ISLAMABAD, Nov 4: Pakistan has agreed to reduce customs duty on all items by an average 27 per cent except few sensitive items under preferential tariff arrangement (PTA) signed with China with the hope to enhance the volume of bilateral trade between the two countries.

Official sources told Dawn that the PTA signed by the representatives of the two countries in Beijing on Monday would become effective from January 1, 2004. The PTA is aimed at establishing and promoting preferential trade between the two countries for strengthening intra-regional economic cooperation and the development of the region.

According to the officials, under the PTA, Pakistan agreed to give preferential treatment on around 200 items to China.

Of these on around 75 items, it was proposed to reduce customs duty from 10 per cent to zero per cent. And on the remaining items, mostly the duty would be reduced between 3-10 per cent, the officials added.

They said the duty on items placed under chapter 72 would be reduced to zero per cent except for 18 items. Similarly, duty on seafood items to be reduced to zero per cent.

China will give preferences in tariffs on around 893 items to Pakistan under the PTA. The highest tariff on these commodities was 32 per cent while the lowest offered were 4 per cent with zero per cent duty on some items.

According to officials, on chapters 61 and 62 concerning made-ups and ready-made garments, duty was reduced from 25 to 18 per cent and from 21 to 15 per cent on most other items. On Leather goods, the reduction was mostly 25 per cent. For mangoes the tariff has also been reduced considerably.

The agreement, however, did not cover any concession on Pakistan’s exportable products like sports goods, surgical instruments, cutlery, guar and furniture, they said adding these would be negotiated for tariff concession subsequently.

The decision to enter into a PTA with China was taken following China’s willingness shown recently to provide preferential tariff to Indian products in the Chinese market under Bangkok Agreement (BA). Under the BA, China and India have signed the PTA which would come into effect from January 1, 2004.

Following these developments, it was feared that Pakistani goods in the Chinese markets would become less competitive due to the tariff preference edge which would be available to Indian products.