Pakistan has not granted concessions on Complete Built Units (CBU) and local auto parts (SRO 693(1)/2006 under the China Pakistan Free Trade Agreement- II (CPFTA-II), well-informed sources told Business Recorder. Both countries, however, have agreed on 20 per cent Margin of Preference (MoP) on non-local parts from January 2022; and are ready to sign the long-negotiated agreement during the ongoing visit of Prime Minister, Imran Khan to China.
The sources further stated that China has agreed to give the following access on the following automotive parts and vehicles for export to China: (i) 0% on vehicles including tractors, coaches, dumpers, fire fighting vehicles, etc; and (ii) 0% on automotive parts including bumpers, brakes, gear boxes for tractors, buses, dumpers, trucks, drive-axles with differentials for tractors, road wheels, shock absorbers for cars, radiators, oil coolers, mufflers & exhaust pipes, steering wheels/columns/boxes of tractors & dumpers, frames for dumpers, and other parts for motorcycles, bicycles & wheelchairs.
Overall, China has agreed to give access to more than 50% tariff lines out of chapter 87 on imports from Pakistan from year 1-10, in different categories. These lines include Motorcycles, Tractor, Prime-movers, prime movers, Trailers/Semi-Trailers, Coaches, Dumpers, Crane lorries, mobile drilling derricks, fire fighting vehicles, concrete mixers, special purpose motor vehicles, Chassis for dumpers, bodies for buses, tractors, buses, trucks and many automotive parts.
Talking about safeguard measures, transition period will be of 10 years for category- I items, 15 years for category II; and 23 years for category III; whereas China has provided 5 years to other FTA partners.
Duration of safeguards will be 3 years, extendable by 2 years, which is not granted to any other country by China, whereas provisional safeguard measures , i.e, Emergency measure will be 180 days which can be imposed on import of any item from China, without proving injury. Compensation will be triggered upon extension of safeguard and not on first time imposition.
The sources further stated that Pakistan has regained eroded margin of preference and at the same time, unequal liberalization is favour of Pakistan. Overall liberalization for China by value is 90 per cent and is 67 per cent for Pakistan whereas implementation period for Pakistan is 15 years and 10 years for China.
In addition, balance of payment provision has been included in the agreement and elimination of mis-declaration and under-invoicing through EDF implementation. EDF coverage will be on 95 per cent of tariff lines and value. China has also agreed to eliminate duty at par with ASEAN on 313 items, and an increase of 257 tariff lines.
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