Pakistan, Malaysia likely to ink FTA in October
5 August 2005
LAHORE : Pakistan and Malaysia are likely to ink a Free Trade Agreement in October this year.
“The officials of both the countries are giving final shape to the proposed agreement ahead of the visit of Prime Minister Shaukat Aziz to Malaysia in the first week of October this year,” a senior commerce ministry official said.
He said that Pakistan and Malaysian trade authorities have short-listed more than 300 items to be traded mutually under the proposed Free Trade Agreement that aimed at enhancing the quantum of bilateral trade of the two brethren nations.
Pakistan and Malaysia are holding a decisive round of technical talks in September in Islamabad as an official delegation of Malaysian government is scheduled to visit Pakistan to finalise the list of trade-able items, said the official.
He, however, said that both the countries are unwilling to trade textile products under the FTA.
“Malaysia wants to protect its textile sector with a view that the industry was new-born involving heavy foreign investment and duty-free imports of Pakistani textile products would not only hurt the Malaysian industry, but also discourage further investment in this sector,” said the official.
He said that Pakistan is also not willing to provide any incentive to Malaysian textile products in the proposed agreement with the objective to give protection to the local industry.
If Malaysia did not allow tax-free imports of textile products from Pakistan, the proposed FTA would be an exercise in futility as it would not prove beneficial for the local exporters, said the official.
At present Pakistani textile products have a lion’s shares in exports to Malaysia.
It is learnt that during bilateral talks on FTA with Malaysia, Pakistani officials have also raised the issue of major tilt of balance of trade in favor of the former.
Out of half a billion dollars bilateral trade between the two countries, Pakistan is facing more than 450 million dollars trade deficit a year.
Surprisingly, in 2004-05 Pakistan’s exports to Malaysia have slightly declined and settled at $67 million as against $77 million in 2003-04.
Pakistan’s major exports are textiles, rice, leather/leather products, sports and surgical goods and fish, etc, while main imports are edible oil, electronic equipment, food items, machinery, toys and tea.
The Free Trade Agreement (FTA) with Malaysia is a part of the Pakistan government’s strategy to promote bilateral trade with the important trade partners through mutual trade pacts. Pakistan had already signed FTA with Sri Lanka and also negotiating similar accords with China, Morocco and the United States and other countries.
Meanwhile, the Ministry of Commerce is also negotiating Preferential Trade Agreements with different trade partners with the aim to enhance exports of the country in the years to come.
It is worth noting that the WTO trade rules do not come in the way of bilateral trade agreements as a result most of the countries are launching trade pacts in the backdrop of rapidly changing WTO regime.