CPFTA talks conclude with breakthrough

After two days intense negotiations on FTA-II, China has indicated that it would consider allowing import of 70 high priority items of Pakistan''s interest prior to finalization of phase-II of the pact. This was conveyed in an official statement issued by Secretary Commerce, Younus Dagha who headed the Pakistani team in the negotiations held in Beijing.
The 8th meeting of 2nd Phase Negotiations of China-Pakistan FTA (CPFTA) held in Beijing on 14-15th, September, 2017 concluded with a breakthrough after an impasse that had lasted for a number of negotiation rounds, says the announcement.
Informed sources told Business Recorder that during two days detailed discussion following agenda for the 8th meeting was discussed:
Trade in Goods The meeting may discuss issues relating to the structure of tariff reduction modality, including final elimination level, phase-out periods and response to key items of export interest, etc.
Trade in Services The meeting may discuss both sides'' respective interests and concerns regarding the enhancement of market access of trade in services, including movement of natural persons, building upon the outcome of 1st phase negotiations.
The meeting discussed Chinese investment (relocation and Greenfield) in Pakistan''s export oriented and value added industrial sectors including discussion on amending protocol to the CPFTA
The meeting also discussed implementation issues relating to Electronic Data Exchange under CPFTA. The Chinese side will update the progress on this issue. The meeting discussed implementation issues relating to SPS/TBT issues under CPFTA.
Regulatory Duty of Pakistan The meeting discussed the issue of regulatory duty imposed by Pakistani side. The Pakistani side will update the progress on this issue. The meeting discussed issues relating to levy of 20% tariff on MDI by Pakistan due to the transposition of HS code. The Pakistani side will update the progress on this issue.
During discussion dead lock was created several times due to rigid attitude of China side. The round was not so successive. Pakistan side proposed TRMs as 40-45 percent immediate reduction, 15 percent to be reduced from 3 to 7 years, 20 percent in 5 to 15 years and 20 percent as sensitive. For China 70 percent immediate reduction, 10 percent in 5 years and 10 percent 10 years and 10 percent sensitive. The Chinese side suggested same as for Pakistan suggested it self. The minutes were proposed to signed during a week. Technical and legal experts of both countries will discuss and finalize the draft of FTA and will also prepare the lists. This all will be considered final after minutes are finalized.
The meeting was co-chaired by Younus Dagha, Secretary Commerce, Pakistan and Wang Shouwen, Vice Minister for Commerce, China. Pakistan Commerce Secretary pointed out that the preference on 79% of Pakistan''s exports to China had been eroded. Pakistan was also concerned over not having been able to get a meaningful market access during the first phase of the FTA.
Pakistan had been raising this issue with the Chinese side time and again during the previous rounds without any agreement on how to address these concerns. It was in this backdrop that Secretary Commerce decided to lead himself the negotiations with the Chinese Vice-Minister. "After two days of intense negotiations, the Chinese side agreed to address the major concerns of the Pakistani side regarding preference erosion for Pakistani exports and meaningful market access during the 2nd phase. In this regard, Pakistan shared a list of around 70 high priority items of its export interest for immediate market access, which the Chinese side agreed to consider favourably. These tariff lines constitute more than 80% of Pakistan''s current exports to China. The meeting ended with exchange of pleasantries and a resolve to continue working together to make China Pakistan Free Trade Agreement a win-win proposition for both the countries," says the announcement.
During the last seven rounds, Pakistan had been pleading the case for restoration of its preference under the FTA which had been eroded due to subsequent FTAs of China. Secretary Commerce, who is personally heading FTA negotiating teams, especially with Turkey and Thailand, recently informed a Parliamentary panel that in the past FTAs were not negotiated appropriately. A similar observation was made by Senate Committee headed by Syed Shibli Faraz. Senator Saleem Mandviwalla pointed out that under-invoicing of $ 4 billion per annum has been recorded in trade with China due to non-sharing of Customs live data.