Chinese President Hu Jintao and his Pakistani counterpart Pervez Musharraf Friday oversaw the signing of a free trade agreement between the two allies here in Islamabad on 24th November, 2006. The document was signed by the Commerce Ministers of both the countries.
The architecture of the bilateral Free Trade Agreement includes Trade in Goods and Investments in the first Phase and the leaders of both the countries have decided to negotiate on Trade in Services during 2007 to enlarge the coverage of the Free Trade Agreement.
The Early Harvest Programme between the two countries which was put into operation on 1st January 2006, has been merged into this bilateral FTA. In the overall package Pakistan will get market access at zero duty on industrial alcohol, cotton fabrics, bed-linen and other home textiles, marble and other tiles, leather articles, sports goods, mangoes, citrus fruit and other fruits and vegetables; iron and steel products and 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.
Pakistan has given market access to China mainly on machinery; organic; and inorganic chemicals, fruits & vegetables, medicaments and other raw materials for various industries including engineering sector, intermediary goods for engineering sectors, etc.
The Free Trade Agreement consists of the following components:
The agreement contains the Articles on Establishment of Free Trade Area, objectives, relation to other agreements, application of this agreement, definitions, scope and coverage, National treatment, tariff elimination, para-tariffs and non-tariff barriers, rules of origin, Trade remedies, safeguard measures, sanitary and phyto-sanitary measures, TBTs, Investment, settlement of disputes, amendments, annexes etc.
Annex ‘I’ relates to the Elimination of import customs duties. It has two phases:
Phase-I – Tariff Reduction Modality of China within five years after entry into force of this agreement: