PBC expects $3.3b rise in Pakistan’s exports to China

KARACHI: The Pakistan Business Council (PBC) has projected that Pakistan could export an additional $3.3 billion worth of goods to China if the country manages to get tariffs reduced to zero on certain goods under a free trade agreement (FTA).

In this regard, the PBC – a business policy advocacy group – has shared a list of top 25 products with the Ministry of Commerce, suggesting the government needs to secure zero tariff on these goods in negotiations with China on the second phase of the FTA.

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The assessment of export potential does not take into account freight costs, marketing channels in the export market and consumer preferences among others.

According to the PBC, Pakistan can increase exports of rice, textiles, seafood, footwear and leather products to China.The commerce ministry had sought PBC’s input before the next round of FTA talks as Pakistan was trying to win greater market access to China in an effort to reduce its growing trade imbalance with its giant neighbour.

Pakistan and China had signed the FTA in 2006. They have been negotiating the agreement’s second phase for some time in order to create a right trade balance that is heavily in favour of China.

Pakistan’s trade deficit with China stands at $12 billion with the gap expected to widen because of the import of machinery for the China-Pakistan Economic Corridor (CPEC) projects.

Pakistan’s private sector has long been raising voice against the ever-increasing trade with China. Since the launch of CPEC in April 2015, such concerns have heightened because Pakistan is importing machinery of a huge value from China, which may further widen the trade imbalance.

Mindful of the growing discontent in Pakistan, Chinese authorities have taken steps to address the concerns.

Chinese Ambassador to Pakistan Yao Jing on Tuesday pointed out that Beijing understood that Pakistan’s private sector and manufacturers had some reservations about the FTA.

He clarified that China looked at Pakistan as a special partner and it would never like to damage its industry through the bilateral agreement. Chinese authorities suggest Pakistan can increase exports of sugar, corn, vegetables, textiles and seafood.

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Despite all the assurances from Beijing, Pakistani authorities believe that exports to China could go up markedly only when the world’s top exporter provides the same concessions to Pakistan that it gives to Asean member states.

Some experts say Pakistani exporters also need to explore Chinese markets proactively because the second largest economy of the world is expected to import products and services valuing at more than $10 trillion a year.

This, like any other country of the world, provides a historic opportunity for enterprises across the world to enter the huge Chinese market. PBC, established in 2005, regularly publishes Pakistan’s trade data with different countries with the aim of stepping up exports and bringing down imports.

Published in The Express Tribune