ISLAMABAD: Pakistan and China have finalized the text of agreement on banking sector after two daysí hectic deliberations at the fourth round of second phase negotiations on Pak-China Free Trade Agreement (PC-FTA).
PC-FTA is in effect since 2006 and the Ministry of Commerce (MoC) expressed its concern over the insufficient utilisation of the facilities provided under the PC-FTA in which only few sectors have been able to reap the fruits of the favorable tariffs in an in assessment of the PC-FTA.
Both sides have agreed to sign this agreement during the upcoming visit of the Chinese President to PakistanĒ a well placed source at Ministry of Commerce (MoC) told this scribe here on Wednesday.
In an attempt to deepen economic and strategic ties between the neighbouring countries, Chinese President Xi Jinping is expected to arrive in Pakistan on April 9. He was expected to visit Pakistan in 2014 during his trip to India, Sri Lankan and the Maldives but postponed it due to the ongoing protests against the government in Islamabad.
As per this agreement, both Pakistan and China will allow banks to open branches in each otherís country. Initially, National Bank of Pakistan (NBP) and Habib Bank Limited (HBL) are expected to open their branches in China.
If Pakistani banks start operations the following benefits are expected: (i) presently, the inward remittance/ LC is routed through European banks. Once Pakistani banks are opened the LC routing would be done through Pakistanís own banks.
In this way it is expected that $ 10 billion would move through Pakistani banks which will benefit not only forex reserves but also help in expansion of the economy and GDP; and the Chinese side will also open their leading banksí branches/offices in Pakistan and linking financial sector with world largest economy would help Pakistani banks and financial institutions in multiple ways and will strengthen their standing as well.
Moreover, it will also ease Chinese investments for the Economic Corridor through Pakistani banks which will imply that Pakistanís current account deficit would be curtailed at 15-20% and will be an enormous achievement.
However, both the sides could not come to any agreement on the issue of tariff reduction modalities (TRMs) and decided to continue bilateral talks in next phase of negotiations.
Additional Secretary Ministry of Commerce Robina Ather led Pakistani delegation comprising officials from Federal Board of Revenue, Ministry of Industries, Ministry of Textile Industry and Ministry of Food Security and National Research in ourth round of second phase negotiations on Pak-China Free Trade Agreement (PC-FTA).
Main focus of the discussions and deliberations was on matters related to Sanitary Phytosanitary (SPS) /Technical Barriers to Trade (TBT) and Mutual Recognition Agreement (MRA), and making the PC-FTA articles namely 34 & 41 operational for removal of impediments related to SPS & TBT.
Pakistani side pressed Chinese negotiators to get permission for Pakistani exportersí concerns regarding the inspection and quarantine process of Rapeseed Meal and Canola Seed based on Pakistanís co-operation.
Moreover, both sides also tried to come to some agreement and unanimity of views on reconciled trade figures quoted in the light of study conducted respectively to find out the reasons for this discrepancy.
The both sides tried to address the concerns of either side regarding insufficient utilization of concessions, influence to local industry as a result of concessions and misuse of certificate of origin.
The two day long deliberations discussed the findings of the Working Group on Customs on modalities of establishing customs Electronic Data Exchange related to the implementation of PC-FTA.
It is pertinent to note here that the third meeting of the Second Phase negotiations of CP-FTA was held in Islamabad on January 6, 7 & 8 this year to assess the performance of Pak-China Free Trade Agreement (PC-FTA) and to propose necessary changes of mutual benefit for the two countries
Pakistan emphasized the importance to broaden its export-base to China by encouraging exports from all the sectors which falls under FTA and sought to enhance facilities and concessions on high value-added products.