Commerce Minister Humayun Akhtar Khan has said that Pakistan-Malaysia Free Trade Agreement (FTA) was expected to be signed within two months as the two sides had concluded the negotiations on all technical aspects.
Speaking at a news conference here on Wednesday, he said that Pak-EU Sub-Group on Trade will monitor the impact of EU's trade policies in the region on Pakistan's preferential access to EU markets and will identify possible options for improvement in bilateral trade. The minister denied that the EU had linked the market access to Pakistan with the doffing of President General Pervez Musharraf's uniform.
"As far as I am concerned, the EU has never raised this point in trade negotiations," he said. Responding to another question on President's uniform, he said that foreign office would be in a better position to answer this question. The minister said both Pakistan and EU also agreed that Sub-Group on Trade should meet in autumn this year with a view to initiating a study in consultation with Pakistan on the impact of EU trade policies in South Asia especially its trade relations with least developed countries (LDCs) in the region. In reply to a question, he said he was hopeful that major economic blocs of the WTO would shortly sign Doha Development agenda, adding for the first time in the last five years, the momentum is high in different capitals of the developed countries.
Negotiations on the Pak-Malaysia FTA were successfully concluded at Kuala Lumpur on May 24. The initiatives include trade in goods and services. Besides this, the FTA would also focus on investment and economic co-operation, he said.
Under the agreement, Pakistan would reduce special duty on palm oil, which is Rs 9,000 per metric ton, by 15 percent from January 2008, said an official. He said that Pakistan would reduce this duty by around two percent every year.
According to documents distributed to media, for trade in goods, the package with Malaysia was successfully negotiated to achieve objectives of trade liberalisation while giving due protection to the local industry. Pakistan, the minister said, has undertaken to eliminate/reduce tariff mostly to raw materials and Malaysia will provide market access to our textiles, bed linen, other home textiles, kino, and prepared foods, etc.
The manufacturing sectors of Pakistan will now be able to source raw materials and intermediary goods from China as well as Malaysia at preferential or zero duty, Humayun said, adding this will address the issue of trade diversion and help in global competitiveness of Pak exports.
For trade in services, Malaysia has provided market access to various sectors, including Islamic banking and Takaful, said Humayun, adding these concessions have not been extended by Malaysia to any other country. The limit of aggregated foreign equity participation in the Malaysian domestic financial institutions has been increased from 30 percent to 49 percent. This facilitation will also qualify Pakistani financial institutions to conduct full range of Takaful business in international currencies without any limit, he said.
This landmark agreement will be the first between two OIC member countries and will serve as a precedent for reaching many such agreements in future between Muslim countries. Malaysia is an important member country of Asean and this agreement will provide Pakistan a firm foothold in the vibrant and growing economies of East Asia, the minister said.
Humayun said that Asean and China have already concluded the FTA. The Asean member countries are in the process of reducing or eliminating tariff for import from China. The Pakistani exports, which are already facing tariff barriers in Malaysia due to the Asean FTA, would have been even more adversely affected by 2012, when tariffs are to be eliminated on textile imports from China by Malaysia, he said. The Pak-Malaysia FTA is a timely move. With the signing of FTA with Malaysia, the Pakistani exports would not be adversely affected, he remarked.
The minister said that Pakistani exports suffer due to certain policies of the EU with LDCs and Bangladesh, Maldives, Bhutan and Nepal in South Asia. The Sub-Group on Trade will look into this issue in detail, he added.
Responding to a question, the minister said that Pakistan exports in this fiscal year would remain very close to the target of 18.6 billion dollars. He admitted that tight monetary policy had some negative implications on the trade deficit and exports.
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