The agreement contains articles relating to the establishment of the free trade area, objectives, relations with other agreements, the application of this agreement, definitions, scope and coverage, national treatment, removal of tariffs, paratarifs and non-tariff barriers, rules of origin, trade remedies, safeguards, health and plant health measures , THRs, investments, dispute resolution, amendments, annexes, etc. The evaluation begins with the implementation of a comprehensive set of data on all tariff positions of 8,238 tariff positions, included by China in CPFTA2, which includes three types of data for each tariff line: the tariffs proposed under CPFTA1 and Phase 2 (for years 0, 5 and 10), trade data on volumes for China and Pakistan and growth rates for Pakistan. , China and China`s best trading partner and, third, customs data for all countries that export to China to products. This dataset is used to compare China`s tariffs on Pakistani products under CPFTA2 with CPFTA1 tariffs to determine whether market access has improved in China, as well as with tariffs offered to other countries exporting these products to China. Although Pakistan`s tariff concessions for Chinese products are a second important aspect of the free trade agreement, they do not fall within the scope of this report. This round of review of the CPFTA expands and diversifies business opportunities for businesses on both sides while maintaining fair and equitable protection of local industrial interests. There are 1,436 products in this category in the 8-digit HS sector, where Pakistan exported $2.5 billion worldwide, while China imported $464.7 billion from the world. By the last year of CPFTA2, 70% of priority product lines 2 will have duty-free access in China – an increase of 575 product lines over CPFTA1. Compared to CPFTA1, 47% of product lines face lower tariffs under CPFTA2. The report then examines non-tariff barriers to access to the Chinese market, based on the results of a roundtable discussion and one-on-one interviews with exporters, some of whom had attempted to export to China.
The main obstacles were Pakistan-specific issues, not non-tariff barriers in China. The reported barriers include capacity issues related to internal factors such as industrial infrastructure and qualifications, as well as external factors such as uncertainties and delays in import and export procedures, which hinder the ability of firms to commit to faster delivery times. Another critical issue was the lack of information about China at the level of companies, associations and sectors. This results from the inability to open up market and destination markets, find appropriate partners, find relevant regulatory or pricing information for themselves and compare it to their competitors in China. Lack of price competitiveness, inadequate trade facilitation and an unfavourable trading environment were also cited as significant obstacles. However, while growth in Pakistani exports to China outpaced Pakistani exports to the rest of the world, Pakistani imports from China increased even more strongly (Table 1). As a result, the trade deficit with China has soared. It already accounted for a quarter of Pakistan`s total trade deficit in 2007. In 2018, it was 35%. The CPFTA has also been the subject of much criticism among Pakistani business groups that Pakistan has negotiated poorly, both in terms of access to products for which it was better able to export to China and the granting of access to Chinese products that have invaded the Pakistani market and contributed to premature deindustrialization. Chinese President Hu Jintao and his Pakistani counterpart Pervez Musharraf on Friday monitored the signatu