2nd phase of CPFTA comes into effect on 1 Dec. Prime Ministers of both Pakistan and China.

Exclusive by Zafar Hussain in Beijing

2 December 2019: The second phase of China-Pakistan Free Trade Agreement (CPFTA) has come into effect, allowing Pakistani manufacturers and traders to export 300+ new products on zero duty to the Chinese market. Details of CPFTA protocols here on Ministry of Commerce site.

List of 313 items in PDF

BEIJING, 8 Nov 8: The second phase of China-Pakistan FTA (CPFTA) is set to come into effect from 1 December 2019, according to Pakistani official sources.

China agrees for the immediate elimination of tariffs on 313 most priority tariff lines of Pakistan’s export interest giving treatment on a par with ASEAN.

These 313 tariff lines cover over $8.7 billion worth of Pakistan’s worldwide exports and $64 billion worth of Chinese global imports. This will help to lessen Pakistan’s trade deficit and give support to its economy.

In terms of the complete offer made by China, over $19 billion of Pakistan’s exports will be covered, which corresponds to $1.6 trillion of the Chinese global imports.

The major products on which tariff have been eliminated are:

  • textiles
  • garments
  • seafood
  • meat
  • other animal products
  • prepared food
  • leather
  • chemicals
  • plastics
  • oilseeds
  • footwear 
  • engineering goods including: 
  • tractors
  • auto parts
  • home appliances machinery.

Increase in the sensitive list from 10% to 25% which comes to 1760 tariff lines and covers 37% of Pakistan’s imports from China. This will give a fair amount of production to Pakistan’s domestic industry from import from China.

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The major protected industry includes:

  • textiles and clothing
  • iron and steel
  • auto
  • electrical equipment
  • agriculture
  • chemicals
  • plastics
  • rubber
  • paper and paper board
  • ceramics
  • glass and glassware
  • surgical instruments
  • footwear
  • leather
  • wood
  • articles of the stones and plastics
  • miscellaneous goods

Talking to China Economic Net, Badar uz Zaman, commercial counsellor of Pakistan embassy in Beijing, said that the implementation of 2nd phase of CPFTA will increase further $1 billion Pakistani exports to China.

Under the new agreement, effective and robust measures have been taken to protect domestic industry from a surge in imports from China. Revision of safeguard remedial measures will provide protection of maximum 23 years against an import surge that may cause injury or threaten to cause injury to the local industry, said another official on condition of anonymity.

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In order to avoid miseducation and under-invoicing of import from China, a system of electronic data exchange has been introduced in the trade taking place under the framework of the Free Trade Agreement (FTA).

The Phase-1 of FTA between the two neighboring countries was signed on 24 November 2006 and became operational in 2007, while negotiations for the second phase of the CPFTA were started in 2011.

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After eleven rounds of negotiations, both sides concluded the agreement in April 2019 in Beijing.

Under the second phase of CPFTA, Pakistan has secured enhanced and deeper concession on products of its exports interest revision of safeguards mechanism for the protection of the domestic industry, the inclusion of the balance of payment clause as a safety valve against the balance of payment difficulties and effective enforcement of the electronic data exchange.

Moreover, the Chinese side also has agreed to accommodate Pakistan’s request for immediate market access on its priority products, tariff reduction modality based on the principles of “less-than- reciprocity” longer phased out period for tariff reduction and effective safeguard measures for protection of the domestic industry.

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