Islamabad: The government is in a fix over the future of the China-Pak Free Trade Agreement as some ministries fear that giving free access to manufacturing giant will wipe out local industry while on the other hand the Chinese who are investing massive 40 billion dollars, are ambitious to get into Pakistani markets. Pakistan signed a comprehensive Free Trade Agreement with China in 2009, allowing it market access in 11 sectors. After the expiry of phase-1 in 2012, both the countries were bound to provide 90 percent free access to each other in the next phase.

Despite the expiry of phase-1, the phase 2 could not be adopted yet, due to internal resistance of different departments. Pakistan’s ministry of commerce believes that allowing 90 percent free trade across neighbouring countries will boost Pakistan’s exports but ministry of textiles, agriculture and industries opposed the move arguing that it will adversely affect the local industry.

During the implementation of phase-1, we have learnt that free trade with China adversely affected our domestic industry and many industries including ceramics had to be closed, said a senior official. He said that cost of doing business in Pakistan was very high and the local industry cannot compete with China, which is very cost efficient due to economy of scale. The official said that after the reservations from the Pakistani side now the Chinese are pursuing to have free access to 90 percent items in next 15 years, while they are offering Pakistan free access in next five years. But, according to him, it was still not a viable option.

Zero duty on 90 percent products means, you are importing almost everything from the neighbouring manufacturer on zero duty, if done so, all local products will be wiped out by very competitive Chinese products, which means a severe crisis, the country will plunge into hunger and extreme poverty, the official said. He added that when the industry will be out of business there will be nothing to export hence, the economy will collapse. Chinese are pursuing to have free access of Pakistani market at a time when China already has initiated more than $40 billion investment in new projects in the country under China Pakistan Economic corridor (CPEC).