Opportunity: The Escalation Of The Sino Pakistani Free Trade Agreement And The Opportunity For China'S Textile Enterprises To Meet The New Opportunities

On April 28th, Yu Jianhua, Vice Minister of Commerce and deputy representative of international trade negotiations, signed the protocol on the revision of the free trade agreement between the government of Pakistan and the government of Islamic Republic of Pakistan with Masood, Khaled, Ambassador of China to Pakistan.

After the entry into force of the protocol, the ratio of tax items to zero tariff products between China and Pakistan will gradually increase from 35% to 75%, and the level of liberalization will more than double.

Comprehensive upgrading of protocol contents

According to the protocol, China will abolish customs duties immediately after the entry into force of the 45% tax items, and gradually abolish customs duties for 30% of the taxable items in 5 years (tax items 15%) and 10 years (tax accounts 15%).

Pakistan will also abolish customs duties immediately after the entry into force of the 45% tax items, and gradually abolish customs duties in 30% years' tax items in 7 years (tax items 15%) and 15 years (tax accounts 15%).

In addition, the two sides will also impose a partial tax reduction of 20% on other products that account for 5% of their respective tax collections.

According to the director of the Department of international trade and economic relations of the Ministry of Commerce, the protocol is composed of about 400 pages, consisting of preamble and 6 chapters. Besides upgrading and revising the contents of market access and tariff reduction schedule, rules of origin, trade remedy and investment in the original FTA, a new chapter on customs cooperation is also added.

The upgrading of market access for trade in goods is the core of the second stage negotiation and the protocol of the China Pakistan FTA.

On the basis of the original FTA, the two sides will substantially reduce the tariff level between the two countries and further expand the liberalization of trade in goods between the two countries.

After the entry into force of the protocol, the ratio of tax items to zero tariff products between China and Pakistan will gradually increase from 35% to 75%, and the level of liberalization will be more than doubled. China and Pakistan will abolish tariffs immediately after the entry into force of the agreement 45%.

The official said that the signing and implementation of China Pakistan FTA led to the rapid development of bilateral economic and trade relations.

According to our customs statistics, the bilateral trade volume between China and Pakistan reached US $19 billion 80 million in 2018, 3.6 times before the 2006 agreement.

At present, China is Pakistan's largest trading partner, the largest source of imports, the third largest export market and the largest source of investment.

Pakistan is my second largest trading partner in South Asia.

On the basis of mutual benefit, China and Pakistan take the tariff reduction granted to 80% of their total tax items, and give full consideration to the main export products which are of mutual concern.

Pakistan has included the export advantages of Electromechanical, furniture, textile, phosphate fertilizer, glassware, automobile and motorcycle spare parts, which China has focused on.

China has included the export advantages of cotton yarn, leather, clothing, aquatic products, nuts and other export products that Pakistan focuses on.

With regard to the tariff reduction arrangements for specific products, the agreement can be found in the tariff reduction schedule of both parties after publication.

The official pointed out that China and Pakistan will substantially reduce tariffs on the basis of the original FTA, which will provide more favorable conditions for the two enterprises to further develop their respective markets, promote mutually competitive exports and promote balanced development of bilateral trade, bringing more tangible benefits and benefits to enterprises and people of both countries.

The tariff level between the two countries has been greatly reduced, and it will further promote investment and production capacity cooperation, provide better conditions for Chinese enterprises to "go out" and overseas industrial layout, and promote the construction of China Brazil economic corridor and "one belt and one road".

At the same time, in the long run, the reduction of trade costs between the two countries will promote the integration of China Pakistan industrial chain, make full use of the comparative advantages of both countries, enhance the competitiveness of enterprises in the regional and global industrial chains, and promote the economic development of both countries.

In accordance with the relevant provisions of the protocol, the Protocol shall enter into force on the thirtieth day after completion of the internal procedure received by both parties in writing, or with the consent of both parties.

Next, the two sides will fulfill their domestic legal approval procedures to promote the early implementation of the protocol.

After the entry into force of the protocol, relevant departments will publish the text on the "China free trade area service network" (fta.mofcom.gov.cn) for reference by enterprises and individuals.

China Pakistan textile industry opens a new chapter

The China Pakistan free trade agreement is a turning point in the economic and trade cooperation between China and Pakistan, and will also open a new chapter in the trade and investment cooperation between China and Pakistan.

In recent years, the China Brazil economic corridor has achieved some achievements as the flagship project of China's "one belt and one road" initiative, such as the construction of Gwadar Port, energy cooperation and the planning of the special economic zone.

In particular, after the signing of the Sino Pakistani FTA, combined with Pakistan's labor cost advantages, pportation advantages, power supply improvements, and a series of tariff preferences, Pakistan sincerely welcomes Chinese textile enterprises to build factories in Pakistan to realize the complementary and win-win situation of the two textile industries.

On the other hand, with the continuous development of the "one belt and one way" construction, China's textile industry has accelerated the pace of global layout, especially in the countries and regions along the belt and road.

The friendship between China and Pakistan has a long history. Pakistan is China's only all-weather strategic partner.

Some experts believe that this is a favorable opportunity to strengthen cooperation between the two countries.

Imran Khan, Prime Minister of Pakistan, recently held the "Pakistan China Trade and Investment Forum" held by Beijing, saying that the Pakistan government will provide convenient conditions and full support for Chinese enterprises invested in Pakistan, hoping that more and more Chinese textile enterprises can take root in Pakistan.

According to Pakistani officials, Pakistan has unique advantages in terms of labor costs, investment policies, trade agreements with the European Union, and economic development zones.

In recent years, with the attention and efforts of the Pakistan government, the domestic security situation has been continuously improved, the energy supply capacity has also been significantly improved, and the RMB settlement method has also started to implement.