Pakistan is reportedly unhappy with China over non-tariff barriers imposed by China on Pakistani exports despite a Free Trade Agreement (FTA), well informed sources told Business Recorder. "We are very concerned over the non tariff barriers in China because of which our companies are at a distinct disadvantage against products of Chinese companies," the sources added.

China and Pakistan concluded the second phase of FTA negotiations on March 11, 2001 held in Islamabad. The prime focus of talks was goods and investment. Pakistan China FTA was signed on November 24, 2006 during the visit of Chinese President Hu Jintao to Pakistan. The agreement became operational from July 1, 2007. Initially, the agreement covered trade and goods and investment. Thereafter, trade in services was incorporated in the pact on October 10, 2009.

According to the FTA, the following Terms of References (ToRs) were the basis for negotiations: (i) To further liberalise, facilitate and promote transparency for trade and investment flows;(ii) to further strengthen economic and technical co-operation in areas of mutual interest to support the objectives of the FTA;(iii) to enhance market access for trade in goods, services and investment; and (iv) to take progress action with consideration of the particular sectoral sensitivities of the parties.

On the first day of talks, both teams presented evaluation reports on the implementation of FTA and held discussion on future framework of negotiations whereas on the second day tariff reduction modalities came under discussion. The foreign trade figures compiled by the Federal Bureau of Statistics (FBS), reveal that exports fetched $1.154 billion in 2009-10 against $4.414 billion, depicting a trade deficit of $3.257 billion in favour of China. Trade deficit was about 3 billion dollar in 2006-07 which has now touched $4.414 billion. However, Pakistani exports have also increased from $576 million in 2006-07 to $1.154 billion.

Commerce Minister, Makhdoom Amin Fahim who met the Chinese delegation before formal commencement of second round of negotiations, expressed serious concerns over growing trade deficit with China. Pakistan has requested China for enhanced market access of 268 items, co-operation in skill enhancement/capacity building of Pakistani export industry besides facilitation in participation in exhibitions.

Pakistani team also urged Chinese team to send a buying mission which according to the commerce ministry will be a positive signal for the exporters. During deliberations, Pakistan team conveyed to the Chinese side that current state of trade affairs is unacceptable and asked for steps to facilitate Pakistani exports in accordance with the FTA.

Recently, Chief Executive, TDAP, Tariq Iqbal Puri, acknowledged that China is using non-tariff barriers to block Pakistani exports and Pakistani exporters, in spite of zero duty status, are not able to compete in China. Pakistan has also announced 2010-11 as Exports Year and decided to focus on China as, at present, China is importing raw material from Pakistan and initiatives would be taken to meet China's import demand through value-added products instead of raw materials.

Puri argued that an increase in cost of production in China is compelling Chinese producers to quit from the clothing sector, which is creating new export opportunities for Pakistani exporters for those export products where Chinese don't have an edge on Pakistani exporters.

March 13^th, 2011

Source: Business Recorder

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