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Indonesia offers market access to 216 tariff lines

Dawn, Pakistan

Indonesia offers market access to 216 tariff lines

By Amin Ahmed

4 February 2012

ISLAMABAD: Indonesia has agreed to offer market access to Pakistan for 216 tariff lines on preferential rate under the Preferential Trade Agreement which was signed in Jakarta on Friday.

Indonesia offered market access to Pakistani kinno at zero per cent. Pakistan agreed to provide the same treatment for Indonesian palm oil products as given to Malaysia under the Pakistan-Malaysia Free Trade Agreement. Pakistan will import palm oil from Indonesia at 15 per cent ‘margin of preference’ rate.

At present Pakistan imposes a tariff of $123 per ton on Indonesian palm oil, about 15 per cent higher than the tariff levied on palm oil from Malaysia, which already has singed a PTA with Pakistan.

According to Jakarta Post, Indonesian Palm Oil Producers Association’s Executive Director Fadhil Hasan has welcomed the agreement and expressed the hope that palm oil exports would rebound under the PTA to their pre-2007 level of about $560 million when Indonesian palm oil had a commanding 55 per cent market share in Pakistan.

Pakistan has been importing palm oil and its products from both 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.

Pakistani officials are of the opinion that the country will be able to save about $300 million in foreign exchange under the agreement. It will also help decrease prices of vegetable ghee and cooking oil, create an atmosphere based on competition and discourage monopolistic trends in the country.

The list of items offered by Indonesia under the agreement includes exportable products of fresh fruits, cotton yarn, cotton fabrics, readymade garments, ceiling, table and pedestal fans and sports, leather and other industrial goods. Pakistan’s list includes 287 tariff lines for market access at preferential tariff.

The agreement will be implemented within one month after the two countries will exchange written notifications for completion of their respective legal procedures.

Pakistan has completed all its internal formalities to implement the PTA, while Indonesia is in the process of completing these. A diplomatic note will be exchanged after the Indonesian government completes its formalities.

The agreement was signed by Indonesian Trade Minister Gita Wirjawan and Pakistan Ambassador Sanaullah as Commerce Minister Makhdoom Amin Fahim could not travel to Indonesia because of the National Assembly session.

Negotiations on the PTA started in 2005 but were delayed because Indonesia and Pakistan could not find a common ground on tariff reductions for several commodities, including principal export commodities.

Pakistan and Indonesia signed the Comprehensive Economic Partnership Agreement in Nov 2005 under whose provisions the two countries started negotiations the following year to conclude the Preferential Trade Agreement. The agreement will ultimately create a free trade area between the two countries.

Senior officials of the two countries successfully concluded the negotiations process during the eighth round of talks held in Jakarta in September last year. The federal cabinet in its meeting in November last year approved the signing and ratification of the PTA between the two countries.