July 01, 2007	Sunday	Jamadi-us-Sani 15, 1428

ISLAMABAD, June 30: The multi-billion-dollar free trade agreement (FTA) between Pakistan and China comes into effect on July 1, allowing free movement of goods and investment in a bid to enhance volume of bilateral trade to $15 billion by 2011.

To give effect to the treaty, Pakistan on Saturday issued a notification (SRO659 of 2007) announcing the first phase of cut in duty on import of goods under 4,700 tariff lines.

Beijing has already lowered import taxes by 11 per cent on 3,975 categories of goods from Pakistan to an average tax rate of eight per cent from July 1.

The notification issued by Pakistan carries two tables:

Table 1 includes fresh items of around 4,700 tariff lines for duty reduction from China; and Table 2 includes 1,190 tariff lines which were already availing preferential customs duty under an early harvest programme till Jan 1, 2008.

From January next onwards, these items will be merged into the ambit of the FTA.

The services chapter of the agreement will be concluded by the end of the current calendar year, making the FTA as Pakistan’s first-ever comprehensive treaty with any country.

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

Under the accord, Pakistan will 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 will reduce duty on 157 items and China on 604 items.

Under the agreed reduction on margin of preference from 20 per cent, China will reduce duty on 529 items and Pakistan on 1,768 items. China placed 1,132 items in the negative list (no concession list) as against Pakistan’s 1,025 items.

Under the FTA, China will eliminate tariff within three years from five to zero per cent on marble and granite, in-organic 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 which will end in 2011. The items are dairy sector, some vegetables (mushrooms, lentils), mixture of fruit, frozen orange juice, organic chemicals, in-organic 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 duty on these products ranges between 5.5 and 10 per cent.

Similarly, goods on which China will reduce 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 six to 10 per cent, knitwear eight to 10 per cent, woven garments eight to 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.

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, in-organic 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 equipment 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 include fruits, tea, ginger, vegetable waxes, residues and waste of 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 material, conveyor and transmission belts of vulcanised 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.