Pakistan and China here on Friday signed an agreement to enforce Early Harvest Programme (EHP) reducing tariff on a number of industrial and agriculture products from January 1, 2006.
Commerce Minister Humayun Akhtar Khan and his Chinese counterpart Bo Xilai inked the agreement at a ceremony held at a local hotel. Later, the two ministers told reporters at a joint news conference that it was the historical day, when the two sides were laying a strong foundation, bringing their trade in conformity with the excellent diplomatic ties.
The agreement followed by bilateral talks held between the two ministers and the conclusion of second round of negotiation on Free Trade Agreement (FTA).
The Chinese Minister said Pakistan was the first country, with which China would have free trade arrangement under FTA. He said the leadership of the two countries attached great importance to their bilateral ties and the EHP is the manifestation of their continuous efforts, developing comprehensive partnership in all areas of mutual interest.
The two sides declared completion of all processes to initiate the EHP from January one. The EHP was concluded following the talks held in Islamabad April this year between Prime Minister Shaukat Aziz and the Chinese Premier Wen Jiabao. Under the EHP, the two countries will enjoy tariff reduction all-together on about 3000 items, in three phases till January, 2008.
According to the agreement, 486 categories of Chinese goods exported to Pakistan will enjoy the zero-tariff treatment, relating mainly to vegetables, fruit, stone materials, textile machinery and organic chemical products.
Meanwhile, China will give zero-tariff treatment to 769 categories of goods imported from Pakistan, mainly involving vegetables, fruit, stone materials, cotton fabric and man-made fabric.
The two countries will start the tariff reduction process on January 1, 2006, and the tariffs will reach zero by January 1, 2008. From that same date, China will also cut its tariffs by 27 percent on 1,671 kinds of products from Pakistan, and Pakistan will cut tariff by an average range of 22 percent on 575 kinds of products from China.
The "early harvest" programme is the first step to establish Sino-Pakistan Free Trade Area, said Chinese Minister of Commerce. To a question, he said Chinese government would encourage its businessmen to increase their purchases from Pakistan to correct balance of payment position.
"We are looking forward to increase our investment in Pakistan as well," Bo Xilai said. The two ministers during the talks also agreed to make join efforts to develop consensus on core issues, to be discussed at the Sixth Ministerial Conference (MC6) of the WTO, scheduled to take place in Hong Kong from December 13.
The bilateral talks between the two ministers was attended by senior officials from both sides, including Pakistan ambassador Salman Bashir, leader of Pakistani negotiating team on FTA Shahid Bashir, China's chief negotiator on FTA Zhu Hong and Commercial Counsellor Shahid Mahmood. Humayun Akhtar is scheduled to leave for Hong Kong on Saturday to attend the WTO's conference.
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