The News - International, Pakistan
Free trade agreement with Malaysia soon
By Khalid Mustafa
12 May 2007
ISLAMABAD: In a major breakthrough, Pakistan and Malaysia have decided to announce the much-awaited deal for free trade agreement (FTA) during the visit of Prime Minister Shaukat Aziz to Kuala Lumpur scheduled for May 27-29, a senior official told The News.
In addition to other engagements during the three-day trip to Malaysia, the premier will also be attending the World Islamic Economic Forum (WIFE) there.
Both sides have made substantial progress during the talks on FTA held here on May 7-9 and finalized almost all the things which include tariff reduction modalities, rules of origin and draft of the agreement keeping in view the legal niceties.
A 20-member delegation from Malaysia and a 28-member experts’ team from Pakistan took part in the three-day talks, and made substantial progress on almost all issues.
However, Malaysia and Pakistan have also developed the agreement on services and investment chapters and trade remedies, which would be part of the free trade agreement. However, both sides developed differences over duty reduction mechanism in respect of palm oil and 77 textile items.
On the issue of palm oil, Malaysia was of the view that Pakistan should go for a 30 percent reduction in tariff while Pakistan offered to cut 20 percent tariff over a period of five years. Both sides refused to entertain each other’s positions and decided to solve the matter in the final round after calling input from respective stakeholders.
“Pakistan has expressed it willingness to reduce the tariff by 20 percent in 5 years time,” an official who attended the three-day talks informed this correspondent.
He added that Malaysian experts have also shown agreement on reducing the 20% tariff on 77 textile products from Pakistan, but they said that after consultations with stakeholders, they would be able to finalize this issue.
However, the official claimed that both sides have decided that the FTA would be finalized and inked in the final round of talks between the experts of both countries at Kuala Lumpur on May 22-24 which will later be formally announced by the prime ministers of both the countries on May 29.
The official said that Malaysia has recognized Pakistan’s medical education and allowed its doctors and nurses to work in Malaysian hospitals.
In case of any dispute on the investment issue, both sides have agreed on a mechanism under which disputes will be solved in three phases. They include i) consultation process, (ii) panel and (iii) international arbitration.
At present Pakistan exports to Malaysia stand at just $76 million while imports stand at $700 million.
“With the trade under FTA, Pakistan’s textile sector exports would go up to a reasonable level,” the official said.