistan’s economic development and regional prosperity.

Premier Li was apprised of the actions undertaken recently to fast-track CPEC projects and to push the development momentum in Gawadar.

Premier Li underlined the salience of the abiding Pakistan-China relationship and reiterated China’s support for Pakistan’s issues of core national interest.

Premier Li thanked Prime Minister Imran Khan for the measures to advance CPEC projects and maintained that the second phase of CPEC will be instrumental in reinforcing and consolidating Pakistan’s economic development and pave the way for enhanced Chinese investments in Pakistan.

The two sides exchanged views on deepening bilateral trade and explored ways of increasing Pakistan’s exports to China.

The two sides also discussed regional security situation including serious human rights and humanitarian situation in IoJK.

Prime Minister Imran Khan apprised Premier Li of the latest developments and the importance of urgent action by the international community to alleviate the sufferings of the Kashmiri people in the lockdown.

Both leaders maintained that frequent and substantive bilateral exchanges were contributing to elevating the All-Weather Strategic Co-operative Partnership to new heights and were reinforcing people-to-people ties.

The two leaders also witnessed signing of various Agreements and MOUs aimed at deepening Pakistan-China ties in a range of socio-economic sectors.

Prime Minister Imran Khan reiterated his invitation to Premier Li to visit Pakistan at the earliest opportunity.

October 8, 2019
Pakistan, China agree on duty free access to 313 tariff lines

ISLAMABAD: Pakistan and China have signed second phase of Free Trade Agreement (FTA) under which both the countries have agreed allowing duty free access to 313 tariff lines.

Prime Minister Imran Khan and Chinese Premier Li Keqiang witnessed the signing ceremony at a meeting on the conclusion of the 2nd Belt and Road Forum (BRF) in Beijing, a statement said on Sunday.

Officials at the ministry of commerce said that China had agreed to grant Pakistan duty free access same as give to ASEAN countries. They said that Pakistan and China had agreed on giving duty free access to around 75 percent tariff lines.

The officials said that Pakistan would get duty free access to 313 tariff lines. This relaxation would help Pakistan to improve exports to China by $6.5 billion during next five years.

They said that Pakistan would able to export duty free goods including textile, leather, agriculture, chemical, engineering, plastic, furniture etc.

According to the commerce ministry protection to local industry was given priority in signing the free trade agreement. It is also agreed to put 1,700 tariff lines from China on sensitive list.

The officials said that China imports around $40 billion annually those items from various countries, which Pakistan export to China. The agreement would help 90 percent Pakistani products accessing Chinese markets.

Abdul Razak Dawood, Adviser to Prime Minister on Commerce, who is also in China, said that around 400 Chinese investors attended Pak-China Business Forum and they had shown interest to enter Pakistani market.

He said that Pakistan and China had signed free trade agreement. Besides this agreement both the countries also signed 16 Memorandum of Understandings (MoUs) including agriculture, Information Technology, Chemical etc.

He said that the free trade agreement would attract investors into Pakistan. Further Pakistan will get same benefits under free trade agreement what ASEAN countries are availing.

April 29, 2019
Second phase of Pak-China FTA signed; two premiers witness signing ceremony

ISLAMABAD: The second phase of Pakistan China Free Trade Agreement (FTA) signed on Sunday, which was witnessed by the premiers of both the countries.

Prime Minister Imran Khan and Chinese Premier Li Keqiang witnessed the signing ceremony at a meeting on the conclusion of the 2nd Belt and Road Forum (BRF) in Beijing, a statement said.

The list of MoUs/Agreements signed/exchanged on the occasion is as follows:

i. Second Phase of China Pakistan Free Trade Agreement

ii. Declaration for Completion of Preliminary Design of Phase-I for Up-gradation of ML-1 and Establishment of Havelian Dry Port under CPEC

iii. MoU on Cooperation in the field of Marine Sciences between the China Geological Survey (CGS), Ministry of Natural Resources of China, the Institute of Oceanography, Ministry of Science and Technology.

iv. MoU between CIDCA and Ministry of Planning, Development and Reform on Implementation of the Projects under JWG of CPEC on Socio-Economic Development.

v. China-Pakistan Economic and Technical Cooperation Agreement

vi. Rashakai SEZ Joint Venture and License Agreement between KPEZMDC and CRBC.

The two prime ministers were accompanied by ministers and senior officials.

Both leaders reaffirmed the time-tested and strong friendship between Pakistan and China and exchanged views on the myriad facets of bilateral engagement.

The prime minister extended felicitations to the Chinese leadership on the successful holding of the 2nd Belt and Road Forum (BRF).

Noting the depth and breadth of the Belt and Road Initiative (BRI), the Prime Minister said it was of immense significance for the world in terms of connectivity and shared prosperity.

The two sides exchanged views on bilateral collaboration in the context of CPEC and prospects of further deepening economic linkages.

Prime Minister Imran Khan underscored the importance of CPEC for Pakistan’s economy and noted with satisfaction its expansion into new areas of development – including industrial development; livelihood projects; social uplift; and agriculture in line with the priorities of government.

He hoped that Chinese investment in Specialized Economic Zones (SEZs) would expand Pakistan’s industrial base and assist in diversifying its export basket.

Underlining the steady growth of bilateral cooperation since the Prime Minister’s last visit to China in November 2018, Premier Li Keqiang expressed satisfaction at the positive momentum of CPEC projects.

He hoped that the conclusion of the Second Phase of China-Pakistan Free Trade Agreement (FTA), would give further boost to trade and economic relations between the two countries.

The two sides agreed to further deepen the political, security, economic, education, science & technology, cultural, and people-to-people relations.

It was agreed to maintain the existing momentum of high level exchanges between the two countries.

The two leaders also exchanged views on regional issues including peace efforts in Afghanistan and peace and stability in South Asia.

They also agreed to closely coordinate in their endeavors.

April 28, 2019
Pakistan unlikely to get benefit from 2nd phase of China FTA: SITE Association

KARACHI: Pakistan may not get benefit from the 2nd phase of Pak China FTA as Chinese imports of $2 trillion are either of raw materials or high-tech equipment.

“Pakistan does not have the industrial and technical base to produce high-tech equipment such as computers, ICs, telecommunication equipment & automobiles,” Saud Mahmood, Chairman SITE Taxation and Trade Policy, said in a statement on Friday.

Moreover, he said, exports of minerals, live stock and agricultural products is not accelerated by FTAs as importing countries do not apply duties on raw materials.

China is known as the supplier of the world with huge current account surpluses with most trading partners.

After the first phase of PAK China FTA, we had to impose up to 30 percent regulatory duty to save the local industry from closing down.

Even after the imposition of 30 percent regulatory duty, trade deficit from China is over $15 billion with Pakistan exporting under USD 3bn worth of goods to China, mostly minerals, agricultural products, and livestock.

In view of the above ground realities, it would be interesting to see in which areas Ministry of Commerce has envisioned growth of Pakistan’s exports to China.

If exports to China are expected to grow to $6 billion after the 2nd phase of FTA, an item wise break up in which exports are expected to jump should be shared with the industry for their comments.

In the absence of such a detailed effort duly endorsed by leading chambers, it seems that we are all set to shoot ourselves in the foot again.

April 26, 2019
Second phase of Pak-China FTA not at cost of local industry: FPCCI

KARACHI: Federation of Chambers of Commerce and Industry (FPCCI) has advised the government that the second phase of Pak-China Free Trade Agreement (FTA) should not be at the cost of local industry.

FPCCI President Engr. Daroo Khan Achakzai, while chairing session on Pak-China FTA, advised that Pakistan may enter into second phase of FTA with China but not at cost of closing our local industries and adversely affecting the economy at large.

He said first phase had enhanced Pakistan’s trade deficit with China to US$ 17 billion.

President FPCCI further added that Pakistan has already liberalized 60 percent of its trade with China, suggesting that Ministry of Commerce to take policy reforms for elimination of under-invoicing and settle to have agreements with China on removal of Sanitary and phytosanitary measures (SPS), Technical Barriers to Trade (TBT) and barriers other than tariffs.

During the interactive session, the participants expressed their serious concern over the signing of second phase of CPFTA without ensuring the elimination of weaknesses of first phase of CPFTA.

The participants said that considering the stances of several sub sectors industries like seafood, vegetable oil and leather products should also be considered to have zero rated export entry status like ASEAN so that enhancement of exports are contributed by these existing sub sectors of industries with available potential further to grow with the passage of time.

The participants also considered to protect the domestic industries of Chemical, steel, leather, plastic and poultry, in specific industries in SME in such a way that the effects of FTA do not adversely affect the present industry, already hostage of domestic supply constraints.

They said that time space, tariff reducing modalities, elimination of non tariff barriers should be rationalized in FTA in such a manner that circumstances surrounding the economies of FTA partners is fundamental to negotiate on non reciprocity basis due to huge difference in economic development levels of FTA partners.

The participants of the meeting also showed concern on non-implementation of Electronic Data Exchange, earlier agreed between the Customs of both side countries.

The participants also showed further concern on non documented data of at least 36 percent on account of reasons inclusive of continued reported under invoicing, which not only is making losses in custom collections but as well as is against fair practices of trade leading to unhealthy competition.

The participants also stressed on the negotiation to focus negotiating on win-win concluded safeguard measures, transfer of technology and required skills for smooth operation of negotiated FTA.

Moreover, the participants underlined the need of direct market access of Pakistan’s products in China; which presently allows import from Pakistan for sales in Chinese market through vendors, which have registered history of on rising trade disputes.

The existing trade through such intermediaries creates the burden of not only apprehensions but also generates non resolved disputes arising of such mode trades in between Pakistan and China.

The participants also stated that since already 60 percent trade of Pakistan from China is being conducted in major at Zero percent and in minor in between 0 to 5 percent, therefore further liberalization in these zero and 0-5 categories on import of intermediary and finished goods may not be preferred to be part of FTA.

The participant feared that economic growth of Pakistan closing to 3.7 percent during this year will further suffer due to addition of further trade liberalization and small and medium vulnerable SMEs may add to the closure and reduction of industrial economy of Pakistan.

The country needs employment as fundamental to the requirement of law and order, which may be assured to be preserved during negotiation of FTA as liberalization also costs employments for weaker economies.

The participants also suggested that China should also give concrete plan of relocating its labor intensive industries in SEZs of Pakistan and include Pakistan in the supply chain of its finish goods exports from Pakistan, example of which are countries like Vietnam & Cambodia doing so.

The participants also strongly suggested that Mutually Recognition Agreement for quality and quarantine inspections and standards be adopted to include meat and agriculture produce exports, which has identified potential of exports.

The meeting concluded that the second phase of CPFTA should be deferred for some period to analyze the benefits and losses and further analyze as what exactly went wrong in first phase negotiations concluding to development of huge trade deficit with China.

Pakistan should ask China to facilitate entry of significant export share from Pakistan, which demand of stakeholders in Pakistan appears to be realistic in view of rising deficit since first phase from 2.9 Billion USD to over 17 Billion USD.

Further this deficit number on exchange of electronic data may cross 20 Billion USD. The outcome of such negotiation should also take care of issues of balance of payments, which are also recognized by the multilateral negotiating mechanisms.

The participants also asked for free access and publication of negotiating draft with GoP on all proposed matrix and reasons thereof being considered to be negotiated in second phase of CPFTA.

The proposed draft on negotiation be provided with reasons of endeavoring win-win situation available with GoP negotiators in respect of phase-II negotiation of FTA with China with complete analysis as how the present and future of industries will be protected by fiscal incentives, through tariff rationalization and other measures deem necessary to keep the country further falling from the declining GDP growth.

April 5, 2019