Free trade agreement: China talks in second phase after under-invoicing mechanism

Pakistan and China have decided to halt talks on second phase of Free Trade Agreement (FTA-II) until review of first phase is completed and mechanism is finalised to deal with under-invoicing which is causing massive financial loss to Pakistan. This was disclosed at a meeting of Senate Standing Committee on Commerce headed by Senator Syed Shibli Faraz. Senator Salim Mandviwalla, who is also Chairman Senate Standing Committee on Finance, gave a tough time to the officials of Commerce Ministry. Commerce Minister Engineer Khurram Dastgir briefly attended the meeting.
When the issue of Free Trade Agreements (FTAs) came under discussion, Commerce Secretary Azmat Ali Ranjha acknowledged that Pakistan has not harvested the benefits of FTAs to the extent reaped by its partners. Replying to questions on flawed FTA with China, Commerce Secretary said that Pakistan and China held talks on FTA-II last year, adding that both sides had exhaustive discussions and decided to take a breather for the time being on this issue. Commerce Secretary acknowledged that there is a difference of $ 4 billion in bilateral trade figures of China and Pakistan. However, Senator Salim Mandviwalla claimed that the difference stood at $ 8 billion which is being doled out to China each year.
Chairman Standing Committee enquired whether FTA-II would be in favour of Pakistan or otherwise, prompting Additional Secretary Commerce Asad Haya-ud-Din to state that the first review of FTA-1 would be completed then both sides would think about FTA-II. He said, 53 per cent Chinese goods are being imported at zero duty whereas Pakistan is exporting only 23 per cent tariff lines.
"We have conveyed to China to bring its 23 per cent tariff lines at par with our 53 percent tariff lines then we will consider the second phase," he added. Commerce Ministry''s Additional Secretary gave a detailed presentation on FTAs with Malaysia, Sri Lanka, SAFTA, PTA with Indonesia in addition to proposed FTAs'' with Turkey and Iran. FTA with Turkey is in final stage. Imports from India were $ 1.78 billion in 2015-16 whereas exports stood at $ 303.7 million. Exports to Afghanistan were $ 1.438 billion in 2015-16 against imports of $ 410 million.
The committee was informed that Pakistan is very serious about signing FTA with Iran, adding that an Iranian delegation is expected next month. Commerce Minister sought committee''s help to get the control of Export Development Fund (EDF) from the Finance Ministry. Total collection from EDF is around Rs 6 billion per annum but Finance Ministry releases only Rs 1.2 billion.
According to Secretary Commerce, Rs 30 billion is pending with the Finance Ministry under the EDF head for the last 9-10 years. Senator Mandviwalla was of the view that it is exporters'' money, and Finance Ministry cannot hold it. Senator Ilyas Bilour also supported the view.
Commerce Minister who visited Germany to attend textile exhibition said that the Ministry is considering preparation of country''s brand image and marketing strategy which would be shared globally.
Committee urged the government to improve its export strategy to which the Commerce Minister said that major exporters have been requested to contribute towards formulating an improved strategy
The committee was informed that Expo Centre Peshawar would be inaugurated in February or March this year as additional funds of Rs 300 million are being arranged from the PSDP which were earlier allocated for Islamabad Expo Centre. The committee also approved Commerce Ministry''s budget for 2016-17 in spite of officials'' failure to satisfy the committee''s queries.
Senator Salim Mandviwalla also urged the Commerce Ministry to discourage import of steel to rescue domestic steel industry. He was of the view that imposition of Regulatory Duty is not the solution to the problem. Besides others, Senator Usman Kakar, Senator Karim Khawaja, Senator Saud Majid and Senator Raheela Magsi attended the meeting.