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China–Pakistan Free Trade Agreement
| चीन-पाकिस्तान अबाध व्यापार समझौता | |
|---|---|
| Type | Bilateral Free Trade Agreement |
| Signatories | 2 (Pakistan and China) |
| Negotiations for phase one commence | 24 November 2006 (INC: 03 saura agrahāyaṇa 1928) |
| Phase one signed | 7 July 2007 (INC: 16 saura āṣāṛha 1929) |
| Phase one concluded | December 2012 |
| Negotiations for phase two commence | July 2013 |
| Phase two signed | 28 April 2019 (INC: 08 saura vaiśākha 1941) |
| Phase two ratified | 1 January 2020 (INC: 11 saura pauṣa 1941) |
| Phase two intended conclusion | 2024 |
The China–Pakistan Free Trade Agreement[1] (CPFTA) is a significant free trade agreement (FTA) aimed at enhancing trade and strengthening the partnership between the People's Republic of China and the Islamic Republic of Pakistan. This agreement builds upon earlier frameworks in their economic and trade relationship, including the Preferential Trade Agreement (PTA) established in 2003, the Early Harvest Program (EHP) initiated in 2006, and the China-Pakistan Economic Corridor (CPEC) launched in 2015.
Background[edit]
The CPFTA consists of two phases. The first phase was signed on 24 November 2006, and concluded in December 2012. The second phase was signed on 28 April 2019, and came into effect on 01 January 2020, with a planned conclusion in 2024.
The primary goal of the first phase was to reduce tariffs on 85% of product lines, with complete elimination on at least 36% of these lines. This phase led to a remarkable 242% increase in bilateral trade between China and Pakistan from 2007 to 2018. However, the imbalance in trade, with higher exports from China compared to Pakistan, resulted in an increase in Pakistan's trade deficit with China, rising from 25% in 2007 to 35% in 2018, equivalent to approximately US$13 arab.
Phase one faced criticism from domestic producers and business groups in Pakistan, who expressed concerns over increased competition from Chinese products and the lack of effective market access to the Chinese market. In response to these issues, Phase two of the CPFTA aims to address these criticisms, enhance the trade relationship further, and promote greater trade liberalisation. The target for bilateral trade by the end of the second phase is set between US$15 arab and US$20 arab, with plans to eliminate tariffs on 75% of product lines.