Europe not interested in FTA, PTA with Pakistan

The News | Thursday, January 10, 2013

Europe not interested in FTA, PTA with Pakistan

Javed Mirza

KARACHI: Several European countries have declined Pakistan’s offer for signing a free trade agreement (FTA) or preferential trade agreement (PTA) with them as Pakistan will not agree to their demand of opening the auto sector and government procurement under the said agreements.

Sources in the Ministry of Commerce said that the EU was not at all interested in FTAs or PTAs with Pakistan unless Pakistan opened an auto sector and the government procurement for them.

Sources say that the Europeans are of the view that all the other sectors are already open for the world and there is no consideration for them against opening their market for Pakistan.

They said that the authorities were under pressure from Japanese manufacturers who had complete control over the local auto market and they would not let anyone enter the market.

The Ministry of Commerce had time and again tried to convince the authorities to open the auto sector to European companies but failed, which proved the influence of the Japanese cartel, said sources.

As far as government procurement is concerned, the sector is under the complete control of the military establishment and cannot be brought under the ambit of the FTA or PTA.

Commerce officials said that there were some FTAs and PTAs with regional countries but these are not particularly beneficial to Pakistan as countries such as Mauritius and Indonesia are not attractive markets for Pakistani products.

World Trade Organization (WTO) member countries establish free trade areas to achieve market access through reciprocal exchanges of trade concessions. Entering a PTA/FTA is partly motivated by the desire to obtain equilibrium in foreign trade.

Increased market access on bilateral or plurilateral basis can essentially be achieved through affective market access negotiations under the GATT Article XXVIII bis – Tariff Negotiations.

The ability to derive benefits from trading arrangements depends upon inter alia export-oriented strategies, the state of domestic industry, standard and quality of products and price competitiveness.

The WTO defines FTA as agreements among two or more parties in which reciprocal preferences (whether or not reaching complete free trade) are exchanged to cover a large spectrum of the parties trade.

Customs unions, on the other hand, are PTAs with a common external tariff in addition to the exchange of trade preferences. Both forms of PTAs can be either bilateral (two parties) or plurilateral.

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source: The News