These products, imported by China but not exported by Pakistan, could be potential new exports for Pakistan and offer opportunities for diversification and expansion of Pakistan`s export supply for the world, starting with China. These products are the most promising for a real commercial creation instead of diverting them. For these products, more competitive tariff access is a necessary but insufficient condition. Other prerequisites for the success of the Chinese market are that Pakistan must (i) have a latent competitive advantage in the production of these products and (ii) be able to remove non-tariff barriers that have prevented access so far. Compared to tariffs offered to the country that had the highest level of exports to China in 2018, Pakistan has already faced a reduction in tariffs on 60% of these products, which have now risen to just over 70%. However, 12% of product lines continue to face higher tariffs than those offered to this product by China`s trading partner. In order to pre-select the possibilities for Pakistan, several filters are applied to Priority 3 products. These include frozen meat and seafood, dried fruits, chemicals, plastics, oilseeds, building materials, appliances and machinery, leather, auto parts, household appliances and machinery. (The full list of Pakistan`s Ministry of Commerce is available here.) v. Electronic data exchange: In order to avoid misrepresentation and under-invoicing of imports from China, an electronic data exchange system for trade has been set up under the Free Trade Agreement. On more than 80% of the CPFTA2 product lines imported by China, Pakistan is now hit with tariffs lower or equivalent to China`s main trading partner. Nearly 40 percent of CPFTA2 products imported by China have experienced a reduction in tariffs under CPFTA2 compared to CPFTA1, and 45 percent of customs lines now enjoy duty-free access to China. A disaggregated analysis for Pakistan`s high-priority products shows considerable opportunities for export expansion and diversification to China, although there are still a small but considerable number of product lines for which Pakistan still does not have competitive access to China, including rice, durum wheat, paper and cardboard items, and hormonal medicines.
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