Pakistan, Indonesia sign crucial PTA

Pakistan and Indonesia signed Preferential Trade Agree-ment (PTA) on Friday, in the absence of Commerce Minister Amin Fahim.

The agreement, allegedly pushed by top palm oil importers through a 'special instrument', was inked by Indonesian Minister of Trade Gita Wirjawan, and Pakistan Ambassador to Indonesia Sanaullah.

An official told Business Recorder that the agreement would have been inked during early months of last year, but Chinese lobby in Malaysia, dealing with palm oil business, used its influence to delay the pact.

Commerce Ministry had informed the Federal Cabinet that with the commencement of PTA, Pakistanis will get palm oil at less expensive rates from Indonesia, as compared to Malaysia, and ultimately Pakistanis will get edible oil/ ghee at lower rates.

However, market analysts maintain that the Pakistan Vanaspati Manufacturers Association (PVMA) would not pass on the benefit of PTA to Pakistani consumers.

"Amin Fahim was reportedly jubilant to sign the first PTA during his tenure and got his travel ticket confirmed twice during the last two weeks but unfortunately Prime Minister did not allow him to proceed abroad despite the fact Prime Minister himself went to Davos," sources added.

"Commerce Minister was scheduled to travel to Jakarta on the invitation of his Indonesian counterpart to sign the PTA.

However, due to the session of the parliament, the Prime Minister authorised the Pakistan Ambassador in Jakarta to sign the PTA on behalf of the Government of Pakistan (GoP)," said an official statement.

Commerce Minister, however, proceeded to Bangladesh last week to condole the death of one of his mothers-in-law.

An official statement said that Pakistan and Indonesia signed the Comprehensive Economic Partnership Agreement (CEPA) in November 2005 on the occasion of the visit of the President of Indonesia to Pakistan.

Under the provisions of CEPA, both countries, in 2006 commenced negotiations to conclude a PTA.

The agreement would ultimately create a Free Trade Area (FTA) between the two countries.

Both countries successfully concluded the negotiations process during the 8th round of negotiations held on 16th September, 2011 in Jakarta, Indonesia, where Pakistan delegation was led by Commerce Secretary Zafar Mahmood.

Under the Agreement, Indonesia agreed to offer market access to Pakistan on 216 tariff lines on preferential rate.

The Indonesian offer list includes products of export interest to Pakistan including fresh fruits, cotton yarn, cotton fabrics, readymade garments, fans (ceiling, table, pedestal) sports goods (badminton and lawn tennis rackets), leather goods and other industrial products.

Indonesia also offered market access to kinos from Pakistan at 0 percent which will provide level playing field to this product in the Indonesian market.

Pakistan's offer list to Indonesia under the Agreement includes a total of 287 tariff lines for market access at preferential tariff.

Pakistan also agreed to provide the same treatment to Palm Oil products from Indonesia as provided to Malaysia under Pak- Malaysia FTA.

It means Pakistan will import palm oil from Indonesia @ 15 percent Margin of Preference (MoP) rate.

Pakistan has been importing palm oil and its products from Malaysia and Indonesia.

The preferential market access provided by Pakistan to Indonesian palm products will have a positive impact on the overall economy of the country.

It is expected that this will result in saving approximately $300 million of foreign exchange of Pakistan.

It will also help in decreasing the prices of vegetable ghee, cooking oil etc in the country which are going beyond the reach of common man and will create competition in the market which will discourage monopolistic trends.

The agreement will enter into force 30 days after the date on which the parties exchange written notifications for completion of their respective legal procedures.

Pakistan has completed all its internal formalities to implement the PTA.

Indonesia is in the process of completing its codal formalities and documents show that Indonesia would eliminate tariff on certain chemicals from Pakistan, such as chlorine, hydrochloric acid, di-sodium carbonate and dyes.

Indonesia will provide preferential market access to Pakistan on motorcar tyres, leather products, sports leather garments, gloves, leather accessories, wood products, ceiling fans, cutlery and sports goods.

Indonesia will also provide preferential market access to Pakistan on textile products such as silk fabrics, cotton yarn waste, cotton yarn, cotton fabric, synthetic filament yarn, embroidery, knitted shirts, cotton shawls, cotton tracksuits and clothing accessories.

Pakistan's offer list to Indonesia under the Agreement includes total 288 tariff lines for market access at preferential tariff.

Edible oil refineries will get cheaper raw palm oil, which would revive the edible oil refining industry in Pakistan.

Pakistan has also agreed to provide preferential market access to Indonesia for the following products: some varieties of fish (tuna, trout, shrimps), fresh fruits (coconut, pineapple and mangosteen), edible products (coffee, green tea, black tea, pepper, vanilla, cinnamon, nutmeg, cardamom, coriander, cloves, ginger, turmeric, lactose, maple syrup, cocoa beans, cocoa confectionery, shrimp crackers, malt extract, pineapple juice, soya sauce), industrial inputs - citric acid, varnishes, esters, surface-active ingredients), chemicals (mosquito coils, prepared waxes, oleic acid) and manufactured goods (contraceptives, gaskets of rubber, printing blankets, tanned leather, computer printers, electric amplifiers, digital cameras, flat monitors, golf balls, sunglasses, musical instruments).

Source http://www.brecorder.com accessed on Februari 6th 2012