China-Pakistan Free Trade Agreement Phase II pushes friendship to next level
By Zamir Ahmed Awan
People's Daily Online

Pakistan and China have enjoyed an ideal friendship in all spheres, including trade and commerce, since the early days of establishing formal diplomatic relations. However, to boost it further, both countries opted to sign a Free Trade Agreement (FTA). The first-ever FTA was signed between the two Iron Brothers in 2006 and was implemented in 2007.


File photo: CGTN

Trade between China and Pakistan rose to $19 billion in 2018, as both countries worked together closely to identify measures to boost Pakistani exports to China.

The China-Pakistan FTA phase-II was concluded after the 11th round of negotiations in April 2019, and was signed during Pakistan Prime Minister Imran Khan’s recent visit to China. The new agreement relaxed tariffs for Pakistani exports and gave Pakistan duty-free market access on 313 tariff lines. It became effective from Dec. 1, 2019.

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

Pakistan is already enjoying zero duty on the export of 724 products to China under the first FTA, signed in 2006. After the implementation of the second FTA, Pakistan will be allowed to export a total of 1,047 products to China on zero duty.

Currently, cotton yarn, copper, rice, chromite nephrite, seafood, and ethylene alcohol are the main products Pakistan exports to China.

The new FTA will particularly benefit the textile sector, as textile exports to China will become virtually duty-free. Pakistani manufacturers will also be able to export a number of other items, including leather and agriculture products, as well as confectionery and biscuits, to China.

Pakistan is passing through the worst economic crisis in the last seven decades. The country’s foreign debt has crossed almost 100 billion US dollars. In fact, the value of Pakistan’s total exports stands at around $20 billion, whereas its imports stand at approximately $50 billion. Pakistan faces a difficult journey to narrow this trade deficit of almost $30 billion.

It is believed that the implementation of the second phase of the trade agreement will provide great relief to Pakistan in overcoming the trade deficient.

The per capita income in China is around $10,000, while the average person’s purchasing power is gradually increasing. Pakistani policymakers give China the highest importance concerning its target export market.

China is the only country in the world that has organized import expos, proving it wants to import quality products from different countries, including Pakistan. If Pakistani traders actively participate in various trade fairs in China to market their goods, they can achieve import orders at a reasonable price. This, in turn, will continue the positive relationship between Pakistan and China and help people from both countries trade with each other.

Author: Zamir Ahmed Awan is a senior fellow with the Center for China and Globalization (CCG) and a sinologist at the National University of Sciences and Technology in Pakistan.