China, Pakistan to begin second phase of trade talks next week

Pakistan Commerce Minister Pervaiz Malik has asked China to revise the existing free trade agreement (FTA) on the less-than-equal reciprocity principle ahead of the eighth round of negotiations on the second phase of the FTA to be held in Beijing on September 14 and 15.

"We will demand an early-harvest programme in the existing FTA that will cover 100 items of Pakistan's export interest," the Dawn quoted Malik, as saying.

The negotiations were held to overcome the trade imbalance that exists between the two countries.

Commerce Secretary Younus Dagha will lead a technical team to represent Pakistan in the secretary-level talks.

Malik said China signed several bilateral and regional FTAs, which limited the benefit of preferences to Pakistan. China's FTA with the Association of Southeast Asian Nations countries has also made the preferential treaty for Pakistan mostly irrelevant.

The minister said Pakistan will urge China to enter into the early-harvest programme. "We also raised this issue with Pakistan's foreign minister before his visit to China," he said, adding that the ministry also sought help from the Foreign Office to make the treaty beneficial.

Pakistan may not sign the second phase of the FTA as it fears that the move will further increase imports from China. Authorities in Beijing are unwilling to accept Islamabad's demand for the revival of the preferential treatment for exportable products under the FTA, the Dawn reports.

As per the original plan, the second phase was supposed to be implemented from Jan 1, 2014. Both countries started negotiations for the second phase in 2011. The FTA covers more than 7,000 tariff lines at eight-digit tariff code under the Harmonised System (HS). Both sides have held seven rounds of negotiation on the second phase to break the deadlock.

A commerce ministry report revealed that Pakistan could not utilise the concessions granted by China under the first phase. Pakistan's key exports to China were raw material and intermediate products, such as cotton yarn, woven fabric, grey fabric etc. Value-added products were missing despite the fact that some of these products, like garments, were included in the concessionary regime.

It only exported in 253 tariff lines, where the average export value was $500 or more, which was around 3.3pc of the total tariff lines (7,550) on which China granted concessions to Pakistan.