ISLAMABAD: Pakistan and China are all set to hold the long-awaited 8th round of China-Pakistan FTA (CPFTA) on September 14-15 in Beijing.

Secretary Commerce, Younus Dagha, who is unhappy with the progress on the pact, will lead the Pakistan team. Pakistan’s powerful Commercial Counselor to Beijing, Irfa Iqbal, who refused to return despite the rejection of her summary for extension in tenure in Beijing by the former Prime Minister Nawaz Sharif, will be part of the Pakistani team. She was purportedly transferred from Germany to Beijing on the advice of a top man in Punjab.

A two-member Commerce Ministry’s team comprising Taimur Tajammal and Shafiq Shehzad Baloch gave on Friday a detailed briefing to Commerce Minister, Pervaiz Malik on CPFTA and the proposed Thailand Pakistan FTA.

Commerce Minister was apprised that China-Pakistan trade which was around $ 4 billion in 2006-07 reached an all time high of $ 13.77 billion in 2015-16. Pakistan’s exports jumped to $ 1.669 billion in 2015-16 from $ 575 million in 2006-07. Correspondingly, China’s exports to Pakistan increased to $ 12.1 billion in 2015-16 from $ 3.5 billion in 2006-7.

During the first three years of implementation of phase-1 both sides reduced tariffs on almost 36 per cent tariff lines to zero per cent duty. Phase-II was supposed to commence from the sixth year of the entry into force of the agreement (by 2013) and by the end of second phase both sides would have reduced tariffs on 90 per cent tariff lines to zero per cent duty.

The sources said, FTA with China covers more than 7000 tariff lines at the 8 digit level of the HS code. Pakistan secured market access for products of immediate export interest such as cotton fabrics, blended fabrics, synthetic yarn and fabrics, knit fabrics, home textiles, minerals, sports goods, cutlery, surgical goods, kinnow, mangoes and industrial alcohol etc.

Pakistan and China began negotiations on the second phase of Pak-China FTA in 2012. So far seven meetings have been held in this regard. In the initial meetings, Pakistan informed the China that the Margin of Preference granted to Pakistan under the CPFTA has eroded owning to the subsequent FTAs between China and other countries whereas Margins of Preference granted by Pakistan to China remained intact. Furthermore, the concerns of local industry being hurt by cheap Chinese imports were also conveyed.

Pakistan sought adjustments in the 1st phase. On the insistence of China that all concerns would be addressed in the second phase, Pakistan agreed to start negotiations on the TRM of the next phase based on principles of reciprocity in favor of Pakistan and to the 1st phase being independent of second phase. However, during the 6th meeting it transpired that both sides had different interpretations of the two agreed principles.

China’s proposed TRM for the second phase of the CPFTA entails overall tariff elimination on 90 per cent of tariff lines. On 70 per cent tariff lines, duties would be immediately reduced to zero on the date of entry into force of the second phase of CPFTA whereas the remaining 20 per cent tariff lines would be divided into two equal slabs.

On the first 10 per cent of these tariff lines, duties would be reduced to zero within five years and on the remaining tariff lines within ten years.

The 7th meeting on the negotiations of the second phase of CPFTA was held in Islamabad on December 6-7, 2016. Pakistan once again conveyed its concerns to China on the impact of the 1st phase of the CPFTA.

“Since Pakistan’s concerns cannot be addressed through the Chinese interpretation of the two agreed principles, Pakistan proposed that before entering into the second phase, China may grant immediate concessions on 35-40 tariff lines of Pakistan’s prime export interest with the objective to abate the concerns of local industry as well as a confidence building measure,” the sources added.

The Chinese side again insisted on commenting on the second phase and proposed that Pakistan may take longer and seek additional categories in the TRM to achieve a 90 per cent liberalization level. Both sides agreed to consult their respective stakeholders on each other’s proposals and respond during the next meeting.

On the investment side, Pakistan referred to the protocol signed between the two countries in 2009 whereby Pakistan agreed to offer an incentive package to Chinese investment in the Special Investment Zones. China, in return, would reduce/eliminate tariffs on the products produced in these zones. Both sides agreed to hold further in-house consultations in order to explore ways and means to implement the protocol.

On the directives of Prime Minister’s office, an inter-ministerial task force has been constituted to ensure proactive and sustained engagement with China for accelerated progress in matters related to MoU on Electronic Data Interchange (EDI) as part of determination of valuation rulings on major imports. The Additional Secretary (Trade Diplomacy) is the chairman of the task force with members from Ministry of Foreign Affairs and FBR.

According to sources, the Commerce Minister was also briefed about the bottlenecks in finalization of FTA with Thailand. He was apprised that incumbent Secretary Commerce personally visited Bangkok and held talks with his counterpart.

Pervaiz Malik expressed satisfaction over the progress of FTA negotiations and the preparation of the negotiating team and directed them to work vigorously to conclude the agreements in the best interest of Pakistan and at the same time address the concerns of the local industry.

Speaking to the negotiating team, the Minister argued that while negotiating an FTA with Thailand, Pakistan is also looking to access a huge untapped market of the whole East Asian Region. From the same region, the Minister added, Pakistan has already concluded successful FTAs with Malaysia and Indonesia.

Earlier, the Pakistan’s Ambassador to Belgium Naghmana Hashmi and Pakistan’s Economic Minister in Brussels, Omer Hameed called on Minister for Commerce and briefed him about the situation of bilateral trade between Pakistan and Brussels and appraised him on the areas of trade & investment between the two countries.

Pervaiz Malik directed them to work relentlessly to boost exports of Pakistan to Brussels and to look for opportunities to increase trade, investment and cooperation between the two countries.

The Commerce Minister later also visited the National Tariff Commission Office in Islamabad where he was given a briefing by Chairman NTC, Qasim M. Niaz about the structure, working, achievements and problems faced by NTC.

Commerce Minister, Mohammad Pervaiz Malik expressed satisfaction over the performance of NTC and pledged full support of the Commerce Ministry in resolving the issues faced by them.