Advisor to Prime Minister on Commerce and Textile Abdul Razak Dawood said on Tuesday that China has accepted Pakistan's demand of duty-free market access on 313 items and both sides would sign Phase-II of Free Trade Agreement (FTA) on April 28, 2019. This he stated while briefing the National Assembly Standing Committee on Commerce and Textile which met with Naveed Qamar in the chair here on Tuesday to investigate and scrutinise the export, import and WTO policy directions, challenges, initiatives, way forward, Vision 2019-2024, and assessment of future reciprocal FTA access trends in Pakistan.
Dawood said that Pakistan has rejected China's demand of duty-free market access, which they demanded in return for allowing Pakistani products duty free access; however access on a few items would be given. He further said that China has agreed to allow market access on the pattern of ASEAN countries.
China will give Pakistan duty-free access on 313 items. These 313 items are among those in which China's imports stand at $64 billion but Pakistan was not earlier allowed to export more than one billion dollars in these items, he added.
He further said if Pakistan gets 5 percent share in the $64 billion market of China after duty free market access and revised FTA, Pakistan exports could be increased by $3.2 billion per annum and if Islamabad succeeds in getting 10 percent market share, the exports could be increased by $6.4 billion.
China earlier did not agree to duty-free market access due to internal differences, as their commerce minister did not agree to give Pakistan market access but the Chinese prime minister and foreign minister agreed to give market access to Pakistan.
The advisor further informed the committee that many items' list (in hundreds) for reciprocal duty free export/ import (trade) to Chain is on final terms. He added that much improvement is expected in near future not only in exports to China but also to other countries including Indonesia, Bangladesh, Afghanistan, and Turkey.
The committee was further informed that Turkey is not ready to give any concession to Pakistani products, especially leather and textile. He further said that the US is also not ready to allow Pakistani products duty free access like it gives to Bangladesh and Vietnam and others due to geo-political and other reasons.
Federal Secretary Commerce Sardar Ahmad Nawaz Sukhera briefed the committee in detail on the exports of Pakistan and the World Trade Organisation (WTO).
The Ministry of Commerce and Textile Industry has projected a sluggish growth in exports owing to headwinds including slow economic growth, lack of fiscal space, contractionary monetary policy as well as geo-political uncertainty.
The secretary commerce said that Pakistan is making all-out efforts for making the FTA-II effective from July 1, but the Chinese side may take up to two months longer. The FTA-II will be signed on April 28 during the upcoming visit of Prime Minister Imran Khan to China, but after that it would be passed from the Chinese Parliament, he added.
The committee was informed that exports declined by 19 percent during 2014-17 due to global market contraction from $17.2 trillion to $14.9 trillion (16 percent), commodity crunch, and currency overvaluation (20 percent in Pakistan), while other regional currencies also depreciated i.e. India by 3 percent, RMB by 11 percent, MYR by 33 percent, BRL by 42 percent, besides competitiveness crisis (Pakistan vs Bangladesh), electricity prices and minimum wages. The committee was further informed that trade balance is improving in 2019 as exports increased by 0.11 percent in dollar terms and 25.3 percent in rupee terms while trade deficit decreased by 13.02 percent during July-March 2018-19.
There is need for enhancing export competitiveness components particularly in the areas, i.e., PM's Package, zero-rating of 5 export sectors, rationalisation of energy costs for export sectors, exemption of export sectors from load shedding, tariff rationalisation on raw material and intermediate products.
In new policy initiatives, Strategic Trade Policy Framework 2019-24, National Tariff Policy, trade-related investment policy framework and regulatory reforms may be revisited for future improvements and growth of exports and decline in imports, he said and suggested regulatory reforms as amendments in export/import policy order.
On the WTO, the secretary informed the committee about the structure and functions and current issues faced by Pakistan. The basic principles of trade were explained in detail along with advantages of the WTO. He briefed the committee on multi-trade agreements, dispute settlement body, reforms, transparency, role of e-commerce, and norms of Trade Facilitation Agreement (TFA).
The committee issued instructions to achieve objectives following the principles laid down for tariff policy, besides revisiting the relocation of value added industry, resource intensive, agro and agriculture re-processing. The ministry was directed to give a briefing on the WTO and export/import of Pakistan more conclusively in the next meeting.
The chairman informed the members with regard to a sub-committee report on the visit to Faisalabad Garment City and JICA-sponsored Faisalabad Garment City Training Centre to identify problems therein due to which the projects could not achieve objectives of their establishment. Another sub-committee was constituted with the composition of four members with the mandate to hear the State Life Insurance Company (SLIC) and the aggrieved employees of the company.
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