Two-day formal talks between Pakistan and China will commence in Islamabad on Thursday to finalise the second phase of the free trade agreement (FTA) to promote bilateral trade between the two countries.

According to sources, Pakistan is playing host to the first round of talks, in which elaborate discussions will be held on allowing Islamabad duty-free access to Chinese markets worth $1 billion. The implementation of FTA between Pakistan and China started on January 1, 2007 and the arrangement is being terminated by the end of the current year.

Talks for the second phase will finalise issues associated with giving Pakistani products duty-free access to Chinese markets, to bring a balance in trade between the two countries. The agreement will give approval to export of 268 Pakistani products to China, which include textile items, agricultural products, seafood and leather, among others.

However, China is also demanding greater access for some of its goods to Pakistani markets in exchange and the talks will also consider the issue. A decision will also be made on whether the two countries should prepare offer lists or a negative list, which will consist of items that cannot be traded.

According to sources, this round of talks will also finalise the strategy for Chinese technical and financial support to enhance the capacity of the export industry of Pakistan, along with issues related to Chinese investment in Pakistan.