April 30, 2007	Monday	Rabi-us-Sani 12, 1428

GROWING volume of imports from China is formalising trade in Bara markets in NWFP, which until recently used to be a hub of smuggled goods. Bara markets, also known as Karkhano markets located in Peshawar on the fringes of tribal areas bordering Afghanistan, have been the destination of smuggled goods from various countries via Afghanistan.

But now, according to traders, such markets are dumped with low-priced Chinese goods together with items, mainly cloth and foodstuff, smuggled from Afghanistan. The Chinese goods include garments, footwear, electronic appliances, stationery, toys, items of interior decoration, crockery, bathroom accessories, kitchenware, hosiery and cosmetics.

Traders of the area attribute cut in duties on imports from China as the major incentive behind imports from China.. This has happened after Islamabad and Beijing activated the Preferential Trade Agreement and Free Trade Agreements.

Abdul Hakim Shinwari, senior vice-president, Tribal Chamber of Commerce and Industry (TCCI), concedes that Karkhano markets , in the past ,dealt with smuggled goods which were supplied to other parts of the country. But he claims that now imported Chinese goods are changing the old business trends, most of the traders are adopting the legal way of trade.

"The business of smuggled goods involves a lot of risks and has very little margin of profit when compared to items imported from China. That is why most of the traders in Karkhano markets, particularly those involved in Afghan transit trade, have switched over to formal imports from China," he said.

Pakistan and China had signed Preferential Trade Agreement and Free Trade Agreement in 2003 and 2006 which came into force in 2004 and 2007 respectively. Under these agreements customs duty on hundreds of goods were reduced. A majority of the items are duty-free .

Following these accords, trade between the two countries grew many times since fiscal year 2002-03 and the trade volume touched $1083.6 million mark, followed by $1441.7 million in 2003-04, $2196.67 million in 2004-05 and $5247 million in 2005-06.

With free trade, a lot of Chinese goods are reaching Pakistan markets. The balance of trade is in favour of China as the total imports from China was $839 million, $1153 million, $1842 million and $4424 million in financial years 2002-03, 2003-04, 2004-05 and 2005-06 respectively.

Although influx of Chinese goods benefits traders and consumers because of their low prices, the continuous rise in their supply is posing threat to local manufacturers. That is why certain domestic industries are demanding imposition of anti-dumping duties on Chinese goods to protect the domestic industry.

To reduce the widening trade imbalance, the Chinese government is planning to increase imports from Pakistan. Speaking at a function in Karachi on April 14, Consul- General of the People’s Republic of China Chen Shanmin assured Pakistan authorities that Chinese companies would be encouraged to increase imports from Pakistan.

Traders at Karkhano markets concede that influx of Chinese goods is harming the local manufacturing sector. However, they say that flow of low-price goods has helped them in formalising business practices in Karkhano markets, and most of the traders, who were previously dealing in business of smuggled goods, are now switching over to formal trade..

They were unaware of the merits of legal business, but now, with concessions envisaged under the trade accords and constant perusal by the TCCI, most of the traders are getting engaged with formal business," Shinwari said. Although, imports from China is attracting traders of smuggled goods to transform their business into a legal one, it has also has its impact on the overall traditional cliental of Karkhano markets.

"Gone are the days when people from various parts of the country used to visit these markets and buy low-priced foreign goods. The unprecedented entry of Chinese goods has helped open new markets at various places in Punjab, Sindh and Islamabad where consumers could find these goods easily," says another trader, who imports electronic items from China.

It is true that imports from China carries certain benefits, but the main motive of most of the traders is to maintain their traditional cliental whether it could be possible through regular imports because the ratio of buyers from Punjab and other parts of the country to such markets has declined," he explains.

At present there are 3,500 to 4,000 shops in Karkhano markets, where investment of billions of rupees has been made over the years. Traders in Karkhano markets claim that most of the goods are reaching here through legal channels. But, the sources in the market say that even Chinese goods are finding their way into Karkhano and other markets through illegal channels as well.

According to the sources, northern areas are the gateway for smuggled Chinese goods, that is why a Chinese product displayed in down country costs more than the same goods exhibited in Gilgit.

"Rawalpindi is the first destination of these smuggled goods, from where it is transported to other parts of the country, including Karkhano markets," the sources said. A tribal trader, having electronics business in the area, argued that in the recent past it had been blamed that goods under Afghan Transit Trade Agreement are being re-smuggled to the adjoining tribal markets. But import of low-priced Chinese goods must change this perception because it has helped in opening of many Bara markets in other provinces, he said and added that this was compelling traders of Karkhano markets to bring stuff from down parts of the country.