ISLAMABAD, Nov 18: Ahead of Chinese President Hu Jintao's visit to Islamabad, a high-level Chinese technical team is scheduled to arrive here on Monday to give final touches to modalities of the free trade agreement (FTA) envisaging removal of tariff and non tariff barriers for a freer trade and investment within next five years.
Well-placed sources told Dawn on Saturday that the six-member Chinese delegation during their stay would give final touches--like translation into Chinese language etc--to the proposed FTA draft, which had almost been finalised in the last meeting held in Beijing.
The agreement is scheduled to be signed during the four-day Chinese president’s state visit starting from November 23, which would allow reduction of customs duty on selected items to zero per cent within a period of three years. While the duty on the remaining items of the list would be scaled down to 5 per cent within a period of five years.
The sources said that the both sides agreed that the PTA would come into effect from early next year. However, the real reduction in tariffs on all agreed products would start from July 1, 2007. Under the proposed agreement, China has agreed to provide preferential market access to all Pakistan’s core products, including textile products.
The proposed FTA agreement would have two parts- trade in goods and investment chapter. However, the services chapter would be negotiated after the signing of the agreement, the sources added.
Pakistan will be the first country with whom China would be signing an investment treaty as part of the FTA, the sources said and added China has so far not offered this facility under its operational FTAs to any country.
The sources said China was also pushing for having a similar FTA with India. China is also pressuring India to grant "market economy" status, which most developed nations and some developing nations have not accorded to Beijing in view of its highly opaque pricing system and high-level of subsidies offered to exporters. But they will go for a regional trade agreement in the first phase, added the sources.
According to the statistics, top five items of export to China constituted 86.65 per cent of Pakistan’s total exports to China indicating a very narrow base. Cotton yarn alone has a share of 55 per cent of the total exports to China.
Under the investment chapter of the agreement, the sources said Pakistan was looking for relocation or for possible Chinese joint ventures with local firms to meet the domestic demand as well as for exports to Central Asian States and China.
Some sectors, which would attract possible Chinese investment, includes textile, light machinery, dairy farming, pesticides, leather, non-woven fabric, man made filament yarn, tractor, marble, fruits and vegetables, glass industry, beverages, plastic product, motor cycles, organic chemicals and pharmaceuticals etc.