China on Wednesday lowered tariff rates on 313 products for Pakistan, in accordance with the China-Pakistan Free Trade Agreement (CPFTA), which seeks to bridge the trade deficit between the neighboring nations.
The implementation of the second phase of CPFTA, which was inked in 2006, brings to 1,047 the products that Pakistan can export to China with zero duties. According to state-run Associated Press of Pakistan, the waivers are especially beneficial for Pakistan’s textile sector, as a majority of exports from it would now be virtually duty-free.
In addition to the textile sector, the CPFTA also applies to leather and agriculture products, as well as confectionery and baked goods. A report published in APP claimed the zero duty products could raise the value of Pakistan’s exports to China by around $1 billion in the short-term, with a potential boost to $4-5 billion in the medium-term, as more industries avail the special benefits applicable to industries located in the special economic zones being established under the China-Pakistan Economic Corridor initiative. Similarly, in the long-term, Pakistan has the potential to raise its exports to China to $10 billion—a dramatic uptick considering the trade balance currently is firmly in favor of Beijing.
Presently, cotton yarn, copper, rice, nephrite, seafood and ethylene alcohol are the main products being exported to China by Pakistan. Agricultural products have the greatest potential for growth, say observers, noting that cotton and its related products alone account for nearly 45 percent of Pakistan’s total exports to China. To boost this yield further, experts from the Chinese Academy of Agricultural Sciences are actively engaged in technology exchange and cooperation with Pakistani experts to improve the quality of cottonseeds.
Additionally, Pakistan’s mangoes are also finding a home in China. Exports of the fruit jumped by 42 percent last year, with 115,000 tons traded by mid-September.
A report published in the Global Times, Beijing’s English-language mouthpiece, said the lowered tariffs should help Pakistan and China deepen trade ties by reducing their deficit—currently Pakistan exports approximately $2 billion in goods to China; it imports around $12 billion. A greater parity in trade would promote the Belt and Road Initiative, as well as the benefits of CPEC, it added.