After attaining all the official approvals, Phase-II of the China Pakistan Free Trade Agreement (CPFTA) came into effect on 1st January, 2020. On 28th April, 2019 China and Pakistan inked an amending protocol on the Phase II of CPFTA in Beijing. Under Phase II, Pakistan and China will eliminate 75% of tariff lines for a period of 15 and 10 years respectively.
This protocol is an integral part of CPFTA in pursuance of Article 79(2). Basically, a protocol is an agreement that is used to amend, supplement and enforce a treaty or convention. Article 79 of CPFTA states, ‘1. The Parties may agree on any amendment to this Agreement. 2. When so agreed, and entered into force according to Article 81 (Entry into Force), the amendment shall constitute all integral parts of this Agreement’.
Besides, Article 81 says, ‘I. The entry into force of this Agreement is subject to the completion of necessary domestic legal procedures by each Party. 2. Unless otherwise agreed by the Parties, this Agreement shall enter into force 30 days after the date on which the Parties exchange written notification that such procedures have been completed.’
Phase 1 of CPFTA was signed by the two states on 24 th November, 2006 and became operational in July 2007. China eliminated tariff duties on 6,418 items to Pakistan. On the other hand, Pakistan liberalize tariffs on 6,711 items to China. China’s exports to Pakistan jumped from $3.5 billion in 2006-2007 to $15.74 billion in 2017-2018. Similarly, Pakistan’s exports increased to $1.74 billion from $575 million within the span of 11-12 years.
Under the Amending Protocol, market access equivalent to ASEAN Countries is given to Pakistan; a major concern of Pakistani exporters is resolved finally. ASEAN Member states are Brunei Darussalam, Cambodia, Indonesia, Lao Peoples Democratic Republic; Malaysia, Myanmar; Philippines, Singapore, Thailand, and Vietnam. Phase II of CPFTA allows Pakistani traders and manufacturers to export around 313 new products on zero duty in the Chinese Market.
CPFTA-II introduced safety measures to protect domestic industry by restricting the imports of products that threaten or cause injury. Notably, a new tariff reduction schedule is also added to enhance bilateral trade. China has offered market access to Pakistan on textiles and garments, seafood, meat and other animal products, prepared foods, leather, chemicals, plastics, oil seeds, footwear as well as engineering goods including tractors, auto parts, home appliances, machineries, etc. Pakistan has granted concessions to products that include raw materials, intermediate goods and machineries. Positively, both states under the Amending Protocol shall ensure the implementation of Memorandum of Understanding (MOU) signed on 3 rd November, 2019 for Electronic Data Exchange between Customs Administrations to address the issue on export price information.