China-Pakistan Free Trade Agreement on Services to be in Effect Soon

China and Pakistan signed the free trade agreement on service in Wuhan, the capital city of Hubei Province in central China, on Feb. 21 during Pakistani President Asif Ali Zardari's visit to China. The pact, which is expected to be effective as of the first half of the year, will lead to a China-Pakistan comprehensive free trade zone including trade in goods, trade in services and investment.

According to the press release by China's Ministry of Commerce on its website on Feb. 23, Pakistan will further open 102 sub-sectors under 11 major sectors out of the 12 WTO-defined 12 sectors and China will further open its 28 sub-sectors under six major sectors.

Specifically, Pakistan will relax its shareholding restrictions on China's investment in sectors of construction, telecom, finance, distribution, health care, environmental protection, tourism, transportation, research and development and IT education. Chinese service providers in those sectors will be allowed to hold 60 percent to 99.99 percent stakes, compared with the cap of 40 percent to 51 percent of foreign investment.

Pakistan has agreed to grant more favorable treatment to Chinese companies in certain conditions. Solely China-funded businesses are possible particularly in courier, telecom and tourism.

Fifty-six sectors, including five major sectors of distribution, education, environment, transportation, entertainment and sports, will be open to Chinese providers for the first time. Chinese investors will also have the access to service markets on sub-sectors like legal affairs, accountancy, architecture, printing and publishing, veterinary, etc.

Pakistan will also provide better conditions to facilitate personnel flow.

The sectors that China will open mainly include mining, environmental protection, health care, tourism, sports, transportation, translation, real estate, computer, marketing consultancy, etc.

China and Pakistan reached the free trade zone agreement in November 2006, which focuses on trade in goods and investment. The new deal on trade in service means the two countries will build a comprehensive free trade zone.

In MOC's press release, an official with the International Trade and Economic Affairs of the Ministry said that the new deal on trade in service will lay a more solid foundation for the two countries' cooperation on dealing with the global financial crisis, promoting the economic common development, and furthering the all-weather friendship.

China is building 14 free trade zones with 31 countries and regions around the world. Seven free trade zone agreements have been implemented.

"China will push forward the construction of free trade zones more actively while continuing our participation into the WTO Doha Round talks," said the official.

By People's Daily Online