Trade interests brook no complacency

That China and Pakistan are very close friends is a fact. That their friendship is deeper than the oceans and taller than the Himalayas is also a fact. So no one from Pakistan should doubt China's approach to trade with Pakistan. China, according to its ambassador in Pakistan, Yao Jing, will never want to have any "intentional" trade imbalance with Pakistan. According to him, the current trade imbalance is the result of specific reasons, which include larger-scale infrastructure projects and some kinds of machinery from China for CPEC projects. But this is a temporary phenomenon because CPEC will finally improve Pakistan's manufacturing capability and reduce the manufacturing cost of Pakistani products. For the long-term, China believes that Pakistan's exports and manufacturing capability will improve. "I understand that there are some kinds of concerns from Pakistan's private sector and manufacturers on the FTA. I would say China looks at Pakistan as a special partner and we will never like to hurt your industry through this kind of trade. Basically, our intention is to have a more convenient and facilitating mechanism of bilateral trade between the two countries. We want to encourage and facilitate trade with Pakistan, and for this purpose would extend whatever facilitation is required," the Chinese ambassador was quoted as saying at a press conference that he addressed with Pakistan's commerce minister Pervaiz Malik in Islamabad recently.
That every Free Trade Agreement (FTA) has its upsides and downsides is a fact that has found its best expression from the divergent positions taken by China and Pakistan on the timing of trade concessions under the second of phase of their FTA. The present second phase "stalemate" however does raise a question: why have the two largest economies in Asia, China and India, failed to enter into a free trade agreement despite growing bilateral trade between the two neighbours? The answer is quite simple: India's domestic industry doesn't want an FTA with China. Although the nature of relationship between Pakistan and China is vastly different from that between India and China, and no country would like to compromise its economic interests through an agreement. The Chinese response to Pakistan's request that it must grant unilateral duty concessions on at least 70 items, and with immediate effect has not been encouraging. Islamabad has also sought similar trade concessions whatever available to ASEAN countries. Addressing the press conference, the Chinese ambassador has made it clear that although his country is ready to extend maximum trade concession to Pakistan in the second phase of FTA on items which are allowed in the Chinese market.
But this goodwill gesture is characterized by a difficult condition: the concession will be allowed keeping in view trade pacts that China has already signed with other countries and its strict regulations. This gives birth to a profound question, although the Chinese ambassador's signal of more trade concessions for Pakistan has come at a time when the two countries will be holding the 8th round of talks on FTA-II on February 7. But can our own goods and products compete in terms of both quality and price with the ones already available in the Chinese market? The Chinese approach to our ordeal could be easily discerned from the Chinese ambassador's remarks. According to him, the Pakistan minister has suggested to him that export of some Pakistani items like sugar, maize, edible oils, vegetables and seafood should be facilitated. His answer was quite simple, and plausible: that China would buy from Pakistan whatever products are "competitive." He said that "I am suggesting to the minister for commerce and ministry that first China would invite Pakistani exporters to China to identify commodities familiar in the Chinese market, and in reciprocation Pakistan should invite Chinese exporters in Pakistan to identify the potential of their products in the Pakistani market."
Pakistan knows well that its industry is far beyond China's, or even any Chinese partner in the ASEAN. China is fully appreciative of Pakistan's downside as far as manufacturing on a large-scale is concerned. That is why it has pledged that in the long-term China would support Pakistan in Special Economic Zones and through joint ventures, which would help increase its capacity to manufacture quality goods for exports to international markets.
Although the Chinese envoy's position makes a greater sense insofar as bilateral trade between the two counties is concerned, Beijing could look into the possibility of granting Pakistan tariff reductions on the pattern that it follows in the case of ASEAN countries, Pakistan's advantage in textiles and some other areas can be translated into a big boost to Pakistan's industry. But such a concession on China's part will brook no complacency by our manufacturers. As pointed out by the Chinese envoy, "the problem right now is to identify more commodities with competitive quality and price. The problem is too much shortage of items. China would purchase commodities of $10 trillion over the next five years and Pakistan can get its share." The question is: does our industry possess the required wherewithal and the skilled workforce to cash in on this huge opportunity that China has thrown up for Pakistan's trade and industry?