KARACHI, Jan 27: After failing to get a favourable response from the European Union (EU) to lift 13.1 per cent countervailing duty on bedlinen, the commerce ministry wizards are now trying to conclude Free Trade Agreement (FTA) with China and Sri Lanka in next few weeks.

An FTA with Sri Lanka is expected to be concluded next month when Sri Lankan President visits Islamabad on conclusion of the Saarc Summit in Dhaka in February. Pakistan is engaged in negotiations on the FTA with Sri Lanka for last more than two years.

Since Pakistan sought tariff concessions on goods which are said to be main source of revenue generation for Sri Lanka, the FTA talks got stuck up. "All these issues have been sorted out in meetings of the working groups of the two countries and hopefully we will sign the first FTA with Sri Lanka next month," a well-placed source confided.

According to business sources about 15 to 16 items have been identified on which Pakistan seeks tariff concessions for import into China. These are few minerals, fruits and vegetables, textiles, leather goods and a few other categories.

Federal Commerce Secretary Tasneem Noorani is due in Karachi in next two weeks to discuss with the exporters of all the 15 or 16 items to workout a case for concessional imports into China. At present there are 5 to 10 per cent duties on import of these items.

A delegation of Chinese experts to discuss FTA arrangements with Pakistan is due at the end of next month. Sources are confident that the meeting of the working group of two countries will be able to finalize the FTA agreement draft.

Pakistan authorities want to sign FTA with China when Chinese premier visits Islamabad to attend the inauguration ceremony of Gwadar port sometimes in March. The first phase of Gwadar port has been completed with Chinese help and it is reported to have become partially operational.

China also applies non-tariff trade barriers in form of quarantine regulations which affects the import of fruits, vegetables and many other edible items. The quarantine regulations are certain varieties of bacteria specific which requires special clearance process. Pakistan authorities intend to seek clarifications on all these issues.

Pakistan has already signed a Preferential Trade Agreement (PTA) with China. During Prime Minister Shaukat Aziz's visit to China recently, the list of items for import into China under concessional arrangements was expanded. Inclusion of rice in this list was considered to be a major breakthrough.

India is said to have increased its two-way trade volume with China to over $12 billion. India has taken advantage under Bangkok arrangement to push up trade volume with China.

India has also concluded FTA with Sri Lanka more than two years ago and maintains a robust bilateral trade and economic relationship. The two-way trade volume between Pakistan and China is also showing steady growth in last three years and touched $1.4 billion during last fiscal year.

With inclusion of Hong Kong, the two way trade volume has exceeded $2 billion. Chinese imports into Pakistan have shown quantum jump during three years. Chinese imports into Pakistan in last fiscal year swelled to over $1.15 billion from $839 million in 2002-03 and $575.39 million in 2001-02.

A big quantity of Chinese goods is finding its way into Pakistan through informal channels via Sust check-post on Khunjrab. A conservative but rough estimate put the value of these Chinese goods at about $300 million.

Gilgit is said to be the main conduit for all these smuggled goods from China. Most of the goods being smuggled from China via Sust check-post carry high tariff but involve low tariff in transportation.

Chinese foot wears have flooded Pakistan market for last three years and now many Pakistani reputed footwear companies have out sourced their manufacturing to China. These shoes bear made-in Pakistan stamp but are prepared in China.