Pakistan has been experiencing trade deficits on its imports, but an Islamabad-based news outlet claimed that upon the commencement of the China-Pakistan free trade agreement this month, the country could bounce back from its economic troubles. China was said to aid the country in improving its trade deficits by imposing zero tariff duties on Pakistani products to China.
The China-Pakistan free trade agreement would take effect this month. A recent report, however, claimed that there had been trading deficits on imports during the first half of the fiscal year of 2019 through 2020. Nonetheless, Pakistan's exports improved while its imports have been going down the line.
Pakistan's exports improved by 3.2 percent yielding 11.54 billion USD from July of 2019 up to present. However, its imports had been failing at a rate of 17 percent and are now valued at 23.18 billion USD. A report claimed that the decline of its imports would result in a balance of payments position by 2020.
It was revealed that in the last few years, Pakistan has experienced a trade deficit since its economy was significantly affected by external factors. The most affected portion of its economy was the current account deficit (CAD). It caused an imbalance of payments that resulted in increased dollar outflows. Thus, it pressured the rupee to cut its value against the US dollar.
However, during the second phase of the China-Pakistan Free Trade Agreement (CPFTA), imports on 313 new Pakistan products were imposed with zero duties by China. Thus, the waiver of the trade duties, experts claimed, would aid Pakistan in improving its economy the most.
At present, Pakistan currently enjoys zero duties on its imports. About 724 products to China had been given free trade access after the implementation of the second FTA. China has allowed Pakistan to export a total of 1,047 of its products without the imposition of tariff duties.
Alternatively, China was also reported to benefit from the CPFTA. The benefit would enhance textile imports to China, as the exports thereto would also be duty-free. The report revealed that the agricultural and leather products are among those that would be covered by the duties waiver along with commodities such as confectionery and biscuits. The said goods are manufactured by Pakistani companies and are exported to China.
Moreover, the CPFTA would also allow Pakistan to increase its exports to China. The report claimed that the country would gain about 10 million USD from free trade in the following years. Consequently, China would also increase its import market volume by 64 billion USD as well.
According to the developments of the free trade between the two countries, the State Bank of Pakistan has already received the benefits. It was revealed that it had increased its fund limits for traders and manufacturers. The move was said to support the export refinance scheme, a strategy that would also increase the country's exports.
