RI envisions free trade among D-8 member countries

Jakarta Post | 12 May 2006

RI envisions free trade among D-8 member countries

Riyadi Suparno, The Jakarta Post, Nusa Dua, Bali

After breaking the ice by launching the preferential trade agreement among Developing Eight (D-8) countries, Indonesian Trade Minister Mari E. Pangestu envisions that the agreement would lead to a free trade arrangement for member countries in less than 15 years.

Using the ASEAN Free Trade Agreement (AFTA) as a model, Mari noted that the path toward creating a Free Trade Agreement (FTA) for D-8 countries would be made possible by first of all expanding the coverage of the Preferential Trade Agreement (PTA).

"ASEAN needed 15 years to move from PTA to FTA. We hope we don’t need that long to create an FTA for the D-8," Mari told the D-8 business forum.

"Three years from now, we need to review the PTA and find ways to widen its coverage."

Of the Association of Southeast Asian Nations, which covers 10 countries in the region, two of its members, Indonesia and Malaysia, are D-8 members. The other D-8 members are Bangladesh, Egypt, Iran, Nigeria, Turkey and Pakistan.

The PTA, to be signed Saturday, will cover around only 8 percent of D-8 countries’ tariff lines that are above 10 percent. Tariffs greater than 25 percent will be reduced to 25 percent, tariffs between 15 and 25 percent to 15 percent, and tariffs between 10 and 15 percent to 10 percent. The reduction will be completed within four years for developing member countries and eight years for least developed members.

"One may ask is 8 percent too little? I would argue that it is an important beginning and reflecting on the ASEAN experience we also began with a PTA and moved on after many years to the AFTA. However, going through the PTA was an important training ground and given the diversity in the D-8 countries, I believe that the PTA would still provide an important start," Mari said.

In addition, the PTA would also eliminate non-tariff barriers such as quotas and other restrictions and all tariffs such as border charges, fees and taxes on trade transactions.

The PTA also covers standards to ensure that standards will not impede trade. It requires that the standards, such as those on environmental protection, are drawn based on transparent, scientific and specific criteria. The PTA also provides room for negotiations on mutual recognition agreements on standards.

In addition to the PTA, D-8 governments will also sign Saturday the agreement on administrative assistance in customs matters to ensure that customs procedures will not hamper trade flow.

Under the agreement, all member countries are required to facilitate the transit of goods by simplifying and harmonizing customs procedures and compliance mechanisms.

The agreement also encourages an exchange of information relating to customs laws and regulations, customs offenses and customs claims to facilitate trade.

Mari said that the agreements would be meaningless unless the private sector used them and benefited from them.

"It requires a partnership between the government and the private sector to implement the agreements for the benefit of businesspeople, and people in general, so that at the end of the day, it will increase trade," Mari said.

source: Jakarta Post