Pakistan Will Benefit From The Second Stage Of China Brazil FTA

According to the Pakistan forum express January 13th, the second phase protocol of the Sino Pakistani free trade agreement came into effect in January 1, 2020. This is another major move in the field of economic and trade cooperation between China and Pakistan after 15 years of implementation of the first stage bilateral trade agreement. At present, China is Pakistan's second largest export destination and largest source of imports, accounting for 8% of Pakistan's exports and 29% of its imports. Since the first stage of the FTA, bilateral trade volume has increased from US $2 billion 200 million in 2005 to US $15 billion 600 million in 2019. However, 75% of Pakistan's exports to China are concentrated on a few products such as cotton and rice, leading to a larger deficit in exports to China. According to statistics, Pakistan's trade deficit with China amounted to US $10 billion 890 million in fiscal year 2019, accounting for 34.22% of the total trade deficit in Pakistan.

The new agreement that China's market access to Pakistan will be balanced with ASEAN member countries is an important benefit to Pakistan exporters. According to the business consultant of the Prime Minister of Pakistan, the export of Pakistan is expected to increase by 500 million US dollars in the first year after the second phase of the FTA comes into effect. To seize the new opportunities brought by the FTA, it is necessary for the government and the private sector to make joint efforts to reduce production costs and enhance the competitiveness of the industry, while strengthening product brand building and international marketing. At the same time, due to the elimination of tariff barriers and devaluation of RMB, Pakistan will also benefit from the export of agricultural products and the import of high value-added products. To ensure export growth, Pakistan should focus on the following three aspects: first, pay close attention to the impact of tariff reduction on products and avoid trade diversion. Second, speed up the construction of the special economic zone (SEZ) under the CPEC, and ensure that the investment from China can smoothly flow into Pakistan and promote industrial development. Third, we should reduce internal trade barriers, improve business environment, improve infrastructure construction, avoid multiple taxes, curb energy prices and improve R & D capabilities.