The Early Harvest Program between the two countries which was put into operation on 1st January 2006.In November 2006, the governments of Pakistan and China signed the Free Trade Agreement (CPFTA). Under the CPFTA, both countries agreed to offer preferential market access through tariff concessions. In the overall package Pakistan will get market access at zero duty on industrial alcohol, cotton fabrics, bed-linen, home textiles, marble tiles, leather articles, sports goods, mangoes, citrus fruit, other fruits, vegetables, iron steel products, engineering goods. China will also reduce its tariff by 50% on fish, dairy sectors, frozen orange juice, plastic products, rubber products, leather products & knitwear; woven garments etc. The first phase of the CPFTA covered the period 2007-2012.In the first phase, Pakistan gained tariff concessions on 6,418 tariff lines, while China secured concessions on 6,711 tariff lines. In terms of tariff lines under Phase-I, China extended zero rates on 35.5% of tariff lines. China proffered moderate liberalization on 42.5% of tariff lines with 5% tariff rate and 50% margin of preference on few tariff lines. China maintained a protected list of 22.0% tariff lines, with either 20% margin of preference or no concession. In terms of value of Pakistan’s exports to China under Phase-I, 28.9% of Pakistan’s exports faced zero rate, 57.9% of Pakistan’s exports to China faced moderate concessions i.e. less than 5% liberalization level and 13.2% of exports were under the Chinese protected list.

China under Phase-II of CPFTA:

In terms of tariff lines and trade value China has immediately liberalized 1026 new tariff lines for Pakistan, out of the total 3707 tariff lines, as in Phase-I 2681 tariff lines were already liberalized. The newly liberalized lines cover 91.3% of Pakistan’s exports to China. These lines include the most high priority 313 tariff lines for Pakistan.84% of Pakistan’s global exports will be covered under the Chinese offer China has also offered faster tariff elimination for Pakistan in tracks two and three i.e. A-5 (in 5 years) and A-10 (in 10 years). Under A-5 and A-10 China will be liberalizing 1235 and 1236 tariff lines respectively.
Sectors included in 313 tariff lines and their significance .With the implementation Phase II of FTA, China will be eliminating tariffs on 313 priority tariff lines which cover over $8.7 billion worth of our global exports and over $64 billion worth of Chinese global imports. These 313 tariff lines are part of track 1 i.e. A0 under the Chinese offer to Pakistan. Under the 313 tariff lines currently our exports to China are less than 2% of their total imports, and with these concessions we should expect to gain our market share, eventually, by almost $4 billion per annum. These 313 items include inter alia textiles and garments, seafood, meat and other animal products, prepared foods, leather, chemicals, plastics, oil seeds, footwear as well as engineering goods including tractors, auto parts, home appliances, machineries.
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