ISLAMABAD, Aug 26: Local manufacturers and traders have asked the government to avoid speedier conclusion of the proposed free trade agreement (FTA) with China. They advised the authorities to negotiate the treaty with a proper strategy and tactics to duly safeguard the local industry from cheaper imports.
Informed sources told Dawn on Saturday that some leading manufacturers of textile products, electronic goods and footwear had asked the commerce ministry not to open the border for all Chinese goods under the proposed treaty as it would result in closing down of domestic industries.
Pakistan and China have reached an understanding informally at a higher level to conclude the FTA by end of the current year and make it effective from July 1, 2007 to further increase the volume of bilateral trade.
The sources said that as China continues its rise as a great economic power. Based on its huge domestic market, high saving rates, entrepreneur skills, pool of cheap and skilled labour, it would not be possible for locally manufactured goods to compete with those coming from China under FTA.
According to the industry sources, the commerce ministry lacks that capacity to negotiate so many FTAs or PTAs at a time with various countries, which would rather open its own markets to other countries. "It is not possible for a joint secretary with two subordinate officers to negotiate such important trade deals with various countries particularly, with China," the sources added.
They further said that for negotiating such important deals, the commerce ministry needed a strong research base followed by professional skills to safeguard the national interests.
The World Bank in its recent report also cautioned the commerce ministry that there were considerable risks of adverse trade diversion effects from regional FTAs. This is because such preferential trading arrangements may lead to shifting of the source of imports away from least cost efficient countries to higher cost member countries, the WB added.
"We have received queries from various trade associations and chambers regarding the FTA with China. They are proposing to delay the treaty on the pretext that the early opening of trade with China will have a serious implications for the domestic industry," a senior official in the ministry of commerce told Dawn on condition of anonymity.
The official, however, said that the commerce ministry would take into confidence all the stakeholders about the proposed list of items on which duty reduction would be committed to China under the proposed FTA.
The Agreement on Early Harvest Programme (EHP) between Pakistan and China became operational from Jan 1, 2006. The EHP is a mini fast track prelude to the FTA under negotiation.