ISLAMABAD: Pakistan’s top performing exports to China should be added to tariff concession and elimination list so that Pakistan could benefit from the indicative export potential value of $20 billion to China.
The Pakistan Business Council urged the government to divert more high potential exports towards China to make full use of existing and future concession and eliminations.
The PBC in its report about third review of Pakistan-China Free Trade Agreement (FTA) and Recommendations for Phase 2 Negotiating stated that Pakistan’s total exports to China have increased to $1.4 billion in the last 10 years, as the exports stood at $1.9 billion in 2015. Major export patterns remained cotton, textile and rice and these products have an individual indicative potential export value of over $100 million.
On the other hand, Pakistan’s imports from China have increased over the last 10 years as well, going up to over $8 billion from $2.9 billion in 2006 to $11 billion in 2015. Pakistan’s imports from China in 2015 were mainly electronics, stainless steel items, polyester, yarn, fabric and tires.
The report indicates that due to sheer size of Chinese economy as well as other factors it must be acknowledged that China will continue to have a positive impact on Pakistan. However it is important that Pakistan continues to face high tariffs.
Presently, rice and fruit exports face 65 percent and 24.2 percent tariffs respectively and this is something that must be addressed during the phase two negotiating.
The China-Pakistan Economic Corridor is a great milestone which is expected to lead the massive development in manufacturing, employment, infrastructure, energy and logistics and government ensure that phase 11 negotiating bring about better trade terms as Chinese markets receives 40 percent or greater share in Pakistani exports for 8 commodities.
The PBC in its recommendations said data collection and reporting needs to be standardised and transparent as currently there are huge discrepancies. The report shows that Pakistan has a trade deficit of over $9 billion with China whereas Chinese reported data shows a trade deficit of over $14 billion indicating that in 2015 there is nearly $5 billion in trade that is unaccounted for that mean severe revenue losses and tax evasion are taking place.
The government should closely monitor those local industries and manufacturer sectors that are harming imports.
Pakistan and China signed an FTA in November 2016. Pakistan offered tariff concession and elimination on 6711 products while China did the same in 6418 products over a period of five year. Phase 1 of the FTA ended in December 2012, phase 11 negotiating started in July 2013 aiming to eliminate tariffs on at least 90 percent of all products. Furthermore both countries agreed on the target for bilateral trade of $15 billion by the end of Phase 11. At the end of 2015, bilateral trade equaled over $12,953 million to $2421.96 million in 2006 prior to the implementation of the FTA.