Responsible Person from the Department of International Trade and Economic Affai

Q: China-Pakistan Free Trade Agreement took effect in July 2007. Would you please briefly introduce the basic status and implementing effect of the Agreement?

A: In November 2006, at the witness of President Hu Jintao and Pakistan President Musharraf, the two nations’ governments signed China-Pakistan Free Trade Agreement, mainly including trade in goods and investment. The Agreement took effect smoothly in July 2007. In accordance with the Agreement, both parties implement tax reduction of overall goods products in two stages. The first stage occurs within 5 years after the Agreement took effect, and both parties implement tax reduction on products accounting for 85% of respective total tax items according to different degrees, among which the tariff of 35% of products shall decrease to zero within 3 years. The second stage starts from the sixth year after the Agreement took effect, the proportions of respective zero tariff products in duty codes and trade volume reach 90%. Since the implementation of the Agreement, bilateral trade has developed smoothly, with economic cooperation being deepened and link of enterprises being enhanced, people’s living being improved and political relationship being close, thus the two nations realize the real mutual benefits and common development.

In October 2008, at the joint witness of President Hu Jintao and Pakistan President Zardari, the two governments once more signed the Supplementary Protocol to China-Pakistan Free Trade Agreement. Both parties agreed to, under the framework of China and Pakistan free trade zone, give priority to consideration of reduction or elimination of tariff on goods produced in China and Pakistan investment zone including “Haier-Shandong Pakistan Economic Zone” in Pakistan and the goods both parties have interest of export in. Pakistan specially endowed 12 preferential policies to China and Pakistan investment zone as the attachment to the Supplementary Protocol. The signing and implementation of the Supplementary Protocol will speed up the construction of China and Pakistan investment zones including “Haier-Shandong Pakistan Economic Zone” and attract more enterprises to set up plants in the zones. We believe the signing and implementation of the Agreement on Free Trade Area and Trade in Services Between the Government of the People's Republic of China and the Government of the Islamic Republic of Pakistan will push the economic relationship of the two nations to a higher level, thus further expanding cooperation content and uplifting cooperation level.

Q: Would you please briefly introduce how much progress China has made in general in the construction of free trade zone at present?

A: To adapt to the new situation of the rapid development of global and regional economic integration, China has since 2003 proactively pushed the construction process of free trade zones. In the report of the 17th CPC National Congress, General-secretary of CPC Hu Jintao specifically put forward “implementation of the free trade zone strategy”. At present, China is building 14 free trade zones with 31 countries and regions of 5 continents. Among them, there are 7 free trade agreements that have taken effects, with good implementing situations, mainly including:

Asia: broaden the opening up of the mainland to Hong Kong and Macao, sign CEPA and five supplementary agreements between the mainland and Hong Kong and Macao; sign Trade in goods Agreement and Trade in Service Agreement of free trade zone with ASEAN and complete investment negotiation; sign Free Trade Agreement and Trade in Service Agreement with Pakistan; sign Free Trade Agreement with Singapore; put forward the free trade negotiation with Gulf Cooperation Council (including Saudi Arabia, Kuwait, UAE, Oman, Qatar and Barhrain); Latin America: sign Free Trade Agreement and Agreement on Free Trade Area and Trade in Services with Chile and investment negotiation is being conducted; the free trade negotiation has been concluded with Peru; push the free trade negotiation with Costaria; South-Pacific Regions: sign Free Trade Agreement with New Zealand; push the free trade negotiation with Australia; Europe: push the free trade negotiations with Iceland and Norway; Africa: kick off the free trade negotiation with Southern African Customs Union. In addition, complete the joint research into Indian regional trade arrangement and joint research of free trade zone with South Korea is being carried out, push the fourth round negotiation of APTA and in the latter of 2009 joint research of free trade zone with Switzerland will be launched.

Through mutual reduction and elimination of tariff, further open up service and investment areas, free trade zones can bring trade and investment opportunities, reduce the cost of production and transactions, enlarge the enterprise profits and increase choice of consumption so as to realize mutual profits and win-win and common development. Consequently, China will, in future, push the construction of free trade zones at a more proactive attitude to make greater contributions to the prosperity and development of the world’s economy, trade and investment while continuously participating in Doha Round negotiation of WTO.