According to adviser to the Prime Minister on Commerce and Textile Abdul Razak Dawood free market access of 313 Pakistani items would bring US$ 6 billion exports growth. Major beneficiary of CPFTA-II will be textile sector of Pakistan. According to a report in Deccan Herald, FTA between Pakistan and China has already dented India’s cotton yarn exports after Indian cotton exports declined by a massive 38.8 percent during the first six months of the current fiscal year that ended in September 2019 feeling the heat of conclusion of second phase. There is an import duty ranging from 3.5pc to 5pc on cotton yarns imported from India into major markets like China.
Concessions to Chinese exports to Pakistan under CPFTA – II would be applicable on the import of crude oil, palm stearin, RBD Palm oil, palm olein, pure breeding animals, meat of goats, fish, yogurt, whey powder, butter, dairy spreads, cheese, honey, vegetables, mushrooms, green tea, black tea, rice, beverages, gold, silver, varnishes, artificial staple fibers, vehicles parts, satellite communication equipment, radio navigation apparatus, parts/accessories for cable TV/satellite receivers, energy saving lamps, cameras, energy saving tubes, components for the assembly/manufacture of vehicles in any kit form and other items specified in FBR’s SRO 1640(I)/2019. While going through the list, it is very much apparent that the list includes those items which Pakistan is already producing however more in volume and less in value. On the contrary items which Pakistan is not producing may be less in volume but more in value to resulting a Trade Deficit yet the impact will be much lower than that of previously executed FTA. In addition to Tariff realignment CPFTA – II protects domestic industry of Pakistan and includes enforcement mechanism of electronic data exchange to avoid under-invoicing of imports from China which will curb trade based money laundering between the two countries. Moreover Pakistan and Chinese customs administrations have principally agreed to implement ‘Green Corridor’ – a fast track customs clearance system exclusively for speedy clearances of the perishable agricultural products, under the proposed Green Corridor at Sust-Khunjerab border.
Though, Pakistan is moving swiftly towards imports from China on RMB basis to avoid Dollar fluctuations, yet it should learn from the outcome of such technological developments so that it may be equipped enough to pace up with its neighbours
Revival of Chinese ancient silk route is endangering the supremacy of sole super power United States of Amercia (USA). It will increase outreach of China into other continents connecting through this route via land and sea. Asia, Middle East, Africa, Central Asian Republics, Europe and Russia will become connected to China which will lead to more trade activities between the countries. Recently a major development in this region has unveiled. Russia and China launched a giant gas pipeline linking the countries for the first time. The 3,000-kilometre (1,850-mile) pipeline will supply China with 38 billion cubic metres of gas annually when fully operational in 2025. Now when China’s influence in International Trade is increasing by each passing day, it will be required that the hegemony of Dollar for transaction purpose may be checked so that unnecessary control from Dollar based watchdogs may be avoided. China may become the first country in the world to roll out its own digital currency which will be called “DCEP” (digital currency electronic payment) based on decentralized blockchain technology however with certain controls unlike other crypto currencies. Though, Pakistan is moving swiftly towards imports from China on RMB basis to avoid Dollar fluctuations, yet it should learn from the outcome of such technological developments so that it may be equipped enough to pace up with its neighbours. If implemented successfully, It will ease out transactions with such countries which otherwise are not possible due to intermediary role of US Dollar.
The writer is a Corporate Finance Specialist and a Chartered Banker (UK)