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Islamic Republic of
Peoples republic of
Pakistan
China
Free Trade
Agreement
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 Agreement
The Free Trade Agreement
consists of the following components:
- The Agreement, and
- Annexes I, II and III
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.
Annexes
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:
Phase-I
-- Tariff Reduction Modality of Pakistan
within five years after entry into force of this
agreement:
Note: elimination
of tariff on the products covered in the Early Harvest
Program (EHP) shall continue in accordance with the
earlier agreed modality of tariff elimination for
EHP.
Phase-II --
Both Parties
shall endeavor to eliminate the tariffs of no less than
90% of products, both in terms of tariff lines and trade
volume within a reasonable period of time on the basis
of friendly consultation and accommodation of the
concerns of both Parties.
Note: The base
year for tariff reduction/elimination for China is 2006
and for Pakistan fiscal year of
2006-2007.
Annex 'II' is the
form and instruction for the Certificate of Origin. A
claim that products shall be accepted as eligible for
preferential concession shall be supported by a
Certificate of Origin issued by a government authority
designated by the exporting Party and notified to the
other Party to the Agreement in accordance with the
operational certification procedures, as set out in this
annex. (Chapter IV, Article 23 of the
Agreement)
Annex 'III' is for
the purposes of this Agreement and Chapter X (Dispute
Settlement). It covers Rules
of Procedure of an Arbitral Panel established pursuant to
Article 63.
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