Pakistan’s exports to China even under 2nd Phase of Pak-China Free Trade Agreement (PCFTA) will not increase until the tariff line offered by China to Pakistan’s competitors Bangladesh, Vietnam and India under ASEAN-China FTA is also made available to Pakistan as it is one of the major reason that Pakistan’s market in China has been eroded away.
This was stated by Syed Mazhar Ali Nasir, Sr. Vice President & Chairman Budget Advisory Council of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) in his welcome address while inaugurating the FPCCI Round Table Conference on China-Pak Free Trade Agreement held simultaneously through video conference at FPCCI Head Office Karachi; zonal office, Lahore and Capital Office Islamabad under his Chairmanship. The Conference was attended by a large number of stakeholders; traders; academia and prominent businessmen including Iftikhar Ali Malik, Sr. Vice President of SAARC CCI, Dr. Mirza Ikhtiar Baig; Captain Abdul Rasheed Abro, Zahid Umar etc, who endorsed the proposals of the Chair.
Mr. Iftikhar Ali Malik, SVP, SAARC CCI said, “While it is possible that changes in tariff are solely responsible for the decline in exports to China, an oft ignored factor is the overall decline in cotton yarn production that the country faces, since Pakistan’s major export item to China was cotton yarn/fabric. The unpredictability in supply from Pakistan seems to have been filled-in by Vietnam and India. Secondly, the main export basket reveals that Pakistan was a major exporter of raw materials and semi-finished products to China as, in the first phase of FTA, China did not help to encourage or accelerate export of value added products from Pakistan”. He underscored the need of Research and Development in Agricultural sector to increase its per acre yield which is the only way to enhance the capacity and base of Pakistan’s exports. He elaborated that Pakistan is an agricultural country and we need to increase the quality and quantity of our agri-products such as vegetables, foods, rice, cotton, sugar etc.
The learned speakers of the Conference expressed that non-signing of CPFTA-II has provided a sigh of relief to the trade and industry and has helped it to come out of shock and worries about the survival of existing industrial sector of Pakistan and its future development as industrialization is the key to economic self-sufficiency and sustainable development. They further urged that the stakeholders should be taken on board while framing and finalizing the recommendations on PCFTA
The speakers elaborated that Pakistan is a developing country and its industrial base is very thin as compared to China, therefore, need of the hour is to protect the industrial growth of Pakistan which is already suffering from many faceted difficulties for its survival.”Since first FTA came into force in November 2006 Pakistan Trade Balance with China has worsened considerably although total bilateral trade between both the countries grew exponentially to $19bn in 2015/16 out of which imports from China was $16.5bn and export to China was only $2.5bn showing a trade deficit of $14bnwhich is slightly less than half of the Pakistan’s total trade deficit of $16.7 bn”, they analyzed. The Pakistan’s optimal capacity to export is $ 30 billion which need to be enhanced by facilitating the agricultural and industrial sectors.
The learned speakers and participants of the conference informed that Pakistan and China started negotiations on the second phase of the Pak-China FTA in 2011. So far, 10th meetings have been held in this regard. China was not willing to offer Pakistan substantial market access on items of Islamabad’s interest.
The Conference after a threadbare discussion evolved a host of recommendations for inclusion in the 2nd Round of FTA, summarized as follows:
• While revisiting Pakistan-China Free Trade Agreement (PCFTA) it should be designed to promote the economy of Pakistan. The measures must be taken to balance of import and export and decrease the trade deficit. Pakistan has so far benefited from 1st Round of FTA to the tune of 4% only while China has derived 64% benefit from FTA-I.
• Pakistan must be very careful to sign the 2nd Phase of FTA and include maximum finished goods / items which can be exported to China on tariff line offered by China to ASEAN countries.
• There is an urgent need to convince China to given unilateral concession to Pakistan with tariffs pegged with ASEAN’s tariff.
• Pakistan should explore the possibility of signing of a trade agreement with all the 10 ASEAN countries separately in case if it is not possible for Pakistan to become a member of ASEAN as India has signed a trade agreement with ASEAN Block.
• Pakistan must make effort to stop selling their most valuable gem stones, marble, cotton etc., in raw form and come out to an agreement with China so that some process of manufacturing is established in Pakistan for value addition of these items and Pakistani industry is established and improved.
• Pakistan must make agreement with China for transfer of technology to Pakistan.
• Agricultural Research Center must be established to provide latest biotechnologies for better yield of our agri-products.
• The concerned stakeholders should be taken on board while framing and finalizing the recommendations on PCFTA