November 25, 2006	Saturday	Ziqa'ad 3, 1427

ISLAMABAD, Nov 24: The multi-billion-dollar free trade agreement (FTA) signed between Pakistan and China on Friday will allow free movement of goods and investment and could enhance the value of bilateral trade to $15 billion by 2011.

Both the sides agreed to scale down customs duty to zero per cent on 5,104 products in three years and on 3,942 items zero to five per cent within a period of five years after the implementation of the agreement.

Under the agreement, Pakistan would further reduce customs duty to zero per cent on 2,423 tariff lines and China on 2,681 tariff lines in the first three years of the agreement. Another tariff reduction in the range of zero to five per cent to be completed within five years would allow reduction on 1,338 items by Pakistan and 2,604 items by China.

Both the sides agreed that reduction on margin of preference at 50 per cent would be completed in five years: Pakistan would reduce duty on 157 items and China on 604 items. Under the agreed reduction on margin of preference from 20 per cent, China would reduce duty on 529 items and Pakistan on 1,768 items. China placed 1,132 items in negative list (no concession list) as against Pakistan’s 1,025 items.

The services part of the agreement would be negotiated in 2007 following the implementation of the trade in good and investment. The early harvest programme (EHP) in operation since January 1, 2006 was also made part of the FTA. However, elimination of tariff on the products covered in the EHP would continue according to agreed schedule.

Product-wise analysis showed that China would scale down customs duty to zero on un-denatured and denatured industrial alcohol, marble and other tiles, tableware and other citrus fruits from January 1, 2008 under the EHP. Similarly, the duty would be reduced to zero per cent from January 1, 2007 on leather articles, cotton fabrics, bedlinen and other home textiles, sports goods, mangoes and citrus fruits, including kinoo, lemon, lime, etc.

Under the FTA China would eliminate tariff within three years to zero per cent from five per cent on marble and granite, inorganic chemicals, organic chemicals, jute products, sewing thread of synthetic filaments, certain types of viscose yarn, metalised yarn, iron and steel products and engineering goods.

China will reduce tariff by five per cent on goods within a period of five years to be ended in 2011. The items are dairy sector, some vegetables (mushrooms, lentils), mixture of fruit, frozen orange juice, organic chemicals, inorganic chemicals, colour, pigments and dyes, plastic products, rubber and leather products, fabrics not covered in the EHP, ceramics, glassware, certain articles of iron and steel, knives and blades, engineering. Currently the duty on these products ranges between 5.5 and 10 per cent.

Similarly, the goods on which China will reduce its tariff by 50 per cent within a period of five years included fish and cheese to be reduced to six per cent, vegetables 6.5 per cent, turmeric and spice mixtures 7.5 per cent, prepared food of (chapter 16) six per cent, soap 7.5 per cent, leather and leather products 6-10 per cent, knitwear 8-10 per cent,

woven garments 8-10 per cent, footwear 12 per cent, unglazed ceramics six per cent, auto parts 6.45 to 6.75 per cent, and shotgun cartridges/swords 6.5 per cent. The current average duty on these products ranges between 12 and 15 per cent except for footwear that attracts 24 per cent duty.

The products on which Pakistan has given zero duty market access to China under the EHP to be effective from January 1, 2007 included garlic and other vegetables, salt, minerals, organic chemicals, 212 tariff lines of machinery and fish. The duty on fruits would be reduced to zero per cent from January 1, 2008.Pakistan will make tariffs to zero per cent on main commodities within three years of the FTA. These include live animals, meat, some fruits not considered earlier, agriculture products, metal ores, inorganic chemicals, organic chemicals, raw material and tanning, photographic and cinematographic goods, plastics, rubber, raw material of glass industry, pig iron, Ferro alloys, other iron and steel, metals, base metals, tools and implements, remaining machinery, electrical machinery and equipments and parts, railway or tramway track fixtures and fittings, aircraft, spacecrafts and parts, ships, optical, photograph, measuring, checking instruments, musical instruments. The average duties on these products stood at five per cent.

The duty to be scaled down to zero to five per cent by Pakistan on the products within five years includes fruits, tea, ginger, vegetable waxes, residues and wastes of the food industries, stones, aluminous cement, lubricating oils, transformer oil, white oil and other oil, petroleum bitumen, inorganic chemicals, organic chemicals, medicaments, essential oils, dental wax and other preparations, miscellaneous chemicals, plastic raw materials, conveyor and transmission belts of vulcanized rubber, some articles of rubber, wood, felt hats and other felt head gears, human hair and ceramic pipes, certain articles of glass, iron and steel, certain steel products, intermediary goods for engineering sector, electrical machinery and equipment and parts, fishing vessels, refrigerated vessels, optical, photographic measuring instruments, paint brushes, hair pins, pipes and pipe bowls, pocket lighters. The duties on these products stood at 10 to 25 per cent.