China gives Pakistan access to rice, sugar and yarn markets as breakthrough expected in PCFTA

ISLAMABAD: The Chinese government has finally offered Pakistan market access for three commodities — rice, sugar and yarn — worth $1 billion for the current calendar year, an official in the Commerce Division confirmed to Dawn on Thursday.

The official said rice shipments to China have already begun as part of the deal which was agreed during Prime Minister Imran Khan’s four-day visit to Beijing and Shanghai in the first week of November last year.

Under the agreement, exporters have been allowed to ship 200,000 tonnes of rice and 300,000 tonnes of sugar — total value of $300 million — to China in the ongoing calendar year.

Moreover, the agreement also includes preferential market access for around $700m worth of yarn but it seems highly unlikely that Pakistan will have adequate surplus quantity of yarn to export to China as cotton production remains lacklustre.

The Chinese authorities were unwilling to increase the total quantity of these items despite multiple requests, the official added.

Another Commerce Division official said exporters will only have nine months to avail the facility as it will expire by Dec 31, adding that the government is working to get access for wheat and other agriculture commodities as well.

Moreover, this agreement will also be extended to calendar 2020. Pakistan’s exports to China are expected to reach $2.2bn in the ongoing calendar year and $3.2bn in the next.

Breakthrough in PCFTA

The official also said that a major breakthrough is expected in the stalled negotiations between Beijing and Islamabad on the second phase of Pak-China Free Trade Agreement (PCFTA) and the outcome will be announced on April 2.

He said a delegation led by the secretary commerce will leave for China later this month.

Sharing the progress made in PCFTA negotiations, he informed that Islamabad will get market access for 301 tariff lines, which will cover most of its exports and allow export of commodities which are currently negligible.

The PCFTA covers nearly 7,000 tariff lines at the eight-digit level of the HS code. Both sides reduced tariffs on almost 36 per cent of the tariff lines to zero during first three years of PCFTA’s Phase-1.

Moreover, second phase was supposed to commence from the sixth year of the agreement ie 2013, but was delayed as officials from both countries failed to reach an agreement despite meeting for more than 11 times.

As per the initial agreement, at the end PCFTA’s second phase, both sides were to reduce tariffs on 90pc of the tariff lines to zero.

The negotiations on the Phase-II of PCFTA began in 2011.