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China and Pakistan will next month begin reducing tariffs on one another's imports, in line with the two countries' Free Trade Agreement (FTA), according to a senior Chinese trade official.

Beginning July 1, the two countries will carry out the tariff reduction in two phases, said commerce ministry spokesman Wang Xinpei yesterday.

In the first five years, the two sides will cut tariffs on up to 85 percent of imports in five categories. In the following five years, China will eliminate or cut tariffs on Pakistan-originated products, ranging from farm products to textile and electronic goods, while Pakistan will remove or cut tariffs on Chinese food, electronics and machinery.

After the reduction, China's average tariff on imports from Pakistan will be lowered to 8 percent, 0.67 percentage point lower than the tariff rate for most-favored nations.

According to the ministry, the two sides will review the implementation of the first phase in a bid to finalize the timetable for tariff reduction in the FTA's second phase, which was described as an "open agreement".

"We aim to adopt zero tariffs on up to 90 percent of imports, in terms of categories and trade volume, from each other in a short period," said a commerce ministry official who declined to be named.

The agreement signed last November is China's third, following FTAs with Chile and the ASEAN.

"Chinese enterprises will largely benefit from the FTA as market access will be increased and trade and investment environment improved," the official said.

The agreement provides opportunities for Chinese companies to invest in Pakistan, he said.

"In the ongoing talks on services, the two sides are discussing how to reduce trade barriers in the service sector," he added. "We hope enterprises will keep an eye on the talks to make full use of the agreement."