Karako­ram High­way & FTA

Pakistan Observer - - OPINION - Dr Habib Gul Email: dhg737pk@ya­hoo.com

KARAKO­RAM High­way one of the en­gi­neer­ing won­ders, cross­ing four great moun­tain ranges, the Hi­malayas, the Karako­ram, the Hindu Kush and the Pamir was of­fi­cially opened for traf­fic on June 18, 1978. It has very pos­i­tive im­pact on the so­cio-eco­nomic life of tan­gi­ble parts of Gil­git-Baltistan, Malakand and Hazara di­vi­sions and hith­erto in­ac­ces­si­ble ar­eas of the re­gion. It has paved the way for vis­it­ing to North­ern re­gion of Pakistan, China and on­ward to the South East Asia by road or by air from China. Af­ter cross­ing the Khun­jrab val­ley of Gil­git-Baltistan, it en­ters into the Au­ton­o­mous Re­gion of Uighur Sinkiang of the Peo­ple Repub­lic of China. Ta­jik­istan, Afghanistan and India are si­t­u­ated close to this High­way. This High­way has a great strate­gic and eco­nomic im­por­tance, both for Pakistan and China.

Un­der the CPEC, the KKH be­tween Khun­jrab Pass and Havelian is sched­uled to be ex­pand, re­con­structed and over­hauled which will al­low the link be­tween Sinkiang and Gwadar port safer. The KKH is the high­est gift of in­fra­struc­ture given by Pakistan and China to the set­tle­ments pass­ing through it and si­t­u­ated in sur­round­ings. It is not wrong to say that the ac­tual progress in the re­gion be­gan af­ter con­struc­tion of this en­gi­neer­ing mir­a­cle. Karako­ram High­way is a project of hope and change. Sev­eral hy­dropower plants and towns are si­t­u­ated ad­ja­cent to it. Gwadar is the near­est port of Chi­nese Western Re­gion which con­trib­utes 20 % to Chi­nese eco­nomic ac­tiv­i­ties. Gwadar through KKH with ef­fi­cient trans­port net­work will pro­vide ac­cess to crude oil and other nat­u­ral re­sources, par­tic­u­larly from Mid­dle East, nec­es­sary for Chi­nese devel­op­ment. Of course, a rea­son­able size of ex­port and im­port will flow through this High­way.

China, in­deed is our all-weather es­tab­lished friend. How­ever, af­ter ro­bust eco­nomic devel­op­ment and sign­ing Free Trade Agree­ment, par­tic­u­larly FTA-II with Pakistan, our in­dus­tries have been neg­a­tively af­fected. China is ex­port­ing in­fe­rior qual­ity con­sumer and non-con­sumer goods to Pakistan at price fixed by her and Chi­nese mar­kets have been spread so widely, al­most in all towns and cities of Pakistan. There are even ten grades of a com­mod­ity which ruth­lessly af­fect in­no­cent peo­ple. Some­time back, bull­doz­ers were pur­chased by the Gov­ern­ment of Balochis­tan which were found de­grade qual­ity, buses and rail­way en­gines are another ex­am­ples of use­less ma­chin­ery, es­pe­cially man­u­fac­tured for Pakistan. Chi­nese has a pol­icy of im­port­ing pri­mary prod­ucts by pro­cess­ing it in her own ter­ri­tory. It will se­verely harm Pakistan’s in­ter­est. Chi­nese im­ported US $88 bil­lion worth of fuel and lu­bri­cant from Mid­dle East in which $ 77 bn was pro­cessed in her own ter­ri­tory. Pro­cess­ing of US $ 5-7 bil­lion pri­mary (crude oil) in Pakistan un­der CPEC will sat­isfy a rea­son­able part of the Western Route dwellers by in­stal­la­tion of re­finer­ies there. The FTA-II be­tween China and Pakistan is only in favour of China and harm­ful for the Pakistan. China ex­port to Pakistan is US $ 9 bil­lion against im­port from Pakistan of US $ 2 bil­lion. The flow of hard cur­rency by Pak­istani tourists vis­it­ing to Sinkiang and other parts of China through KKH is not in­cluded in these fig­ures. Chi­nese tourists sel­dom visit to Pakistan and China wants to ex­pand her ex­port to Pakistan and in­sist­ing for ex­emp­tion from reg­u­la­tory duty.

Un­der Strate­gic Trade pol­icy Frame­work (STPF) 2015-18, known for am­bi­tious ex­port tar­get of $ 35 bil­lion by 2018, prod­uct in­clud­ing rice, yarn, fabrics and gar­ments are sup­ported to pro­mote to China. This trend of STPF will not pro­tect Pakistan’s in­dus­tries, agri­cul­ture and in­crease poverty as no pro­cess­ing term or value added clause is in­cluded in the STPF or CPEC. Pakistan needs strong es­sen­tial in­dus­trial pol­icy oth­er­wise may fail to achieve pos­i­tive tar­get for the CPEC like FTA. At present, the ex­port from Pakistan to China is 70 per­cent cot­ton yarn and China has cap­tured some of our mar- kets, such as Jan­i­maz (Musal­lah) ex­port to Saudi Ara­bia. Pakistan may in­sist on China, par­tic­u­larly through CPEC to pro­mote value ad­di­tion within Pakistan. Crude oil like pri­mary com­modi­ties im­ports through Gwader may be con­verted to value added goods within Pakistan be­fore trans­port­ing to China. In case the KKH is used as a route of trans­port­ing pri­mary or goods pro­cessed out­side Pakistan, it will highly neg­a­tive af­fect on the Pakistan’s bal­ance of pay­ment. The trans­porters bring­ing these goods to China from Gwadar will come back with cheap and in­fe­rior qual­ity load­ers at re­turn jour­ney.

Karako­ram High­way has im­mense im­por­tance for both the coun­tries and our Gov­ern­ment un­der­stands its security. A total of 36 check posts with 1,300 hired men for Pa­trolling Force would be set up along the 390 KM stretch of the road pass­ing through the KPK. The Fed­eral Gov­ern­ment has al­ready es­tab­lished a pa­trolling force of one Di­vi­sion to be also as­sisted by the Gil­git-Baltistan Po­lice force. We should not for­get that Afghanistan, Ta­jik­istan and India are the near­est coun­tries si­t­u­ated to this world most dif­fi­cult moun­tain­ous re­gion. — The writer is a for­mer Deputy Director Gen­eral, R.E, Pakistan Coun­cil of Re­new­able En­ergy Tech­nolo­gies, Gov­ern­ment of Pakistan.

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