WORLD TRADE  
ORGANIZATION   
WT/REG237/M/2 
7 July 2011  
 
(11-3350) 
Committee on Regional Trade Agreements 
Sixty-first Session  
 
 
 
CONSIDERATION OF THE ECONOMIC INTEGRATION AGREEMENT BETWEEN 
CHINA AND PAKISTAN, SERVICES 
 
Note on the Meeting of 28 June 2011 
 
Chairman:  Mr. F. Riegert (France) 
 
 1. The 61
st Session of the Committee on Regional Trade Agreements (hereinafter 'CRTA' or the 
'Committee') was convened in Airgram WTO/ AIR/3754, and corrigendum 1 dated 17 May and 
21 June 2011.  
2. Under Agenda Item B.II of this session, th e CRTA considered the Economic Integration 
Agreement between China and Pakistan (her einafter 'the Agreement'), services.  
3. The Chairman said that the Agreement had en tered into force on 10 October 2009.  It had 
been notified to the WTO by the Parties on 20 May 2010 under GATS Article V:7(a) as an 
Agreement providing for the liberalization of trade in services within the meaning of Article V of the 
GATS (document S/C/N/551).  The text of the Agreem ent, together with its Annexes was available on 
the Parties' official websites.  The Factual Presentation on the services aspects (document WT/REG237/3 dated 23 March 2011) had been prepared by the Secretariat on its own responsibility 
in full consultation with the Parties, in accord ance with paragraph 7(b) of the Transparency 
Mechanism for Regional Trade Agreements (documen ts WT/L/671).  In addition, written questions 
and replies on the Agreement had been di stributed in documents WT/REG237/4 and 
WT/REG237/Add.1, dated 26 May 2011  and 24 June 2011, respectively.  He proposed to organize the 
consideration of the Agreement by first asking the Pa rties and then other Members to give any general 
comments before going into the specifics of the Agreement using the Factual Presentation, , to guide the debate, followed by the questions and replies document. 
4. The representative of Pakistan thanked the Co mmittee for the opportunity to introduce some 
of the features of the China-Pakistan Agreement on trade in services.  He recognized the work of the 
Secretariat in writing the Factual Presentation.  Pakistan and China had been all-weather friends since 1950.  Since the beginning of the century their exce llent political relations had also begun to be 
translated into deep economic li nkages.  The foundation of these linkages had been established in 
concrete terms with the conclusi on of negotiations on a bilateral FTA on goods and investment in 
2006 which had entered into force on 1 July 2007.  This agreement had been notified to the WTO and 
its review had been completed.  The architectur e of the bilateral economic linkages included the 
negotiation of a standalone bilateral Agreement on trade in services which was before the Committee.  
Services had accounted for about 53% of Pakistan's  GDP and about 60% of economic growth before 
the 2008 economic crisis.  Besides, manufacturers a nd producers of goods needed access to services at 
competitive rates such as finan ce, insurance, transport, communications, engineering, energy, 
marketing, advertising, legal services, retail and wh olesale etc.  Services were therefore an integral 
part of goods produced and competitive servi ces produced competitive goods.  The current 
multilateral commitments of Pakistan were in six sectors and 46 sub-sectors.  The sectors were WT/REG237/M/2 
Page 2  
 
  business, communications, construction, finance, health , and tourism and travel services.  In mode 3, 
Pakistan's equity participation commitment was ge nerally 51% except in finance and insurance where 
the limit was 49% and 25%, respectively.   Against this backdrop, in the Agreement Pakistan provided 
market access to China in 11 sectors and 107 sub-sectors.  The only sector in which no commitments had been taken by Pakistan was other services.  In addition, equity participa tion in mode 3 had been 
liberalized in many areas of bilateral interest, with Pakistan permitting the establishment of joint 
ventures in Pakistan without any limits to equity by China.  In other words, in these areas the equity 
limit could be even beyond 99%.  There was al so an undertaking that 100% foreign equity 
participation could be permitted on a case to case basis if the need arose.  This approach had been 
aimed at promoting joint venture initiatives to bu ild the capacity of domestic service suppliers, 
transferring technology and creating new jobs in both countries.   
5. He reminded Members that when the Agreement was being negotiated there was a deep 
economic crisis and simultan eous global increases in the price of energy and food.  The impact of 
these crises on Pakistan had been very acute and for many reasons, like unprecedented natural 
disasters, its economy remained under pressure.  In sp ite of these factors Pakistan's stakeholders had 
been enthusiastic about negotiating the high-level Ag reement in a relatively short period of time.  
Although the Agreement had been in force since 10 Oct 2009 the Parties had been trying to build 
upon the Agreement to capture the untapped potentia l of trade in services and were expecting to 
increase bilateral trade in services manyfold in th e medium and long term.  The Agreement contained 
a review mechanism through a Free Trade Committ ee and a Committee on Trade in Services.  The 
mechanism would not only periodically review im plementation of the Agreement, but could also 
propose further liberalization of trade in services in areas of mutual interest.  Both parties had also 
started work on establishing focal points in differe nt sectors and sub-sectors and to have mutual 
recognition agreements in areas identified through jo int consultations.  The Parties had received some 
written questions from the United States, EU and Chinese Taipei and later from Mexico.  The questions had been primarily focused on the covera ge of the Agreement, benefits arising out of 
bilateral liberalization and the in-built mechanism of the Agreement to deal with  issues such as mutual 
recognition.  The Parties had replied to the questio ns which had been circulated by the Secretariat 
along with an addendum which included answers to some of the questions received later.  The 
Agreement was before the Committee and the Parties would be glad to hear Members' comments and 
clarify any further issues. 
6. The representative of China thanked the WTO S ecretariat for having prepared the Factual 
Presentation and the United States, EU, Chinese Taipei and Mexico as well as other Members for 
their interest and advanced questions.  She also th anked Pakistan for the close and fruitful cooperation 
during the review process.  Chin a appreciated the opportunity to review the Agreement, and to 
introduce the basic background and highlight the impor tant steps of the Agreement.  According to 
Article 83 on a future work programme in the China-Pakistan FTA which had been signed in 
November 2006, the Parties had agreed to negotia te an Agreement on trade in services after the 
conclusion of negotiations for a China-Pakistan FT A to liberalize and eliminate substantially all 
discrimination or prohibit new or more discriminat ory measures with respect to trade in services 
between the Parties.  After five rounds of nego tiations, the Agreement on trade in services under the 
framework of the China-Pakistan FTA had been si gned on 21 February 2009 and entered into force on 
10 October 2009.   
7. China had made commitments under the Agreem ent in 11 sectors and 133 sub-sectors, of 
which 56 sectors or sub-sectors involved improveme nts or additions, in comparison with its GATS 
schedule.  The sectors included computer, mining,  R&D, real estate, other business services, 
environmental services, hospitals, sports, transport et c.  Pakistan had made commitments in 11 sectors 
and 107 sub-sectors with substan tial improvements in mode 3 am ong which 60 new sub-sectors under 
distribution, education, environment, transport,  recreation, cultural and sporting services had been 
opened to competition.  The Agreement had been warmly welcomed by business in both countries.   WT/REG237/M/2 
 Page 3 
 
 
  The Parties believed that the economic potential of  the Agreement was still underutilized and more 
work was needed to inform trader s and investors in both Parties of the opportunities that remained to 
be tapped.  
8. The Chair opened the floor for an y general comments by delegations. 
9. The representative of the United States thanke d the Parties for their presentations and the 
answers provided in advance as well as the Secretar iat for the Factual Presentation.  He noted that 
with respect to the services provisions of the Agr eement, the Parties had ma de some improvements to 
their GATS commitments but in large and important sectors there remained no commitments or significant continuing discrimination.  In some cases new limitations had been introduced beyond 
those scheduled in the Parties' GATS commitme nts.  He did note, however, that there was a 
mechanism in place in the Agreement and that the Parties intended to improve  coverage over time.  
He also noted that Table II.3 on page 17 of the Factual Presentation referred to agreements not 
notified by the Parties, including the agreem ent between China and Chinese Taipei, and was 
interested in hearing when the Parties intended to notify these agreements to the WTO.  As his 
delegation had noted in past CRTA meetings the Un ited States believed that non-notified agreements 
represented a significant blind spot in the understa nding of RTAs and their implications for the 
multilateral trading system.  In the spirit of tran sparency, he urged the Parties to notify these 
remaining agreements as soon as possible. 
10. The representative of Mexico thanked the Secr etariat for the Factual Presentation and the 
Parties for their work.  He thanked the Parties for their quick responses to questions raised by Mexico 
and would contact them upon hearing back from his authorities. 
11. The representative of the European Union th anked the Parties for their comprehensive 
presentations and written answers to questions raised in  advance.  He also noted the low coverage of 
services commitments in the Agreement and encouraged  the Parties to make further commitments in 
those areas not yet liberalized and to take advant age of the review clause that enabled them to 
improve their concessions.  He also noted from th eir written responses that the Parties had already 
committed to improve their commitments and he coul d only encourage them to do so.  He also noted 
that according to Table II.3 of the Factual Presentation Pakistan had not yet notified its RTAs with Mauritius and Iran which had been in force since 2007 and 2006 respectively.  He asked if Pakistan 
could indicate when it intended to notify these agreements. 
12. The representative of Pakistan noted that Iran was not a WTO Member and there were a 
number of agreements involving non-Members that had not been notified to the WTO.  With respect 
to the agreement with Mauritius, this was a small package involving an early harvest agreement and 
the parties were currently negotiating a full-fledge d FTA.  Once these negotiations were complete, the 
parties would notify the agreement to the WTO.  Sim ilarly, with Iran, Pakistan was in the process of 
trying to expand the list of products covered in th is agreement and a notification would be made once 
the second phase of negotiations had been comple ted.  He noted that during the Committee's 
consideration of the agreement between Pakistan and Malaysia in 2009, he had informed Members 
about Pakistan's position at the time and requested that  this be reflected in the minutes of the meeting. 
13. The representative of China thanked the United Stat es for its interest in the Agreement with 
Chinese Taipei.  He indicated that the parties were currently in discussions to  notify the agreement.  
The consultative process was ongoing and had entere d the final phase.  Once agreement had been 
reached the parties would take subsequent action accordingly. 
14. The representative of the European Union, res ponding to the intervention by Pakistan, pointed 
out that even agreements with non-WTO Members needed to be notified because the notification 
provisions applied to WTO Members.  In addition, ear ly harvest agreements also had to be notified. WT/REG237/M/2 
Page 4  
 
  15. In conclusion the Chairman said that the consideration of the services aspects of the 
Economic Integration Agreement between China and Pakistan had allowed the Committee to clarify a 
number of questions and conclude oral discussion of the RTA in accordance with paragraph 11 of the 
Transparency Mechanism.  If any delegations wished  to ask follow-up questions they were invited to 
forward submissions in writing to the Secretariat by  6 July 2011 and the Parties were asked to submit 
replies in writing by no later than  20 July 2011.  In accordance with  paragraph 13 of the Transparency 
Mechanism all written submissions as well as minutes of the meeting would be circulated promptly, 
in all WTO official languages and would be made available on the WTO website. 
16. The Committee took note of the comments. 
__________