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Pakistan in a weak position in FTA with China

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Pakistan in a weak position in FTA with China
By Bilal Hussain
Published: August 11, 2018
The exporters, who export raw material in the form of cotton and yarn, have been criticised for their inability to export finished and value-added goods. PHOTO:REUTERS

Although China calls Pakistan and itself iron brothers, when it comes to trade, Pakistan stands at a weaker position in comparison to India, which is Beijing’s adversary in regional politics but has a better free trade agreement (FTA).

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) held a nationwide online roundtable conference on Pak-China FTA in an effort to prepare itself for a meeting with Asad Umar, the man tipped to be next finance minister.

The conference was attended by representatives of the business community, academia and government departments.

It was briefed that Pakistani exporters had been struggling to make their presence felt in China because their competitors were enjoying zero-rated tax, which left Pakistani goods uncompetitive.

The exporters of Pakistan mainly lose competitive edge in the case of Association of Southeast Asian Nations (Asean) which has a very strong FTA with China and its products are taxed at a lower rate than Pakistan’s.

Therefore, a huge chunk of Pakistan’s textile exporters has been forced to export raw material to Asean member countries like Vietnam, which exports finished goods to China. Exports through this channel are less costly and competitive in Chinese markets.

The exporters, who export raw material in the form of cotton and yarn, have been criticised for their inability to export finished and value-added goods.

Pakistan to get benefits worth $200m

FPCCI Director Research Dr Bilal Ahmed said Pakistan ranked 16th on the list of China’s export partners while it stood at 61st position in its import partners. According to Ahmed, even countries like Kenya are ahead of Pakistan in the exporters’ list.

FPCCI’s Standing Committee on Banking Chairman Mirza Ikhtiar Baig, who led the roundtable talk, told The Express Tribune that the business community had great reservations about Pakistan’s FTA with China.

“It seems that the FTA was struck in haste and we believe that there’s immense need to revisit it,” said Baig. “We will prepare recommendations after the roundtable talk, which we will discuss with Asad Umar.”

China eager to expand FTA with Pakistan

The FPCCI expects to meet Umar after August 15.

He highlighted that Pakistan’s imports from China stood at a whopping $18 billion while exports were a meagre $2 billion, which tilted the balance highly in favour of China by a massive $16 billion.

The moot was told that even India had a better FTA with China under an agreement called Bangkok Agreement, which had now evolved into the Asia-Pacific Trade Agreement. Bangladesh, China, India, Laos, Mongolia, South Korea and Sri Lanka are part of this agreement.

Pakistan delays FTA-II signing with China at eleventh hour

There was a consensus during the conference that if Pakistan was unable to strike a revised FTA with China similar to that of Asean, then the country should avoid doing free trade with Beijing altogether. It would save domestic industries.

Published in The Express Tribune, August 11th, 2018.
 
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@BHarwana Can you tag our so-called Chinese friends? :sarcastic:
Why do you want the Chinese here I think I will be enough to counter and speak on clearing the propaganda here. Come on shot your concerns I will try my best to reply.
I was missing @SunilM on an Indian economy thread and instead he popped here lol. How are you friend. I heard you lost another $1.5 billion to support rupee just in 7days.

There are many ways Pakistan can benefit from FAT with China the best is that Pakistan should start exporting flooring material to China for processing and then targeting Europe. Pakistan has biggest deposits of marble and granite in the world and stone quality is one of the best in the world but business lack online presence and reach to buyers in the west and over seas. This is a industry of billion of dollars and can bring in a lot of money into Pakistan.
We have a good community on pdf we should create a data thread and contact directory for such business and help our country market its self.
 
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Why do you want the Chinese here I think I will be enough to counter and speak on clearing the propaganda here. Come on shot your concerns I will try my best to reply.
I was missing @SunilM on an Indian economy thread and instead he popped here lol. How are you friend. I heard you lost another $1.5 billion to support rupee just in 7days.

There are many ways Pakistan can benefit from FAT with China the best is that Pakistan should start exporting flooring material to China for processing and then targeting Europe. Pakistan has biggest deposits of marble and granite in the world and stone quality is one of the best in the world but business lack online presence and reach to buyers in the west and over seas. This is a industry of billion of dollars and can bring in a lot of money into Pakistan.
We have a good community on pdf we should create a data thread and contact directory for such business and help our country market its self.

exporting raw material is always negative for economy , better you export finished product.
 
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Our exports to China are under $2 billion and Imports nearly $12 Billion. If our Industries can outline what they need to increase our direct exports to china, especially in higher margin value added products, we need to impress upon our Chinese partners the need to even out the trade imbalance. On its face China may feel it does not benefit, but the additional revenue will be poured back into paying for the CPEC loans and further development and growth, which will lead to paying for more and more CPEC projects. Also China will be helping to develop a stronger Pakistani economy, that will use its competitive industries to sell more products to the west, to pay off its debts, and will be a success story for the OBOR.

A Strong developed Pakistan, with a larger economy and growing middle class will be a ever growing market for their industries as well, and a stronger counter balance to India when it can afford more military hardware year on year. Pakistan is the Chinese customer many other nations look at before buying Chinese products, especially military products. A Pakistan that can't afford military purchases will hinder Chinese sales elsewhere.
 
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every one are in weak position with China, there is a reason we have Trade war going on with damn China !

china has become so powerful , in next 20 years it may replace america from no one slot .

every one are in weak position with China, there is a reason we have Trade war going on with damn China !

chinese citizens are seen everywhere from africa to america .
 
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Tell me one country which is in a stronger position when trading with China. But most countries still choose to trade with China, why?
 
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china has become so powerful , in next 20 years it may replace america from no one slot .



chinese citizens are seen everywhere from africa to america .

But there would be a major difference. USA being the largest importer will continue to play a dominant role as it will be lesser dependant on other countries, while Chinese economy being too much depandant on exports will be vulnerable to external shocks.
 
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china has become so powerful , in next 20 years it may replace america from no one slot .



chinese citizens are seen everywhere from africa to america .

Go on, honestly after trump came to power china went from Pitbull to B!tch in just few months.

Its laughing stock to us, en example of how we control the world. How we turned a chest thumping power into a crying begging bitch. :lol:

My family have served for 4 generations to US (brother of my grandpa and my great grandpa surved in Some of the major wors of American history) and to honor my kashmiri ancestors i still fly Indian flag today here but even if India tries to hurt American Interest we will make sure that she larns a lesson like Chabhar oil crisis.
 
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Go on, honestly after trump came to power china went from Pitbull to B!tch in just few months.

Its laughing stock to us, en example of how we control the world. How we turned a chest thumping power into a crying begging bitch. :lol:

My family have served for 4 generations to US (brother of my grandpa and my great grandpa surved in Some of the major wors of American history) and to honor my kashmiri ancestors i still fly Indian flag today here but even if India tries to hurt American Interest we will make sure that she larns a lesson like Chabhar oil crisis.

what makes you think india is going to toe the line of any country be it USA or RUSSIA ? we have acted on our own in the past and we will act on our own in future .

But there would be a major difference. USA being the largest importer will continue to play a dominant role as it will be lesser dependant on other countries, while Chinese economy being too much depandant on exports will be vulnerable to external shocks.

chinese can absorb shockwaves of any large scale sanctions .
 
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what makes you think india is going to toe the line of any country be it USA or RUSSIA ? we have acted on our own in the past and we will act on our own in future .



chinese can absorb shockwaves of any large scale sanctions .
Just few days ago Tump asked India to Jump high on persian oil issue and India asked how high ?
 
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