brecorder.com - The Federal Cabinet is all set to approve the 'Preferential Trade
Agreement' (PTA) with Indonesia, with the main beneficiary purportedly
being edible oil importers.
The meeting will be presided over by Prime Minister Yousaf Raza Gilani, who is scheduled to leave for Australia on Wednesday to attend the Commonwealth Summit meeting.
The meeting will be presided over by Prime Minister Yousaf Raza Gilani, who is scheduled to leave for Australia on Wednesday to attend the Commonwealth Summit meeting.
Official
documents obtained from the Cabinet Division suggest that Pakistan and
Indonesia signed the Comprehensive Economic Partnership Agreement (CEPA)
in November 2005 on the occasion of the visit of President of Indonesia
to Pakistan. (source)
Under the provisions of CEPA, both countries commenced negotiations to conclude a PTA.
The agreement would ultimately create a Free Trade Area (FTA) between the two countries.In the first phase, a Trade Negotiating Committee (TNC) comprising technical experts of both countries was constituted to negotiate a PTA.
Pakistan's negotiating team included representatives from Federal Board of Revenue (FBR), Ministry of Industries, Ministry of Textile Industries and Engineering Development Board (EDB).The TNC held eight rounds of negotiations alternate1y in Indonesia and Pakistan.
The last round was held on September 16, 2011 in Jakarta.
With the approval of the Prime Minister, the Commerce Secretary led Pakistan's delegation and during the meeting both countries reached understanding on outstanding issues and successfully concluded the negotiations for the PTA.Under the PTA, Indonesia has agreed to offer market access to Pakistan on about 220 tariff lines at preferential rate.
The Indonesian offer list includes products of export of interest of Pakistan.According to the documents, Indonesia will eliminate tariff on exports of kinnow, grapefruit, lemons, grapes, peaches, dates, apples, and apricots from Pakistan.
Indonesia is a major market for Pakistani kinnow.
By 2005, Pakistan had exported kinnows worth $10 million.
After implementation of Asean, China FTA, Pakistan lost Indonesian market due to zero tariff on kinnow from China.Indonesia will provide preferential market access at 50 percent MoP on 'halal' food products, such as fruit juices, biscuits and confectionery and dry fruits from Pakistan.The 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, clothing accessories.Pakistan's offer list to Indonesia under the Agreement includes total 288 tariff lines for market access at preferential tariff.
Pakistan also agreed to offer the same treatment on palm oil products from Indonesia as provided to Malaysia under the Pakistan-Malaysia FTA.
It means that Pakistan would import palm oil from Indonesia @ 15 percent margin of Preference (MoP) under the PTA.Pakistan 's total requirement of edible oil is close to three million tons, of which 80 percent is imported, and the rest of the requirement is met domestically.
Pakistan is the world's fourth largest importer of vegetable oils.
Indonesia had a major share in the market of Pakistan for palm products.
In 2007-08, Pakistan imported total $555 million worth of palm oil from Indonesia .
However, this figure dropped to $77 million in 2009-10 due to 15 percent tariff preference provided to Malaysia under the bilateral FTA.The Commerce Ministry believes that the preferential market access, provided by Pakistan to Indonesian palm products, would have a positive impact on the overall economy of the country.
It would save approximately $300 million of foreign exchange of Pakistan.
It will help in decreasing the prices of vegetable ghee and cooking oil in the country.
Besides, a large number of' edible oil refineries in Pakistan are working below capacity due to non-availability of crude palm oil from Malaysia .
Under the PTA, the edible oil refineries will get cheaper raw palm oil which would revive the edible oil refining industry in Pakistan.Besides edible oil, 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, ococa 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).For the products to be eligible for preferential treatment, the agreed Rules of Origin require at least 40 percent value-addition.
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