ISLAMABAD   -   Pakistan hopes that second phase of free trade agreement (FTA) with China would help in reducing its trade deficit with the neighbouring country.

Pakistan and China had recently evolved a consensus on the FTA-II in Beijing. The second phase of FTA was supposed to start from the sixth year of the agreement ie 2013, but was delayed as officials from both countries failed to reach an agreement despite meeting for more than 11 times. The negotiations on the Phase-II of PCFTA began in 2011.

Advisor to Prime Minister on Commerce, Industries and Production and Investment, Abdul Razak Dawood has said that FTA-II with China would be signed later this month during the visit of Prime Minister Imran Khan to Beijing. He informed the media last week that China would also extend unilateral market access to hundreds of Pakistani products which were on the table for the last one year. China has also agreed to give another special quota of one billion dollars to Pakistan for export of potato, wheat, onion and cherry, in addition to existing one billion dollars.

“Both the sides had made a breakthrough in the stalled negotiations during recent talks, which will lead to sign the agreement during Prime Minister’s visit to China,” said an official of the ministry of commerce. He did not share further details only by saying agreement is in Pakistan’s favour. However, another official said that Pakistan would get market access for 301 tariff lines, which will cover most of its exports and allow export of commodities which are currently negligible.

He informed that Pakistan’s exports to China would increase to $2.2 billion by the end of current year from existing only $1.2 billion. Later, it would enhance to $3.2 billion following the additional quota of one billion dollars for export of potato, wheat, onion and cherry, The FTA-II would covers nearly 7,000 tariff lines at the eight-digit level of the HS code. Both sides reduced tariffs on almost 36 per cent of the tariff lines to zero during first three years of PCFTA’s Phase-1. Moreover, at the end of the FTA-II, both sides were to reduce tariffs on 90pc of the tariff lines to zero.

The Federation of Chambers of Commerce and Industry (FPCCI)’s President Daroo Khan Achakzai had recently said that government should enter into second phase of FTA with China but not at cost of closing our local industries and adversely affecting the economy at large. While commenting on first phase of FTA, he said that it had enhanced Pakistan’s trade deficit with China to $17 billion.

It is worth mentioning here that negotiations of FTA-II between two countries had started in 2012. Under the first phase of FTA, Pakistan’s trade balance with China had worsened in last various financial years. Pakistan’s major exports to China are cotton yarn, chemical material, crude vegetable material, rice, raw hides and skins, fish and fish preparations. On the other hand, the major imports of Pakistan from China are machinery and its spare parts, manufactured fertilizer, chemical elements, yarn and thread of synthetic fibre, iron and steel, chemical materials and products, vegetables and synthetic textile fibre, road vehicles and their parts, non-ferrous metals, tyres and tubes of rubber etc.