Page 16 - November/December-2019

tures complained about the unbalance in the
exports to China as the second phase of the Free
deal, especially the textile sector which raised
Trade Agreement (FTA) between China and
concerns about the favours it granted the
Pakistan will offer the same tariff concessions
Chinese textile industry. They believed that the
enjoyed by the ASEAN countries.
FTA was damaging the local industry and giving
undue advantage to the Chinese. The govern-
The agreement covers 313 tariff lines of US $8.7
billion Pakistan's overall exports and US $64
ment took note of the demands by the industry
billion of China’s global imports. Textile and
as they pointed out that during the first phase,
garments sector is at the forefront of this deal
tariffs were imposed on Pakistani textile exports.
and will help enhance the sector’s exports to
At the same time, they complained that the
China as it offers the same duty free access to
country’s competitors from the ASEAN had duty
free access to the Chinese market.
ASEAN countries.
The agreement is already bearing fruits as the
To fix this disparity, the Pakistani government held
several rounds of negotiations with their Chinese
Indian yarn exports dropped more than 38
counterparts and now hope that the second
percent for the first six months of the current
phase of the FTA would overcome the concerns
fiscal year. According to reports in the Indian
of the local manufacturers and increase exports.
press, the cotton yarn exports between April and
As a counter-measure, the sensitive list had been
September of this year dropped from US $2.08
increased from 10% to 25%, totaling 1760 tariff
billion to US $1.27 billion compared to the same
period from last year.
lines and covers 37% of Pakistan's imports from
China. This, the two sides hope, will give protec-
tion to Pakistani industry from Chinese import,
The Indian report cited the FTA’s second as a
and the textile and garments sector is a major
major reason for the decline as it said that the
India did not enjoy the same tariff free access to
beneficiary of this sensitive list. Whereas, the
the Chinese market, whereas India had to pay 3.5
tariffs from the industry had also been lifted to
to 5 percent tariffs.
increase the export of the sector. The Chinese
side also agreed to immediate market access on
its priority products, tariff reduction and measures
The full effects of the second phase of the FTA
could be gauged after the deal comes into effect
for protection of the domestic industry on
from December 1, which would boost the exports
Pakistan’s request.
of Pakistani products to the Chinese market.
The first phase of FTA between China and
Earlier in the month, Abdul Razak Dawood,
Pakistan was signed on November 24, 2006 and
Adviser to the Prime Minister for Commerce,
became operational in 2007. The negotiations for
Textile, Industry & Production and Investment,
the second phase began in 2011 and after eleven
announced that the second phase would come
into effect from December 1 and it was becoming
rounds, both sides signed the agreement in April
of 2019 in Beijing.
operational earlier than usual. He said that it
usually took a year to make such agreements
Now, the second phase is about to take effect
operational between countries but because of the
special relations enjoyed by both the countries.
which is already showing some positive signs.
16 The textile sector of Pakistan will get a boost in During the first phase of the FTA, local manufac-
Cotton season 2018/19 featured:
Rollercoaster prices, with decreasing
production, area and yields
After a few years of relative calm, world agricultural
markets face policy uncertainty and trade tensions: ICAC
Highlights from the latest ‘Review’ regarding the Weakening economic growth amidst trade issues set
2018/19 season include: Global area decreased by the environment for a decrease in consumption with
1% to 32.6 million hectares (ha) and yield declined a near 1% loss to 26.2 million tonnes. With
2% to 790 kg/ha; World production slipped 3% to consumption exceeding production, global ending
25.7 million tonnes; More than half of global stocks stocks for the season decreased by 2% to 18.3
(52%) are now being held outside of China. million tonnes.
Global stocks at the start of the 2018/19 season were As ending stock levels in China lowered, the ratio of
1% higher than the previous season at an estimated stocks held in China and stocks held outside of
18.7 million tonnes. At 84 cents per pound, the China inverted with 52% of global stocks now being
international reference price of cotton was lower than held outside of China. Trade in cotton lint increased
the previous season’s ending average of 88 cents by 2% to 9.2 million tonnes with the USA, Brazil, West
per pound. Africa and Australia leading in global exports.
After a 99.5 cent per pound price at the start of the New uncertainties have emerged in addition to the
season, prices fell throughout the year. Global area usual risks facing agriculture. Following several years
under cotton decreased by 1% to 32.6 million of relatively calm market conditions, world
hectares. Global yield decreased slightly by 2% to agricultural markets today face mounting risks,
790 kg/ha but remained above the ten-year average including policy uncertainty from trade tensions.
Open, transparent and predictable trade is important
of 776 kg/ha. As a result, global production for the cotton market and its role as an important
decreased by 3% to 25.7 million tonnes.
commodity in the global economy.
APTMA demands textile policy capable of doubling exports
APTMA Chairman Amanullah Machera said that textile exports in the next five years.
Pakistani exporters are facing stiff competition from
Bangladesh and Vietnam. The chairman was of the APTMA officials informed that 70 percent of the textile
view that Pakistan can counter the competition only industry is in Punjab, where more than 100 mills have
after exporters get a five year textile policy at hand, been closed due to poor energy policies of the
so they know what will be the tax rates and energy previous governments.
prices.
The previous textile policies have not been much of a
Meanwhile, APTMA Punjab Chairman Adil Bashir has success story, as the Textile Policy 2014-19 failed to
said that the government needs to announce a long achieve all its targets including doubling value
term and comprehensive textile policy if it wants to addition from $1 billion per million cotton bales to $2
see a return of capital investment in the country. The billion per million cotton bales, increasing textile
APTMA Punjab Chairman added that if government exports from $13.1 billion to $26 billion as well as
accepts this demand, they are capable of doubling creation of 3 million jobs in five years.
October/November 2019