China Pakistan Trade Relations Economics Essay
China and Pakistan became major trading partners globally. Pakistan’s major import from china includes telecommunication equipment, industries machinery, transport equipment, textile yarn, fabrics, Machinery and manufactured products. Plastic and rubber are important export from china.
FREE TRADE AGREEMENT BETWEEN PAKISTAN AND CHINA
Signing FTA (free trade agreement) b/w the countries over the above commodities of goods and services helped in tariff reductions and enhance the trade b/w the countries.FTA held two parts: phase 1 and phase 2 of the elimination/reduction of tariffs.
The FTA therefore provides significant opportunities to Pakistani investors to import raw materials and machinery and equipment at lower duties from China and export the finished goods to the expanding market of China.
Free trade agreement promotes more import and export between Pakistan and china. The signing of the free trade agreement will further enhance the economic level and trade as strategic partner between Pakistan and china.
PAKISTAN AND CHINA’S TARIFF’S AND TRADE
China made an agreement between with Pakistan that it is going to reduce tariffs on all goods. First they said that there must be 85% reduce in tariffs from the both sides on the basis of taking care of the concerns of both the sides. Pakistan will reduce these tariffs on mutton, beef and manufacturing products. China will mainly reduce tariffs on mineral products, vegetables and livestock etc.
Pakistan’s main national trading policy tool is its customs tariff. Asian country began to liberalize its tariffs in early 1990’s so as to assimilate its economy with the rest of the world. The liberalization was hastened in 1997; however it had been still a stop-and-go approach. Till 2001, some eighty six import swapping programs were obliged.
Currently over seventy fifth of Pakistan’s exports originate from four things i.e., cotton, rice, animal skin and sports product and over half its exports visit seven countries. Therefore, it's to diversify its product vary and its export destinations. Asian country currently should give a level-playing field to its alternative exports. Asian country currently should give a level-playing field to its alternative exports and it's divided into these categories:
1. Electronic and electrical product.
2. Textiles and effortful merchandise significantly vesture.
3. Finished merchandise from Industries that need high analysis and development.
4. Primary Commodities as well as silk, non-alcoholic beverages and cereals.
Pakistan’s general national trading policy objectives stay to scale back protection, bring home the bacon an additional outward-oriented trade regime, larger world integration and increase market access for exports, and. It pursues these goals through unilateral, triangular, and, progressively, regional or bilateral initiatives. Trade and investment alleviation is seen as contributory to economic potency, aggressiveness, and export-led growth; this is often a key government priority that has ancient (textiles and clothing) and non-traditional merchandise. Government acknowledges the inefficiencies important substitution, and aims to realize an additional liberal trade regime, to step by step expose producers to larger international competition; offer continuous material provides, and to facilitate machinery imports.
OPPORTUNITIES FOR PAKISTAN
Pakistan import leather and leather products from China from last many years. We import footwear, leather garments, leather bags, other leather goods and some finished leather. Some countries enjoy tariffs concessions Pakistan is in this category and enjoys tariff concession including zero tariffs on various leather products. Pakistan and China signed Free Trade Agreement in 2007 and it has created enormous opportunities for Pakistan traders. After this agreement of free trade has opened many opportunities for Pakistan to increase its leather and leather related exports of China. There are three major categories of leather exports of Pakistan to China:
1) Finished and semi finished leather
2) Articles of leather
At present finished and semi finished leather exports occupies forth position on the list of major exports of Pakistan to China in 2010. Pakistan may also work on further increasing share of its exports of finished and semi finished leather to China as it does have potential to do that. Pakistan has strong supply side of these products besides preferential tariff advantage Pakistani goods enjoy under Pak-China FTA. A look at China Customs Tariff 2011 for Pakistan clearly reveals that articles of leather apparel, belts etc attract zero tariff whereas leather bags/ suitcases/ hand bags and other articles of leather enjoy tariff concession between 20 to 40% or even more. Pakistan has substantial tariff concession up to 50% under Pak-China FTA on import footwear/parts in China. Footwear companies of Pakistan should focus on these products as well as its market share.
China leather industry is world boss. Given this enormous size of Chinese leather industry and its volume of imports and the fact that China’s processing trade on large scale in leather goods including shoes as well as different products of leather we need to realize the importance of this market. Although it is very difficult to compete with China in its own home market yet Pakistan may make efforts to find a niche in the Chinese market of leather goods especially finished and semi finished leather, footwear, leather garments and leather bags. Pakistan’s exports to China are concentrated in finished/semi-finished leather due to natural advantage of rich resources. Whereas other segments of leather products are unnoticed as far as Chinese leather market is concerned. There is some improvement in export of leather garments from Pakistan to China in recent years although not impressive as compared to European market but performance of footwear industry is dismal for all markets specially China which has been declining for other markets as well since last few years.
PAKISTAN-JAPAN TRADE RELATIONS
Analyzing the power of natural resources of Pakistan and Japan, it can be said that Japan is an industrialized country deficient in natural resources and raw materials which relies heavily on its value added exports to pay for these imports. On the other hand, Pakistan is a developing country which is deficient in technology and endowed with natural resources of fertile agricultural land and raw materials. Thus, Pakistan and Japan could benefit a lot with mutual cooperation in areas like energy, mining, agriculture, trade and investment.
Pakistan-Japan relations are multidimensional in nature and character and have grown rapidly over the years in different fields and diverse sectors. As our major trading partner and top supplier of goods, Japan has over the years played a very significant role in the economic development of the country.
Pakistan’s main items of export to Japan are textile yarn & woven fabrics, leather and leather manufactures, sport goods, fish and fish products.
The main items of imports from Japan are road vehicles, boilers, machinery and equipment, iron & steel, telecommunication and organic chemicals.
Japan has imposed sanitary measures to Pakistani products due to standard measures. At present, 40 Japanese companies are operating in Pakistan; among them are Suzuki, Toyota, Honda and Hino and hoped that in future more companies will follow them. As there free trade system in Japan, there is tough competition. The Japanese government exercised strict control over foreign trade and exchange dealings in order to protect Japanese manufacturers from competition in their home markets, and to strengthen their capacity to sell abroad. Although Japan's quantitative restrictions are relatively few, but still remain high in agriculture. The protection to the agriculture sector is provided by means of import restrictions and massive provision of direct and indirect subsidies. The imposition of these barriers is probably the largest single factor to negatively affect the market opportunities of Pakistan, as Pakistan is basically an agricultural country with a potential to export the agricultural products to Japan.
Japan is following import restriction policies for the textile products but these restrictions do not cover all textile products. The restrictions are in the forms of quota and duties on particular products and particular exporting countries. The declining trend of Pakistani imports from Japan may be due to the joint ventures between Pakistan and Japan in the automobile sector which has been discouraged by the Pakistani government to develop domestic automobile industry and conserve the foreign exchange reserves.
Although Japan is lessening its import policies but still the agriculture sector is heavily protected by means of import restrictions. These barriers are negatively affecting the market opportunities of Pakistan as Pakistan is an agricultural country with a potential to export the agricultural products to Japan.
DEBT SERVICE PAYMENT ON JAPAN'S LOAN
The bulky accumulated amount of Japan loans has steadily increased the liability of debt service payments which are expected to increase till to the year 1997-98 after that the principal and interest both declined because of debt rescheduling.
WORKERS REMITTANCES FROM JAPAN
The earnings of Pakistani nationals, which they earned in Japan and sent it to Pakistan constitutes the worker's remittance from Japan..
The annual workers remittance declines yearly because annual workers remittance (AWR) was US$ 26.84 million in 1990-91 but declined to only US$ 1.58 million in 1999-2000. The government of Pakistan must check and watch whether this amount may come through Hundi business, if it is true then government must provide facilities to the peoples to deposit and take their money through bank. In this way government can show accurate AWR and remove the money risk of the Pakistani workers those are working in Japan.
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