WORLD TRADE  
ORGANIZATION  WT/REG237/3  
23 March 2011 
 (11-1439) 
Committee on Regional Trade Agreements  
  
 
  
 
 
FACTUAL PRESENTATION 
 
Economic Integration Agreement between 
China and Pakistan 
(Services) 
 
Report by the Secretariat 
 
 
 
 This report, prepared for the considerati on of the Economic Integration Agreement 
between China and Pakistan has been drawn up by the WTO Secretariat on its own responsibility and in full consultation with the Parties.  The report has been drawn 
up in accordance with the rules and pro cedures contained in the Decision for a 
Transparency Mechanism for Regiona l Trade Agreements (WT/L/671).  
 Any technical questions arising from this report may be addressed to Ms Juneyoung Lee (tel: +41 22 739 67 91).  WT/REG237/3 
 Page iii 
 
 
  TABLE OF CONTENTS 
 
  Page 
I. TRADE ENVIRONMENT 1  
II. CHARACTERISTIC ELEMENTS OF THE AGREEMENT 5  
A. BACKGROUND INFORMATION  5  
B. SCOPE AND DEFINITIONS  6  
C. DENIAL OF BENEFITS  6  
D. GENERAL PROVISIONS ON TRADE IN SERVICES  6  
1. Market access 6  
2. National treatment and MFN 7  
3. Commercial presence/Movement of natural persons 7  
E. LIBERALIZATION COMMITMENTS IN SERVICES  7  
1. China 7  
(a) Horizontal commitments 7  
(b) Sector-specific commitments 8  
2. Pakistan 10  
(a) Horizontal co mmitments 10  
(b) Sector-specific commitments 10  
F. INVESTMENT  14  
G. REGULATORY PROVISIONS  14  
1. Domestic regulation 14  
2. Recognition 14  
3. Payments and transfers 15  
4. Subsidies 15  
5. Safeguards 15  
6. Monopolies and exclusive service suppliers 15  
H. GENERAL PROVISIONS OF THE AGREEMENT  15  
1. Transparency 15  
2. Exceptions 15  
3. Accession 15  
4. Institutional framework 15  
5. Dispute settlement 16  
6. Relationship with other agreements concluded by the Parties 16  
7. Cooperation 17  
 
  WT/REG237/3 
 Page 1 
 
 
   
Key Facts 
 
Parties to the Agreement: 
 
China and Pakistan 
 
Date of Signature (services):  21 February 2009  Date of Entry into Force (services): 10 October 2009 
 
Date of Notification (services):  20 May 2010 
 
 
 
I. TRADE ENVIRONMENT 
1. The Agreement on trade in services between th e People's Republic of China and the Islamic 
Republic of Pakistan (hereafter "the Agreement") is Pakistan's second and China's seventh regional 
trade agreement (RTA) notified to the WTO whic h includes services components.  This Factual 
Presentation deals with the services aspects of  the Agreement;  the Free Trade Agreement 
(goods aspects) was considered in April 2009 by the Committee on Regional Trade Agreements.1   
2. In 2009, while China was the world's fifth and fourth largest exporter and importer 
respectively in commercial services amounting for 3.84% of world exports and 5.03% of world 
imports (US$128.6 billion and US$158.2 billi on, respectively), Pakistan ranked 80th and 61st in terms 
of exports and imports accounting for 0.07% of  world exports and 0.21% of world imports 
(US$2.41 billion and US$6.73 billion, respectively).2 
3. Chart I.1 shows the breakdown of China's comm ercial services trade with the world in 
2000-2009 during which time it has run a constant trad e deficit.  The top three categories of both 
exports and imports were other business services,  transportation services and travel services.   
                                                      
1 For relevant documents on the goods aspects of the Agreement, the references are: WT/REG237/1;  
WT/REG237/2;  and WT/REG237/M/1. 
2 WTO Statistics Database, Trade Profile (October 2010). WT/REG237/3 
Page 2  
 
  050100150200
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: IMF, WTO Secretariat estimates based on national data.Chart I.1
China, total commercial ser vices trade, 2000-2009
US$ billion
Transportation services
Travel
Communications services
ConstructionFinancial services
Computer and information services
Royalties and license feesOther business services
Personal, cultural and 
recreational servicesInsurance services
 
 
4. Chart I.2 shows the breakdown of global commercial services trade for Pakistan in 
2000-2009.  Transportation services, travel service s and other business services represent the largest 
categories in terms of both exports and imports of commercial services.  Pakistan's services trade 
deficit has continued to expand although there was a decline in imports in 2009 reducing the size of 
the deficit.  WT/REG237/3 
 Page 3 
 
 
  0246810
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Note: No trade data of construction in 2000-2002 ; no import data of computer and information services in 2000-2002; no export 
data of royalties and license fees in 2000 ; no trade data of personal, cultural, an d recreational services in 2000-2002 and no 
import data in 2003, 2007-2009.Source: IMF, WTO Secretariat estimates based on national data.Chart I.2
Pakistan, total commercial  services trade, 2000-2009
US$ billion
Transportation services
Travel
Communications services
ConstructionFinancial services
Computer and information services
Royalties and license feesOther business services
Personal, cultural and 
recreational servicesInsurance services
 
 
5. Data for its commercial services trade with Pa kistan are not available for 2006 and 2007 
(Table I.1).  In 2008, unlike its global commerc ial services trade, China had a trade surplus with 
Pakistan with over half its e xports in construction services. 
Table I.1.  China's trade in  commercial services with Pakistan, 2006-2008 (US$ million)  
  2006 2007 2008 
Service item Export Import Ex port Import Export Import 
Total services 349.6 227.8 
      
Transport 21.6 44.9 
Travel 46.2 16.4 
Communication services 2.0 0.3 
Construction services 192.9 109.7 
Insurance  0.2 10.2 
Financial services 0.5 1.7 
Computer and information services 0.2 1.2 
Royalties and licence fees 0.2 0.0 
Other business services not available 
74.0 36.2 
 
Note: Chinese government's data submission to the WTO RTA sec tion indicated that the data ar e not available in 2006 and 2007. 
 
Source : Chinese authorities, Nationa l Bureau of Statistics.  
 
6. China's global investment position in 2000-2009 is depicted in Chart I.3.  While it remains 
one of the world's largest recipients of FDI, with total stock reaching US$473 billion in 2009, its 
outward investment has also been increasing with total FDI stock held abroad reaching 
US$229 billion in 2009. WT/REG237/3 
Page 4  
 
  050100150200250300350400450500
2000
2001
2002
20032004
2005
20062007
2008
2009050100150200250300350400450500
2000
2001200220032004
2005
2006200720082009Chart I.3
China, inward and outward foreign investment stock with world, 2000-2009
Inward OutwardUS$ billion US$ billion
Source: UNCTAD, Foreign Direct Investment database.
 
 
7. Pakistan's global investment position in 2000-20 09 is depicted in Chart I.4.  Inward 
investment has generally continued to increase, with a peak in 2007 when it received over US$25 billion, and a reduction to around US$18 billion in 2009.  Outward investment by Pakistan is 
relatively low although it almost doubled from 2007 to 2008 and reached US$2.2 billion in 2009.  WT/REG237/3 
 Page 5 
 
 
  051015202530
2000
2001
2002
20032004
2005
2006
2007
20082009051015202530
2000
2001
2002
2003
2004
2005
20062007
2008
2009Chart I.4
Pakistan, inward and outwar d foreign investment stock with world, 2000-2009
Inward OutwardUS$ billion US$ billion
Source: UNCTAD, Foreign Direct Investment database.
 
 
8. Table I.2 shows China's investment position with Pakistan in 2006-2008.  China was not a 
significant investor in Pakistan in the three year s before the entry into force of the Agreement, 
although there is an upwards trend with outward  investment reaching US$1,328 million in 2008.  
Inward investment from Pakistan, although also in creasing during this period, remains significantly 
lower than outward investment. 
Table I.2.  China, inward and outward foreign in vestment stock with Paki stan, 2006-2008 (US$ million) 
Year 2006 2007 2008 
Inward 30.9 33.4 47.9 
Outward 148.2 1,068.2 1,328.0 
Source : Chinese authorities, Ministry of Commerce.  
 
II. CHARACTERISTIC ELEMENTS OF THE AGREEMENT 
A. BACKGROUND INFORMATION  
 9. The Free Trade Agreement (hencef orth "agreement in goods") entered into force on 1 July 
2007, was notified to the WTO on 18 January 2008 , and considered by the Committee on Regional 
Trade Agreements on 20 April 2009.  Article 83 of ag reement in goods directs the Parties to negotiate 
liberalization of trade in services following the conc lusion of negotiations to liberalize trade in the 
goods.  The Agreement on services, (henceforth "the  Agreement") which entered into force on 
10 October 2009, was notified to the WTO on 20 May 2010 under Article V:7(a) of the GATS 
(document S/C/N/551).  The text of the Agreement is available on the following official websites: 
  China:  http://fta.mofcom.gov.cn/topic/enpakistan.shtml
 
 Pakistan: http://www.commerce.gov.pk/PCFTA-S.php  WT/REG237/3 
Page 6  
 
  10. The Agreement is composed of 25 provisions and schedules of specific commitments by each 
Party. 
B. S
COPE AND DEFINITIONS  
11. Taking into consideration national policy obj ectives (preamble), the Agreement governs the 
Parties' measures affecting trade in services (A rticle 2.1) and covers GATS modes of supply 
1 (cross-border), 2 (consumption abroad), 3 (co mmercial presence), and 4 (temporary movement of 
natural persons) (Article 1). 
12. Commercial presence means any type of busin ess or professional establishment, including 
inter alia  through the constitution, acquisition or main tenance of a juridical person, as well as 
branches or representative offices with in the territory of a Party for the purpose of supplying a service 
(Article 1).  The Agreement adopts the same definition of 'juridical person' as in GATS 
Article XXVIII.(l).  In a footnote it clarifies that, to prevent the possibility of companies of a third 
party unduly benefiting from the Agreement, companies of a third party registered in the territory3 of 
the other Party, their offices, liaison offices, "s hell companies" and "mail box companies" are not 
considered service suppliers of the other Party unde r the Agreement.  According to the Parties, the 
footnote is to clarify the concept of rules of origin  for services suppliers of a Party and is in line with 
GATS Article V.6.  In addition, Article 24.1 (denial of benefits) of the Agreement compliments rather 
than substitutes GATS Article V.6. 
13. The Agreement does not apply to: i) services supplied in the exercise of governmental 
authority within the territory of each Party;  ii) regulations or requirements governing the procurement 
by government agencies of services purchased for governmental purposes and not with a view to 
commercial resale or use in the supply of services for commercial sale;  iii) subsidies or grants 
provided by a Party;  iv) in respect to air transport services, traffic rights, however granted, or services directly related to the exercise of traffic rights, except measures affecting: a) aircraft repair and maintenance services;  b) the selling and marketing of air transport services;  and c) computer 
reservation system services;  v) cabotage in maritime transport services;  and vi) measures affecting 
natural persons seeking access to the employment market of a Party, or measures regarding 
citizenship, residence or employment on a permanent basis (Article 2.2). 
C. D
ENIAL OF BENEFITS  
14. Subject to prior notification and consultation, a Party may deny the benefits of the Agreement 
to service suppliers of the other Party where the ser vice is being supplied by a juridical person owned 
or controlled by persons of a non-party or the denying Party, and the juridical person has no 
substantial business activities in the territory of the other Party (Article 24.1).  A Party may also deny 
the benefits of the Agreement to a service supplier of the other Party where the Party establishes that 
the service is being supplied by a juridical person ow ned or controlled by persons of a non-party, and 
that the denying Party does not maintain diploma tic relations with the non-party (Article 24.2).  
D. GENERAL PROVISIONS ON TRADE IN SERVICES  
1. Market access 
15. The market access provision is along the lines of Article XVI of the GATS.  In the case that 
specific market access commitments ar e undertaken, six types of limitations cannot be maintained or 
adopted by the Parties, unless otherwise specified in their schedules (Article 14).   
                                                      
3 "Territory" has been defined by Article 5 of the agreement in goods.  WT/REG237/3 
 Page 7 
 
 
  2. National treatment and MFN 
16. Under Article 15, which is based on Article XVII of the GATS, each Party will accord to 
services and service suppliers of the other Party tr eatment no less favourable than it accords to its own 
like services and service suppliers in the sectors it h as scheduled, and subject to any conditions and 
qualifications set out therein.  The Agreement does not have a MFN provision regarding like services 
and service suppliers of a non-Party. 
3. Commercial presence/Movement of natural persons 
17. No specific provision on commercial presence or the movement of natural persons, per se , is 
provided under the Agreement.  The limitations on commercial presence or movement of natural 
persons in the subscribed services sectors in th e Parties' schedule of commitments are summarized 
under the section on liberalization commitments below.   China submitted data on the movement of its 
natural persons to Pakistan and the movement of Pa kistani natural persons to China (Table II.1).  The 
annual number of Pakistani natural persons coming to China is about 2.5 to 3.5 times higher than 
Chinese natural persons going to Pakistan during 2006-2008.  
Table II.1.  Movement of natural persons between China and Pakistan 
Year going to Pakistan coming from Pakistan 
2006 29,528 86,629 
2007 26,382 97,518 
2008 28,245 72,854 
 
Source:  Chinese authorities, Bureau of the Ministry of Public Security. 
 
E. LIBERALIZATION COMMITMENTS IN SERVICES  
18. The schedules of commitments are contained in Annex I.  The Annex follows a "positive-list 
approach" whereby the obligations of market access (Article 14), national trea tment (Article 15), and 
additional commitments (Article 16) apply only to the sectors listed therein, subject to the limitations 
and conditions inscribed therein.  Article 17.2 speci fies that measures inconsistent with Articles 14 
and 15 shall be inscribed in both the columns relating to  the two Articles.  This is a feature that differs 
from Article XX.2 of the GATS, where measures inconsistent with both Articles on market access and national treatment are inscribed in the column rela ting to market access only, although considered as 
providing a qualification to national treatment as well. 
1. China 
(a) Horizontal commitments 
19. China's horizontal commitments in the Agreement are similar to those under the GATS.  In 
addition, under the Agreement all subsidies to dom estic services suppliers are unbound in: i) the new 
commitments that go beyond China's WTO commitments  in the sectors listed in the schedule;  and 
ii) any new sector and sub-sector scheduled in future services negotiations
4 after signing the 
Agreement.  In both the GATS and the Agreement,  foreign invested enterprises in China are: 
i) wholly foreign-owned enterprises;  and ii) jo int ventures which are either equity based or 
contractual.  
                                                      
4 China clarifies that "future services negotiations" mean any international services negotiations that 
China may participate in as a party in the future. WT/REG237/3 
Page 8  
 
  (b) Sector-specific commitments 
20. For business services, China has added a number of  new commitments for:  i) research and 
experimental development services in natural sciences  and engineering (excl uding prohibited foreign 
investment industries defined in the Catalogue for the Guidance of Foreign Investment Industries );  
ii) market research services (limited to inves tigation services designed to secure information on the 
prospects and performance of an organization's pr oducts in the market);  iii) services related to 
management consulting in project management servi ces other than for construction;  iv) placement 
and supply services of personnel;  v) building-cleaning services;  and vi) printing of packaging materials, on a fee or contract basis.  These servi ces in addition to those under its GATS commitments 
are to be provided by either joint ventures or whol ly foreign-owned enterprises, and for some of these 
(ii), iv), and vi)) economic needs tests are required.   
21. In addition, services: i) incidental to mining (only in oil and natural gas);  and ii) related 
scientific technical consulting services (field servi ces for iron, copper and manganese), another new 
sub-sector in which there are commitments in the Agreement, may be provided by Pakistani services 
suppliers in cooperation with Chin ese partners.  Pakistan software implementation services, real estate 
services on a fee or contract basis, and translation and interpretation services, sub-sectors in which 
China only guarantees access through joint ventures with foreign majority ownership under its GATS 
schedule, enjoy improved mode 3 commitments under the Agreement as wholly foreign-owned 
enterprises are allowed to enter China.  Regard ing real estate services involving own or leased 
property, China's GATS schedule does not permit  the establishment of wholly foreign-owned 
enterprises for high standard real estate projects (such as apartments and office buildings, excluding 
luxury hotels), whereas the Agreement does not contain such limitations. 
22. In environmental services (excluding environm ental quality monitoring and pollution source 
inspection), under mode 3, for five out of seven sub-sectors (sewage services;  solid waste disposal 
services;  cleaning services of exhaust gases;  noise abatement services;  and sanitation services) in which it has commitments under th e Agreement, China has also permitted wholly foreign-owned 
enterprises, whereas it only permits joint ventur es with foreign majority ownership in its GATS 
commitments.  For the remaining two sub-sectors (nature and landscape protection;  and other environmental protection services), there are no changes to its mode 3 commitments. 
23. Health related and social services, a sector in  which China has no commitments in the GATS 
or in its revised GATS offer, is included under the Agreement for hospital services.  Foreign equity in 
hospital services is permitted up to a maximum of 70% with a majority of doctors and medical staff in 
hospitals being Chinese.  The total number of hospita ls is to be in line with China's needs.   
24. For recreational, cultural and sporting services, a sector in which China has no 
GATS commitments, it has full commitments in m odes 1-3 for the provision of sports event 
promotion/organization services and sports f acility operation services (excluding golf).  
25. Under transport services, China will permit the pr ovision of maintenance and repair services 
of motor vehicles (by wholly foreign-owned subs idiaries), and interurban regular road passenger 
transportation (only under joint ventures with a ma ximum foreign equity of 49% and an economic 
needs test).  In these sub-sectors China has no GATS commitments.   
26. For i) communication services, ii) construction and related engineering services, 
iii) distribution services, iv) educational services, v) financial services, and vi) tourism and travel related services, China's commitments in th e Agreement match those under the GATS.   
27. Table II.1 below summarizes China's specific commitments under Annex I of the Agreement 
and compares them with its GATS schedule excludi ng mode 4 commitments.  This table (as well as  WT/REG237/3 
 Page 9 
 
 
  Table II.2) is based on the services sectoral classification list.5  Improvements in existing GATS 
commitments are mainly represented by a relaxation of the form of establishment under mode 3 or 
further sub-sectors in which commitments are made  (see paragraphs 20-25 for a detailed description 
of the changes).  Like in the GATS, China took no commitments in sectors such as: i) rental/leasing 
services without operators;  ii) postal services;  iii) tourist guide services;  iv) space services;  and v) 
pipeline transport services. 
Table II.1 China: comparison between the GATS and the Agreement specific commitments in trade in services (excluding mode 4) 
Sectors GATS FTA 
1. BUSINESS SERVICES   
A. Professional services √ Same 
B. Computer and related services  √ Improved 
C. Research and development - New 
D. Real estate √ Improved 
E. Rental/Leasing services without operators - - 
F. Other √ Improved  
2. COMMUNICATION SERVICES   
A. Postal - - 
B. Courier √ Same 
C. Telecommunication  √ Same 
D. Audiovisual √ Same 
E. Other - - 
3. CONSTRUCTION AND RELATED ENGINEERING 
SERVICES √ Same 
4. DISTRIBUTION SERVICES √ Same 
5. EDUCATION SERVICES √ Same 
6. ENVIRONMENTAL SERVICES √ Improved  
7. FINANCIAL SERVICES   
A. All insurance and insurance-related services √ Same 
B. Banking and other financial services √ Same 
8. HEALTH RELATED AND SOCIAL SERVICES - New 
9. TOURISM AND TRAVEL RELATED SERVICES   
A. Hotels and restaurants √ Same 
B. Travel agencies and tour operators √ Same 
C. Tourist guides - - 
D. Other - - 
10. RECREATIONAL, CULTURAL AND SPORTING SERVICES - New 
11. TRANSPORT SERVICES   
A. Maritime √ Same 
B. Internal waterways √ Same 
C. Air  √ Same 
D. Space - - 
E. Rail  √ Same 
F. Road √ Improved 
G. Pipeline - - 
H. Services auxiliary to all modes of transport √ Same 
I. Other - - 
12. OTHER SERVICES NOT INCLUDED ELSEWHERE - - 
Note: 
√: Commitments in the GATS schedule. 
-: No commitments either under the GATS or the Agreement. 
New: New commitments made under the Agreement. 
Improved: Improved commitments made under the Agreement compared to those under the GATS. Same: Same commitments made under the Agreement as those under the GATS. 
 
Source :  China's Schedule of Specific Comm itments under the GATS (S/DCS/W/CHN) and Annex I under the Agreement.  
The comparison only concerns modes 1-3, market access and national treatment, and additional commitments, it 
does not concern the issues of mode 4. 
                                                      
5 MTN.GNS/W/120. WT/REG237/3 
Page 10  
 
  2. Pakistan 
(a) Horizontal commitments 
28. Pakistan's horizontal commitments in mode 3 in its GATS schedule have been relaxed under 
the Agreement in that a higher foreign equity par ticipation can be considered by the authorities on a 
case-by-case/project-by-project basis under exceptiona l circumstances, whereas in its GATS schedule 
it permits a maximum foreign equity participati on of 51% (except for representative offices where 
specifically provided for in the GATS schedule).  Under the Agreement representative offices cannot 
partake in any commercial/financial and profit generating activity whereas this limitation is not 
indicated in its GATS schedule.  The authorizati on required for the acquisition of real estate by 
non-Pakistanis found both in Pakistan's GATS sche dule and the Agreement will be eliminated from 
the Agreement if the limitation is abolished at the conclusion of Doha Round negotiations.  In mode 4, 
Pakistan has expanded market access opportunities for Chinese services providers by broadening the 
category of natural persons under the Agreement.  The newly added categories are: managers;  
business visitors (business persons, and service sal es persons);  contractual service suppliers;  
independent professionals;  and ot her natural persons having rec ognized skills.  Chinese natural 
persons in these categories may stay in Pakistan fo r between a minimum of 30 days and up to either 
six months
6, one year7, or three years8 depending on the category.  For executives and specialists for 
which there are also commitments in the GATS schedule, the duration of stay (a minimum of 30 days 
up to three years with possibility of extension) is  specified in the Agreement although not in the 
GATS schedule.   
(b) Sector-specific commitments  
29. All the sub-sectors listed under business services  in the Agreement are either new or have 
some improvements over Pakistan's GATS commitments.  The new sectors and sub-sectors9 generally 
limit market access in mode 3, allowing forei gn equity of up to 60% with a few exceptions.10  I n  
addition, for all but two new sectors and sub-sectors11, Pakistan has indicated that subsidies are 
unbound across the four modes.  Among the sector s and sub-sectors where improved commitments 
have been made in the Agreement, Chinese equity  of up to 70% (compared to 40% in its GATS 
schedule, and 51% in its GATS initial offer) is pe rmitted for engineering consultancy companies in 
engineering services for building infrastructures (harbours, dams, hydel power, and airports only)12 
subject to joint ventures with Pakistani engineers or engineering firms.  Medical and dental services, a 
                                                      
6 Business persons. 
7 Services sales persons;  contractual service suppliers (with possibility of renewal);  independent 
professionals;  and other natural persons having re cognized skills (subject to a labour market test). 
8 Managers (with possibility of extension).  
9 i) Legal services;  ii) accounting and bookkeeping services;  iii) architectural serv ices;  iv) veterinary 
services;  v) services provided by midwives, nurs es, physiotherapists, and para-medical personnel;  
vi) maintenance and repair services of  office machinery and equipment includi ng computers;  vii) R&D services 
on social sciences and humanities;  viii) interdiscip linary R&D services;  ix) rent al/leasing services without 
operators relating to other transport equipment;  x) printing publishing;  xi) agricultural storage facilities 
services;  and xii) range land services .  Pakistan has indicated that range la nds include vast natural landscapes in 
the form of grasslands, shrublands, woodlands, wetlands and deserts.  Range land services include management, 
maintenance, preservation or other as sociated services for the lands. 
10 Such as, printing publishing services for which the foreign equity is allowed up to 25%, and range 
land services for which Pakistan has not committed (i.e., unbound) for mode 3. 
11 i.e., services provided by midwives, nurses, physiotherapists, and para-medical personnel;  and 
maintenance and repair services of office m achinery and equipment including computers. 
12 For other improved services sub-sectors, i.e., t echnical testing and analysis services;  services 
incidental to agriculture and forestry (excluding fishing and hunting);  and services incidental to mining, the 
Agreement allows 60% (compared to 51% in the GATS schedule) of foreign equity participation.  WT/REG237/3 
 Page 11 
 
 
  sub-sector which is scheduled under health relate d and social services in the GATS, is scheduled 
under business services in the Agreement.  Some im provements have been made in that the foreign 
equity limitation has been raised from 51% in the GATS to 60% under the Agreement.  In addition, 
there are no mode 1 limitations on market access and national treatment compared to commitments being unbound under the GATS.  For comput er and related services, joint ventures
13 with Pakistani 
IT/ITeS (Information Technology Enabled Services) are required and the majority of jobs created as a 
result of such joint ventures to be offered to Pa kistani nationals, a new requirement which is not in 
Pakistan's GATS commitments.  Similarly, for research and development (R&D) services, joint ventures which may have a majority share held by Chinese suppliers are recognized as a form of 
commercial presence.  However, for R&D serv ices, there are no nationality requirements. 
30. For courier services (not including services provide d by public institutions whether federal or 
provincial), a sector in which Pakistan has no GATS commitments, foreign equity participation is 
limited to 70% although 100% partic ipation may be permitted on a case-by-case basis.  The first two 
general conditions
14 for telecommunication services in Pakistan 's GATS schedule do not appear in the 
Agreement.  Pakistan has made new commitments  for mobile communication services, a sector in 
which it has no GATS commitments, with full commitm ents across modes 1-3 except limitations of 
60% of foreign equity and technical constraint s on the availability of frequency.  For other 
telecommunication services, commitments under the Ag reement are improved, in particular, due to 
the higher level of foreign equity permitted (from 51% in the GATS to 60% under the Agreement).  
Chinese services providers of on-line information a nd data base retrieval and on-line information 
and/or data processing services are no longer required to use the Pakistan Telecommunication 
Corporation network, a condition in Pakistan's GATS schedule. 
31. For civil engineering construction work for bri dges, elevated highways, tunnels, subways, 
waterways, harbours, dams and other waterworks, a sector in which Pakistan also has GATS commitments, the ceiling on foreign equity particip ation has been increased to 70% from 51% in the 
GATS.  In addition, Pakistan has take n new commitments in five sub-sectors
15, for which it has no 
commitments in the GATS and its initial GATS offer.   For these new services, mode 3 requirements, 
such as joint ventures, preferential use of local ser vices, and technology transfer by foreign services 
suppliers are inscribed. 
32. For distribution, education, environment, recr eational, cultural and sporting, and transport 
services, for which Pakistan has no commitments in the GATS, it has taken commitments.  For these 
new sectors (except distribution services), Pakistan  has indicated that subsidies are unbound across 
the four modes.  In its initial GATS offer, it has no commitments in recreational, cultural and sporting, 
and transport services. 
33. Pakistan has distribution service commitments in wholesale trade, retailing, and franchising 
services with limitations of 70% on foreign equity, co mpared to 51% in its GATS offer.  An economic 
needs test is required only for retailing services.  There are no limitations in mode 1 except for 
retailing services which are unbound.  A general discl aimer for distribution services says that any 
                                                      
13 Pakistan clarifies that for comput er and related services, foreign equ ity is not capped and can be up 
to 99%. 
14 The two conditions are: i) policy, regulatory and operation functions are separate and compliance is 
necessary;  ii) all services to be provided in Pakist an shall require a licence from the Regulatory authority 
established under the law. 
15 The five sub-sectors are: general construction work for buildings (CPC 512);  general construction 
work for civil engineering (CPC 513 except CPC 5132 and CPC 5133);  installation and assembly work 
(CPC 514 and 516);  building completion and finishing work (CPC 517);  and pre-erection work at construction sites (CPC 511), special trade construction work (CPC 515), renting services related to equipment for 
construction of demolition of buildings of civ il engineering works with operator (CPC 518). WT/REG237/3 
Page 12  
 
  future domestic regulations applicable to foreign service suppliers/juridical persons shall be inscribed 
in the schedule under limitations on national treatment.
16 
34. The scope of education services is limited to higher, adult, and other education services.  
Environmental services consist of sewage services, refuse disposal services17, sanitation and similar 
services18, cleaning services of exhaust gases, and noise abatement services.  They do not include 
public works functions owned and ope rated by federal, provincial, di strict, "tehsil" level governments 
or municipalities, or contracted out by them.  Commercial presence for education and environmental 
services is restricted to joint ventures with major ity Chinese ownership (up to 99.9%) albeit subject to 
approval by the relevant authorities.  In par ticular local authority approval is required for 
environmental services, whereas "relevant" authorit y approval is required for educational services.  
Mode 3 commitments for national treatment ar e unbound for all sub-sectors under education and 
environmental services in which Pakistan has commitments. 
35. Under recreational, cultural and sporting services, there are commitments in libraries, 
archives, museums, and various sporting services.19  Pakistan has indicated that subsidies are unbound 
for these services across the four modes.  For lib raries, archives, and museums, foreign equity 
participation is limited to 60% subj ect to approval by the Ministerial authority.  However, for sporting 
services, joint ventures with Chinese majority  ownership (up to 99.9%) are permitted. 
36. In transport services, Pakistan has commitments in rail20 and road21 transport services, and 
services auxiliary to all modes of transport22.  Subsidies across the four modes are unbound.  For all 
these sub-sectors, foreign equity participation is  limited to 60%, and mode 3 commitments for 
national treatment are subject to rules and regulatio ns applicable to foreign entities except that for 
'maintenance and repair of road transport e quipment', and 'supporting services for road transport 
services', there are no such limitations. 
37. Commitments in hospital services, hotels and restaurants (including catering), and travel 
agencies and tour operator services have been improved in that 60% of foreign equity participation is 
allowed under the Agreement compared to 51% in Pa kistan's GATS schedule.  Pakistan also added 
theme parks attraction services, and convention centres al so with foreign equity participation of up to 
60% and subject to approval by the relevant authorities. 
                                                      
16 According to Pakistan, domestic regulations in this regard are currently being formulated. 
17 Additional commitments further clarify that it may also include refuse and recycling technologies for 
large, medium and small scale urban centres. 
18 Additional commitments further clarify that it may also include biological techniques of sewage 
recycling and water purification and recycling. 
19 Those are: sports event promotion services;  sp orts event organization services;  sports facility 
operation services;  other sporting services (cricket, fo otball, hockey, marital art, taekwondo, judo, karate, 
gymnastics, basketball, volleyball, handball, table te nnis, badminton, tennis, wrestling, weight lifting, 
billiard/snooker, chess, bridge and golf only). 
20 The committed rail transport services under the Agreement are: i) passenger transportation;  
ii) freight transportation;  iii) container terminal;  iv) maintenance and repair of ra il transport equipment;  and 
v) supporting services for rail transport services.  Pushing and towing services, a sub-sector defined under the 
services sectoral classificati on list (MTN.GNS/W/120), is not committed under the Agreement.  
21 The committed road transport services under th e Agreement are: i) passenger transportation;  
ii) freight transportation;  iii) rental of commercial vehicles with operators;  iv) maintenance and repair of road 
transport equipment;  and v) supporting services for ro ad transport services, ther efore committing all the sub-
sectors defined under the services sector al classification lis t (MTN.GNS/W/120). 
22 The committed services auxiliary to all modes of transport under the Agreement are: 
i) cargo-handling services;  and ii) storage and warehouse services.  Fr eight transport agency services, a 
sub-sector under the services sectoral classifica tion list (MTN.GNS/W/120), is not committed under the 
Agreement.    WT/REG237/3 
 Page 13 
 
 
  38. In financial services, while no commitments in  additional sub-sectors have been undertaken, 
some changes have been made compared to Pakist an's GATS schedule.  For example, under insurance 
and insurance-related services, mode 3 commitment s for market access have been improved in that 
maximum foreign equity participation of up to 60%  is permitted.  However, in the GATS schedule 
Pakistan differentiates between foreign equity limits  for life and non-life insurance;  25% for existing 
life insurance companies, 51% for new life insu rance companies, and bound for existing non-life 
insurance with regards to scope of operations and eq uity structure.  For banking and other financial 
services (excluding insurance), the Agreement cont ains a general limitation on foreign equity 
participation of up to 49%.  However, for 'accepta nce of deposits and other repayable funds from the 
public in Pakistan', a higher equity can be request ed by China and the State Bank of Pakistan may 
consider each such request on a case-by-case basis.  In  addition, for 'acceptan ce of deposits and other 
repayable funds from the public in Pakistan', ther e are some new features, such as permitting banks 
from countries belonging to regional groups and asso ciations of which Pakistan is a member 
(e.g., Economic Cooperation Organization (ECO), S outh Asian Association for Regional Cooperation 
(SAARC) etc.) to conduct banking business thro ugh a branch established under the Agreement.   
Pakistan clarifies that this branch is bound by a quot a (50 branches per bank).  Another new feature is 
mode 4 commitments for 'acceptance of deposits and other repayable funds from the public in 
Pakistan', and 'lending of all types including co nsumer credit, mortgage, factoring, credit and 
financing commercial transaction' which provides for national treatment in that the employment of 
Chinese nationals in banks and financial institutions  operating in Pakistan requires compliance with 
prescribed Fit and Proper tests for the chief exec utive/country head and key executives across the 
banking sector.  For all payment and money transmission services including traveller cheques and 
banker's draft (excluding credit, charge and debit cards), the Agreement conditions the transmission of 
money on foreign exchange regulations and instruc tions, whereas this is unbound in Pakistan's GATS 
schedule. 
39. Table II.2 below summarizes Pakistan's specific commitments under Annex I of the 
Agreement and compares them with its GATS schedule excluding mode 4 commitments. 
Improvements in existing GATS commitments are ma inly represented by an increased concession for 
Chinese equity participation unde r mode 3 or further sub-sectors in which commitments are made 
(see paragraphs 29-38 for a detailed description of th e changes).  Like in the GATS, Pakistan took no 
commitments in sectors such as: i) real estate service s;  ii) postal services;  iii) audiovisual services;  
and iv) tourist guide services. 
Table II.2: 
Pakistan: comparison between the GATS and the Agreement specific commitments in trade in services (excluding mode 4) 
Sectors GATS FTA 
1. BUSINESS SERVICES   
A. Professional services √ Improved 
B. Computer and related services  √ Improved  
C. Research and development √ Improved 
D. Real estate - - 
E. Rental/Leasing services without operators - New 
F. Other √ Improved 
2. COMMUNICATION SERVICES   
A. Postal - - 
B. Courier - New 
C. Telecommunication  √ Improved 
D. Audiovisual - - 
E. Other - - 
3. CONSTRUCTION AND RELATED ENGINEERING SERVICES √ Improved 
4. DISTRIBUTION SERVICES - New 
5. EDUCATION SERVICES - New 
6. ENVIRONMENTAL SERVICES - New 
7. FINANCIAL SERVICES   
A. All insurance and insurance-related services √ Improved 
B. Banking and other financial services √ Improved 
  Table II.2 (Cont'd) WT/REG237/3 
Page 14  
 
  Sectors GATS FTA 
8. HEALTH RELATED AND SOCIAL SERVICES √ Improved 
9. TOURISM AND TRAVEL RELATED SERVICES   
A. Hotels and restaurants √ Improved 
B. Travel agencies and tour operators √ Improved 
C. Tourist guides - - 
D. Other - New 
10. RECREATIONAL, CULTURAL AND SPORTING SERVICES - New 
11. TRANSPORT SERVICES - New 
12. OTHER SERVICES NOT INCLUDED ELSEWHERE - - 
Note: 
√: Commitments in the GATS schedule. 
-: No commitments either under the GATS or the Agreement. New: New commitments made under the Agreement. 
Improved: Improved commitments made under the Agreement compared to those under the GATS. 
 
Source :  Pakistan's Schedule of Specific Commitments under the GATS (S/DCS/W/PAK) and Annex I under the 
Agreement.  The comparison only concerns modes 1-3,  market access and national treatment, and additional 
commitments, it does not concer n the issues of mode 4. 
 
F. INVESTMENT  
40. While there are no investment-specific provision s in the Agreement, the agreement in goods 
between the Parties sets out provisions relating to investment (chapter IX).  Investment in the agreement in goods is defined as every kind of asset invested by investors of one Party in accordance 
with the laws and regulations of the other Party in  the territory of the latter, including movable and 
immovable property and other property rights such as mortgages, pledges and similar rights;  shares, 
debentures, stock and any other kind of participation in companies;  claims to money or to any other 
performance having an economic value associated with an investment;  intellectual property rights, in 
particular copyrights, patents, trade-marks, trad e-names, technical process, know-how and good-will;  
and business concessions conferred by law or under c ontract permitted by law, including concessions 
to search for, cultivate, extract or exploit natural r esources.  Further provisions of chapter IX relate to 
the promotion and protection of investment, treatme nt of investors and investments, expropriation, 
compensation for damages and losses, transfers, s ubrogation, and the settlement of disputes between 
Parties and between investors and one Party.  
G. R
EGULATORY PROVISIONS  
1. Domestic regulation 
41. Article 5 on domestic regulation is based on Artic le VI of the GATS and may be reviewed to 
incorporate the results of negotiations on Article VI of  the GATS.  It authorizes the Parties to ensure 
that all measures of general application affecting trade in services are implemented in a reasonable, 
objective and impartial manner.  A new feature comp ared to Article VI of the GATS, is that the 
Parties shall consult periodically aiming at rem oving any remaining citizenship requirements for the 
licensing or certification of each other's service supp liers (Article 5.4).  According to the Parties 
consultations had not commenced  as at January 2011.    
2. Recognition 
42. Article 6 contains provisions on the recogn ition of the education or experience obtained, 
requirements met, or licences or certifications of service suppliers of other Party which essentially mirror the provisions of GATS Article VII.  In addition, under the Agreement the Parties shall 
develop mutual recognition arrangements among pr ofessional or regulatory bodies and establish focal 
points in each Party (Article 6.3).  The Parties indicated that such focal points had not been 
established as at January 2011 and ar e to be established as appropriate.  WT/REG237/3 
 Page 15 
 
 
  3. Payments and transfers 
43. The Parties agree not to apply restrictions on in ternational transfers and payments for current 
transactions relating to trade in services apart from balance-of-payments exceptions under Article 11.  
They also agree not to impose restrictions on any capital transactions inconsistent with their 
commitments under the Agreement regarding such  transactions, apart from balance-of-payment 
reasons or at the request of the Inte rnational Monetary Fund (Article 10). 
4. Subsidies 
44. The Agreement does not contain a provision on subsidies per se , nor refers to Article XV of 
the GATS.  However, as described in section II.B ( scope and definitions) above, subsidies or grants 
provided by a Party are excluded from the scope of the Agreement. 
5. Safeguards 
45. Following a review by the Parties, the Agreem ent will incorporate the results of Article X 
(emergency safeguard measures) of the GATS nego tiations.  Meanwhile, if a Party considers that 
implementing the Agreement has a substantial adve rse impact to any of its services sectors, it may 
request consultations with the other Party.  While  sympathetic consideration to the Party seeking a 
measure shall be given, the Parties shall mutually ag ree to any measure to be taken (Article 9).     
6. Monopolies and exclusive service suppliers 
46. Provisions on monopolies and exclusive service suppliers are based on Article VIII of the 
GATS (Article 7).  While recognizing that certain business practices of services suppliers, other than 
those under Article 7 may restrain competition and rest rict trade in services, the Parties shall consult 
each other aiming at eliminating such practices (Article 8).   
H. GENERAL PROVISIONS OF THE AGREEMENT  
1. Transparency 
47. The Agreement incorporates Article III of the GATS including its bis provision on 
transparency and disclosure of confidential information (Articles 3-4).  
2. Exceptions 
48. General and security exceptions are maintain ed by incorporating into the Agreement 
mutatis mutandis  Article XIV and XIV bis of the GATS (Article 12).  The Parties can take measures 
for balance-of-payments purposes in accordance with Article XII of the GATS (Article 11). 
3. Accession 
49. There is no provision in the Agreement for the accession of third parties. 
4. Institutional framework 
50. Article 20 provides for the establishment of a Committee on Trade in Services, comprising 
representatives of the Parties, and co-chaired by officials of the Parties.  Its functions include reviewing: commitments with a view to achieving fu rther liberalization on a mutually advantageous 
basis and securing an overall balance of rights and obligations;  the implem entation and operation of 
the Agreement;  and issues concerning the effectiv e implementation of Articles 6 (mutual recognition) WT/REG237/3 
Page 16  
 
  and 9 (emergency safeguard measures).  In addition, each Party designates a contact point, inter alia , 
to exchange information relevant to the implementa tion and operation of the Agreement (Article 18).  
51. Three years after the entry into force of the Agreement, the Free Trade Commission 
established under Article 75 of the agreement in goods may review the Agre ement taking into account 
the developments and regulations on trade in ser vices of the Parties as well as the progress made at 
the WTO and other specialized forums.
23  The Parties may also review and modify the Agreement 
when necessary following a request by a Party (Article 19).   
5. Dispute settlement 
52. For settlement of disputes under the Agre ement, the provisions of Chapter X24 (dispute 
settlement) of the agreement in goods between the Par ties apply (Article 23).  In addition, Article 53 
(provision on settlement of disputes between th e Parties from Chapter IX on investment) of the 
agreement in goods applies, mutatis mutandis , to measures affecting the supply of services by a 
service supplier of a Party through commercial presen ce in the territory of the other Party, in the 
sectors in which the Parties have made commitments (Article 2.4).   
6. Relationship with other agreements concluded by the Parties 
53. The Agreement's relationship with other existing agreements is defined in Article 22.3, where 
it says the Agreement or any action taken under it sha ll not affect or nullify the rights and obligations 
of a Party under an existing agreement to which it is a party.  The GATS Annexes on: Movement of 
Natural Persons Supplying Services;  Air Tran sport Services;  Financial Services; and 
Telecommunications shall apply to the Agreement unless the Parties agree otherwise (Article 22.1). 
                                                      
23 According to the Parties, "other specialized foru ms" may relate to any international and regional 
conferences and organizations co ncerning trade in services in existence, or to be held or set up in the future. 
24 For the details, please refer to paragraphs 45-46 of WT/REG237/1.  WT/REG237/3 
 Page 17 
 
 
  Table II.3 
China and Pakistan:  Participation in other RTAs (n otified and non-notified in force), as of March 2011  
GATT/WTO Notification Partner/ 
AGREEMENT  Date of entry 
into force Type of 
Agreement Year WTO Provision 
CHINA  
Peru 01.03.10 Goods & Services 2010 GATT Art. XXIV & GATS Art. V 
Singapore 01.01.09 Goods & Services 2009 GATT Art. XXIV & GATS Art. V 
New Zealand 01.10.08 Goods & Services 2009 GATT Art. XXIV & GATS Art. V 
ASEAN 01.07.07 
01.07.03 Services 
Goods 2008 
2004 GATS Art. V 
Enabling Clause 
Pakistan 01.07.07 Goods 2008 GATT Art. XXIV 
Chile 01.08.10 
01.10.06 Services 
Goods 2010 
2007 GATS Art. V 
GATT Art. XXIV 
Hong Kong, China 01.01.04 Goods & Services  2003 GATT Art. XXIV & GATS Art. V 
Macao, China 01.01.04 Goods & Services 2003 GATT Art. XXIV & GATS Art. V 
APTA (Accession) 01.01.02 Goods 2004 Enabling Clause 
Chinese Taipei 12.09.10   Not notified 
PAKISTAN  
Malaysia 01.01.08 Goods & Services 2008 Enabling Clause & GATS Art. V 
China 01.07.07 Goods 2008 GATT Art. XXIV 
SAFTA 01.01.06 Goods 2008 Enabling Clause 
Sri Lanka  12.06.05 Goods 2008 Enabling Clause 
SAPTA 07.12.95 Goods 1997 Enabling Clause 
ECO 17.02.92 Goods 1992 Enabling Clause  
GSTP 19.04.89 Goods 1989 Enabling Clause  
PTN 11.02.73 Goods 1971 Enabling Clause  
Mauritius 30.11.07 Goods  Not notified 
Iran 01.09.06 Goods  Not notified 
 
 
APTA: Asia Pacific Trade Agreement. 
SAFTA: South Asian Free Trade Agreement. 
SAPTA: South Asian Preferential Trade Agreement. ECO: Economic Cooperation Organization. 
GSTP:  Global System of Trade Preferences. 
PTN: Protocol on Trade Negotiations.  
Source: WTO Secretariat. 
 
7. Cooperation 
54. The Parties shall strengthen cooperation in ser vices including those not covered by existing 
cooperation arrangements.  They shall mutually  agree on the sectors for cooperation including 
programmes to improve domestic capacities, ef ficiency and competitiveness of such sectors 
(Article 13). 
__________