Heartening, indeed, it is to lean that Pakistan and China signed an agreement in Beijing on December 10 to enforce Early Harvest Programme (EHP), aimed at reducing tariff on a number of industrial and agriculture products from January 1, 2006.
It was initialled by Pakistan's Commerce Minister, Humayun Akhtar Khan, and his Chinese counterpart, Bo Xilai. Later, the two ministers told reporters at a joint news conference that it was a historic accord, with both sides together laying a strong foundation for growth in economic relations.
It was marked by a common urge to raise their mutual trade in conformity with their exemplary friendly relations dating back even prior to restoration of China's United Nations' membership.
The agreement followed bilateral talks held between the two ministers, at the conclusion of the second round of negotiation on Free Trade Agreement (FTA). A significant feature of the agreement, as noted by the Chinese Minister, is that Pakistan is the first country with which China would have a free trade arrangement under FTA.
Pointing out that the leadership of the two countries attached great importance to their bilateral ties, he described the EHP as manifestation of their desire for developing comprehensive partnership in all areas of mutual interest.
As for the agreement's significance and timing, reference may be made to the observation that "early harvest" programme is the first step to establish Sino-Pakistan Free Trade Area, and that the Chinese government would encourage its businessmen to increase their purchases from Pakistan to correct the balance of payment position.
While saying so, he also stated that they were looking forward to increase investment in Pakistan as well. That the two ministers during their talks also agreed to make joint efforts to develop a consensus on the core issues that would come up for discussion at the Sixth Ministerial Conference (MC6) of the WTO.
It will be noted that, evidently, distressed by the rich nations' reluctance to offer a fair deal to the developing and poor countries they have intensified efforts for increased mutual trade and economic co-operation of which FTA and EHP form parts.
Both Pakistan and China have been pursuing this effort in all seriousness. It will be recalled that the two countries completed the first round of negotiation on FTA in August this year, with officials of the two sides also discussing Rules of Origin, as an essential prerequisite to the operation of the EHP, accord on which was reached and signed earlier in April.
That had followed talks between Prime Minister Shaukat Aziz and Chinese Premier Wen Jiabao. According to the understanding, Islamabad and Beijing were to initiate trade under EHP from January 1, 2006.
Significantly, at a seminar in September, organised by the Export Promotion Bureau and the Pakistan Embassy, major Chinese companies assured support to Pakistan, for enhancing bilateral trade under the EHP, particularly through the land route.
It may also be recalled that last September Pakistan proposed a roadmap of nine-point measures to develop a mutually beneficial economic and trade ties with Bangladesh. That was at the Pakistan-Bangladesh Joint Economic Commission, which had met after a gap of seven years.
Among other proposals, in this regard, prominently featured setting a target of $1 billion bilateral trade by 2007 through EHP. Later, in October, agreement on EHP for Free Trade Area (FTA) between Pakistan and Malaysia was signed as Prime Minister Shaukat Aziz swung through the Far East in search of new economic partnerships and foreign investment. It is based on 2004 statistics and the Most Favoured Nation tariffs of January 1, 2005.
Under the EHP, now concluded Pakistan and China will enjoy tariff reduction altogether on about 3000 items, in three phases up to January 2008. According to the agreement, 486 categories of Chinese goods exported to Pakistan will enjoy the zero-tariff treatment; these will be 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 vegetables, fruit, stone materials, cotton fabrics and man-made fabrics.
The two countries will start the tariff reduction process on January 1, 2006, and the tariffs will reach zero by January 1, 2008. From the same date, China will also cut its tariffs by 27 percent on 1,671 kinds of products from Pakistan, and Pakistan will cut tariffs in an average range of 22 percent on 575 kinds of products from China.
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