Pakistan, China enters in CPFTA-II 2025
ISLAMABAD, Feb 25 (Gwadar Pro) - China Pakistan Free Trade Agreement (CPFTA) phase II, which completed during 2019 to 2024, has finally entered into new stage in 2025 with amendments to transform it more conducive and favorable for Pakistan to help broaden its export footprints in China with more tariff concessions and product coverage.
CPFTA phase II 2025 has been greenlighted during recent President Asif Ali Zardari’s a five-day official visit to China (from February 4 to 10). Pakistan and China agreed to conduct further consultation on trade liberalization under the framework of the Phase-II of China-Pakistan FTA, and actively explore the possible bilateral concessional arrangements based on the spirit of mutual benefit and win-win cooperation.
According to data from the State Bank of Pakistan (SBP), Pakistan’s exports to China totaled USD 1,053.161 million during last six months in connection with ongoing fiscal year which is to complete in June 2025. Before early-stage FTA phase I, Pakistan export to China was USD 0.5 billion in 2006. Commerce Ministry official told Gwadar Pro that with the positive effects of CPFTA phase II, the State Bank of Pakistan (SBP) says that the foreign direct investment (FDI) in the first half of FY2024-25 increased by 37% to USD 1.88 billion as compared to USD 1.38 billion in the corresponding period last year.
The initial FTA was signed on 24 November 2006 and concluded in December 2012. Later, CPFTA (Phase I) was signed on 28 April 2019 and came into force on 1 January 2020. CPFTA Phase II concluded in 2024.
By the end of the initial phase, China and Pakistan had abolished tariffs on 35.5pc of product lines. Under CPFTA-11, the products’ coverage from both sides is 75 per cent.
Phase two of the CPFTA enhances market access for both countries. China has eliminated tariffs on 313 product lines and Pakistan is a major exporter to China in terms of goods such as textiles, cotton, frozen meat and other animal products, seafood, prepared food, chemicals, carpet, marble, plastics, oilseeds, Chilli, footwear, engineering goods, machinery, leather and auto parts.
Under the Phase-II of CPFTA, both countries have liberalized 75% of tariff lines for each other in a period of 10 years by China and 15 years by Pakistan. China immediately eliminated tariffs on 313 most priority tariff lines of Pakistan’s export interest. Overall, China has granted concessions to products which include textiles and garments, seafood, meat and other animal products, prepared foods, leather, chemicals, plastics, oil seeds, footwear as well as engineering goods including tractors, auto parts, home appliances, machineries, etc.
Pakistan has offered market access to China on raw materials, intermediate goods and machineries. Access to cheaper imported inputs and machinery will improve Pakistan’s export competitiveness and help upgrade its industrial production.
