Business Recorder (22/04/2019) - Special Advisor to the Prime Minister on Commerce and Textiles Abdul Razzak Dawood revealed during the relevant National Assembly Committee's meeting that China has agreed to allow market access to Pakistani exports on the pattern of Association of Southeast Asian Nations (ASEAN) countries. This, he clarified, implies duty-free access on 313 items which currently account for a total of 64 billion dollar Chinese imports annually (with Pakistan previously allowed to export only one billion dollars per annum). If Pakistan can export 5 percent of total Chinese imports of these products then, Dawood projected optimistically, our exports to China would exceed 3.3 billion dollars. An exclusive Business Recorder news item maintains that China has agreed to liberalize 75 percent tariff lines and 90 percent trade value of China in the second phase of the Free Trade Agreement (FTA). While critics maintain that success in negotiating with China may be sourced to China's commitment to China Pakistan Economic Corridor yet one would have to appreciate efforts of Razzak Dawood to secure the deal with China.

ASEAN Free Trade Agreement (AFTA) comprising six original member countries (increasing to the current 10 countries) requires goods originating within ASEAN members to apply a common effective preferential tariff scheme from between 0 to 5 percent with following exceptions: (i) temporary exclusions; (ii) sensitive agricultural products; and (iii) general exceptions. Unlike the European Union, however, AFTA does not apply a common external tariff on imported goods. China is not an ASEAN member country but is a signatory to the free trade area, an agreement effective since 1 January 2010, with ASEAN countries accounting for a decline in the average tariff on Chinese goods sold in ASEAN countries from 12.8 percent to 0.6 percent (with latter member countries given a deferral for full implementation) and a decline in tariff of ASEAN products sold in China from 9.8 percent to 0.1 percent. Other countries with which ASEAN members have completed free trade agreements are Japan, South Korea, India, Australia and New Zealand. One would hope that Dawood would initiate discussions with ASEAN member countries for such a free trade agreement.

Dawood acknowledged that the United States is not willing to allow Pakistani products duty-free access, a stance taken by President Donald Trump in trade relations with the rest of world, though he added that the US does give duty-free access to Bangladesh and Vietnam.

There is no doubt that raising exports is the most desired form of earning foreign exchange. To-date remittances have played a very significant role in meeting the widening current account deficit, however, the inflow of remittances are dependent on factors external to Pakistan and hence are not a reliable source of foreign exchange earnings. A slowdown in the economy of those countries where the bulk of our remittances are sourced or indeed due to their changing geopolitical considerations remittances may decline overnight. Hence the way forward has to be through negotiating bilateral trade agreements, free or preferential, or agreements with trading blocs.

Pakistan is a signatory to FTAs with China, Sri Lanka and Malaysia and Preferential Trade Agreements with Iran, Indonesia and Mauritius (with little growth in our exports to Iran, Mauritius and Sri Lanka). In June 2016, Pakistan's trade balance deteriorated with these countries - a trend attributed by a study to 'ineffective, ill-planned negotiations' by the Ministry of Commerce with trading partners in the region. One would hope that negotiations with other countries proceed as well as with China.

Read more at https://fp.brecorder.com/2019/04/20190422466388/