By Samia Khalid ISLAMABAD, Feb. 15 (INP-WealthPK): Services sector is extremely important for Pakistan since it accounted for 52.79% of the country's GDP in FY 2020–21. The services sector of Pakistan has great potential as it has risen to become a dominant engine of economic development. The highest-ever export of IT services is driving the increase in services exports. Finance and insurance, transportation and storage, wholesale and retail commerce, public administration, and defence are among the other major exports of this sector. The services sector has strong backward and forward links with other sectors of the economy and makes a considerable contribution to cross-border trade. It is regarded as the glue that holds numerous segments and components of the completed items together throughout the manufacturing process. In FY 2020-21, agriculture contributed around 22.69% to the GDP of Pakistan, 17.69% came from industry, and over half of the economy’s contribution (52.79%) to GDP came from the services sector, according to Statistica. On February 21, 2009, China and Pakistan signed a free trade agreement (FTA) on trade in services. Thanks to the signing of this three-part agreement, Pakistan now has a complete FTA with China that covers trade in commodities, investments and services. The main features of the FTA were to integrate both economies for mutual benefit, to provide a predictable investment regime in the services sector, particularly in infrastructure, computer and IT services, educational services, research and development (R&D), tourism, sporting services, environmental services such as sewage and cleaning, and lastly, to promote joint ventures, transfer technology, and promote joint ventures to build the capacity of domestic service suppliers. According to the State Bank of Pakistan (SBP), in 2018, the rise in Pakistan’s services exports to China in recent years is less than the increase in its imports of services from China. Pakistan’s service exports to China rose from $62 million in 2010 to $234 million in 2018, or by significantly less than the $570 million rise in Pakistan’s imports of services from China. Pakistan’s export of services to China remained largely confined to general "business services" and "government services," although information and communication technology (ICT), financial, and transport services had a small share. While China also exports these services to Pakistan, its construction services exports have increased sharply. The relatively slow growth of Pakistan’s services exports reflects in part the lack of identified export opportunities for Pakistani firms and lack of an agreement between the two countries to eliminate double taxation. With time, the historic cordial ties between China and Pakistan have grown more pragmatic and productive. The signing of the China-Pakistan Free Trade Agreement Phase II (CPFTA-II) in April 2019 is a positive step towards increasing the market access of Pakistan in China. The country's exports to China increased by 34% to $2.33 billion during FY2020-21 (July 01-June 30), as compared to $1.74 billion in the previous fiscal year, Abdul Razak Dawood, Adviser to Pakistani Prime Minister for Commerce and Investment, said. The major products exported to China during this period were leather, textiles, seafood, and agricultural products. In future, during negotiations between China and Pakistan, priority should be given to trade in services. Pakistan should negotiate with China to further facilitate the entry of Pakistani workers and allow long-term work permits to encourage increased trade in educational, medical, and ICT services. Also, it should be made easier for Chinese citizens to acquire e-visas to further boost tourism in Pakistan and reduce impediments to opening businesses in cities that do not host economic zones. In this context, earlier this month, Pakistan's Ambassador to China Moinul Haque, in an interview with China Global Television Network (CGTN), remarked that in the future, Pakistan would like to add and expand the free trade agreements going into the services sector because the services sectors form the major portion of the GDPs of the two countries. “Earlier, it used to be agriculture and industry, but now the services sector is the backbone of the economy. So, we would like the services sector to be added in our future negotiations with China,” he added. In the second phase of the China-Pakistan Economic Corridor (CPEC), the two countries have opened up their respective markets and deepened access to traders. Both countries now enjoy duty-free access to each other's markets for thousands of products, so trade in services will give a big boost to this bilateral trade.