Pakistan-Indonesia sign much-awaited PTA

Staff Report

ISLAMABAD: Pakistan and Indonesia have signed the much-awaited Preferential Trade Agreement (PTA) to enhance bilateral trade between the two brotherly countries.

Under the agreement, Indonesia agreed to offer market access to Pakistan on 216 tariff lines on preferential rate. Pakistan’s offer list to Indonesia under the agreement includes a total of 287 tariff lines for market access at preferential tariff.

On Friday, Minister of Trade of Indonesia, Gita Wirjawan, and Ambassador of the Islamic Republic of Pakistan Sanaullah, signed the PTA in Jakarta, a Ministry of Commerce statement issued here stated.

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 between the two countries. Both countries successfully concluded the negotiations process during the 8th round of negotiations held on September 16, 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 the products of export interest of 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 kinnow from Pakistan at zero percent, which will provide a 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 on palm oil products from Indonesia as provided to Malaysia under Pakistan-Malaysia FTA. It means Pakistan will import palm oil from Indonesia at 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 cabinet in its meeting held on November 2, 2011 approved the signing and ratification of the PTA between the two countries. The 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.

The agreement shall 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 the diplomatic note will be exchanged by the parties as soon as the formalities are completed by the Indonesian government.

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