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China agrees to reduce duties to zero percent on 313 tariff lines for Pakistan under the new FTA

The Chinese government has finally offered Pakistan market access similar to that offered to countries of Association of South East Asian Nations (Asean) after seven years of negotiations.

According to Secretary Finance Mohammad Younus Dagha, the Chinese government has agreed to immediately reduce duties to zero per cent on 313 tariff lines.

Dagha led the technical team in the negotiations in his previous assignment as commerce secretary, and says he sought to secure market access to China on the pattern of the Asean economies. “We successfully got the best possible gains for Pakistan”, the secretary claimed while talking to Dawn.

Pakistan and China have concluded the second phase of China-Pakistan free trade agreement (FTA) after seven years of talks. The protocol was initialled by current Secretary Commerce Ahmad Nawaz Sukhera and Chinese Vice-Minister on April 13 in Beijing.

Agreement covers 7,000 tariff lines at level of eight-digit HS code

The final agreement will be signed by commerce ministers of the two countries during Prime Minister Imran Khan’s visit to China end of the month. Both sides will get approval from their respective cabinets before signing the pact.

An official source in the Commerce Division told Dawn that China’s willingness to finally offer Pakistan market access on Asean-plus model was in the light of understanding reached between PM Khan and Chinese president.

The second phase of FTA was supposed to commence from the sixth year of agreement ie 2013, but was delayed as officials from both countries failed to reach an agreement despite meeting over 12 times. Talks on Phase-II began in 2011.

Sharing the outcome of the negotiations, Dagha said that Islamabad will get market access for 313 tariff lines, which will cover most of its exports and encourage exports to China.

With signing of the agreement, he said the duty structure on these items will come immediately to zero per cent. “The new agreement will have a positive impact on our exports to China,” Dagha said.

“The Chinese government has also agreed to allow us to protect 25pc of our total tariff lines from duty reduction under the second phase” he said, adding “we have included all those tariff lines identified by chambers of commerce and associations for protection.”

As per Chinese FTA with Asean, reduction on tariffs is almost over 90pc of the total tariff lines.

Under the agreement, Pakistan will reduce duty to zero on 75pc of total tariff lines in 15 years, while China will do the same in a period of 10 years. During this period, China will reduce duty to zero per cent on around 2,000 -2,500 tariff lines for Pakistan.

The FTA between China and Pakistan covers nearly 7,000 tariff lines at the eight-digit level of the HS code. Both sides had reduced tariffs on almost 36pc of the tariff lines to zero during first three years of PCFTA’s Phase-1.

Commerce ministry spokesperson was approached but could not provide any details of the agreement. Meanwhile the Commerce Division’s team turned to social media to share photo ops from the ceremonious initialing of the protocol, while they were unable to provide any details of the agreement or answer any questions posed to them.

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