Pakistan to export 1,037 duty-free products to China

Monitoring Desk

KARACHI: As the second phase of the Pak-China Free Trade Agreement (FTA) comes into force from January 1, enabling the country to export 1037 products to China on zero duty, Pakistani industrialists are caught in a classic catch-22 situation, saying they will not be able to draw immediate benefits from the arrangement.

Pakistan and China on December 31, 2019, signed the second Sino-Pak FTA which will allow Pakistani manufacturers and traders to export 313 new products on zero duty to China. Pakistan already enjoys export of 724 duty-free products to the Chinese market.

“I had the honor of concluding the agreement for Pakistan in April, 2019, hoping it would help increase our exports substantially,” Sardar Ahmad Nawaz Sukhera, Secretary Commerce, tweeted after signing the agreement.

However, Pakistani industrialists say it will be hard for them to reap the benefits of the deal against the backdrop of the gradual economic slowdown. “They have relaxed 313 items, but our problem is that we don’t have anything to sell because there is not productivity,” Mian Anjum Nisar, newly elected president of the Federation of Pakistan Chambers of Commerce (FPCCI) told Arab News on Thursday. “We have witnessed deindustrialization in the last five years.”

He said that the business community is facing liquidly problems since their refunds remained unpaid while the input cost, including gas, electricity and markup, had multiplied.

Pakistan expects that the production of cotton, which is a basic ingredient for textile goods, would be around 8 million bales this year against the demand of 15 million bales. “Pakistan will have to import around 6 million bales which will have value addition impact of around $6 billion,” Nisar added.

The FPCCI fears that the current situation will result in sick industries due to high input costs, if corrective measures are not taken.

To meet the international demand, industrialists say they will have to increase the production capacity by setting up new industries. “We will not be able to draw immediate benefits from the Pak-China FTA unless we managed to enhance productivity. You need to have something to sell in a market,” the FPCCI president said.

Pakistani industrialists also view the United States-China trade war as an opportunity, though they say they are unable to draw the benefits. “This is a new opportunity as industries in China are moving toward substitution and trade will be diverted to other countries. If we succeed in capturing a portion of that trade, it will increase our exports, though we will require long term planning and infrastructure development,” he added.

The protocol for the second phase of China-Pakistan FTA was signed by both countries during Prime Minister Imran Khan’s visit to Beijing on in April 2019.

“Under Phase-II, Pakistan has secured enhanced and deeper concessions on products of its export interests, revision of safeguards mechanism for protection of the domestic industry, inclusion of the balance of payment clause as a safety valve against balance of payments difficulties, and effective enforcement of the electronic data exchange,” according to the Commerce Ministry.

Courtesy: (arabnews)