ISLAMABAD, Aug 20: Pakistan and China have finalized rules of origin for the operation of Early Harvest Programme (EHP) — zero rate of duty — from January 1, 2006. A senior commerce ministry official told Dawn on Saturday that it was a major step necessary for the implementation of the EHP signed during the Chinese premier’s visit to Pakistan in April this year.

Both sides agreed that a 40 per cent value addition would be necessary for exportable products to qualify for the programme. It means that both the contracting states’ manufactured products must have a local content share of 40 per cent, besides imported raw materials, etc.

Both the sides also agreed to a simple processing of consignments and direct consignments between the two countries, added the official. The EHP will be implemented from January 1, 2006. On its implementation, the preferential trade arrangement between China and Pakistan will stand abolished.

Both the countries had already agreed to scale down customs duty to zero on 1,253 tariff lines latest by January 1, 2008 under the EHP agreement to increase the volume of bilateral trade.

Pakistan will reduce the duty to zero per cent on 486 tariff lines, while China will scale down the duty to zero on 767 tariff lines under the Early Harvest Programme by January 1, 2008.