Coming in the midst of mounting apprehensions the world over on what is being, generally, viewed as 'invasion' of Chinese goods, in the global market, it is heartening to learn that Pakistan and China have finalised two separate lists of 52 items, on which duty would be reduced to zero rate on either side, effective January 1, 2006.
This was revealed on August 5 by Zafar Mahmood, Vice-Chairman of the Export Promotion Bureau of Pakistan, who led the Pakistan team at a meeting with the officials of the Chinese Ministry of Commerce. While breaking the welcome news, he pointed out that the duty-free structure had been worked out under the Early Harvesting Programme, which is a part of the already operational Free Trade Agreement between the two countries.
It may also be noted that, as mutually agreed upon, the programme will be implemented in three phases. As he said, the first reduction would be in place on January 1, 2006, and by January 1, 2008 tariff would be brought to zero on a number of other items, which have already been identified by the two sides. Viewing the duty-free arrangement as a big advance in their bilateral trade, he pointed out that the existing trade volume does not match the tremendous goodwill and exceptional Sino-Pak relationship.
Zafar Mahmood recalled that it was decided during Prime Minister Shaukat Aziz's China visit last December, that a joint group would be established to study the feasibility of Pak-China Free Trade Agreement. Although it was earlier thought that the study would take six months, a very short time for assignments of this kind, the completion of the task in only three months was remarkable in its own way. Needless to point out, this would testify to the desire of both the countries for constantly adding more to the gainful thrust of their relationship.
The duty-free items have been decided on a reciprocal basis to facilitate each other, thereby, strengthening their economic partnership. The 52 items Pakistan would export to China duty-free include bed linen, table linen, other home textiles, terry towels, blended fabrics, synthetic yarn, synthetic fabrics, mangoes, oranges, dates, tarpaulin and marble articles, surgical goods, sports goods, cutlery, certain dyes, guar gum and medicines. As against this, the list of items that Pakistan would import duty-free from China include industrial machinery and chemical raw material.
The cut in import duty on Chinese machinery and raw material should reduce the cost of industrial ventures and help generate increased business activity in the country. Since the FTA with China came into operation, China has given tariff concessions on 893 items, with Pakistan reciprocating by concessions on 188 items.
Now under the EHP, the two countries will be extending concessions on more items, gradually bringing the import duty to zero rate by 2008. As for future prospects, the EPB Vice Chairman made a pointed reference to the keen interest the leadership of the two countries has been displaying in widening the areas of economic exchanges. With regard to immediate gain to Pakistan from the new measures, his assessment that it would help overcome the huge trade deficit in their bilateral trade, should leave little to doubt.