The Federal Board of Revenue (FBR) has announced phase-wise tariff reduction, from 2008 to2014, on import of 5921 items from Malaysia, including crude oil/RBD palm oil. The FBR on Monday issued SRO 1261(I)/2007 to notify reduction of customs duty on the import of these items from Malaysia under Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA) 2008-2014.
The Ministry of Commerce had notified MPCEPA Determination of Origin of Goods Rules, 2007 to facilitate bilateral trade under the agreed framework. Pakistan has reduced customs tariff on 23 percent of current imports from Malaysia. On the other hand, Malaysia will eliminate tariff on 78 percent of imports from Pakistan. The agreement is Pakistan''''s initiative to secure market access for its exportable products to Malaysia and deepen the economic and trade relations with a key member of the region.
Under the tariff reduction schedule, the FBR will charge customs duty at the rate of Rs 8100 per metric ton (PMT) on import of Malaysian crude oil (PCT heading 1511.1000) from January 1, 2008.
Now, the rate of customs duty on crude oil would be Rs 8100 PMT from January 1, 2009; Rs 7650/MT, January 1, 2010; Rs 7650/MT, January 1, 2011; Rs 7650/MT January 1, 2012; Rs 7650/MT January 1, 2013 and duty at Rs 7650/MT would be charged on the import of this item from January 1, 2014.
The reduction in tariff on palm oil was a major issue in the negotiations as import of palm oil from Malaysia involves substantial import having annual value of over $375 million. Pakistan offered to reduce tariff on palm oil by 10 percent on a margin of preference on January 1, 2008 and further 5 percent on January 1, 2010 and to which Malaysia finally agreed.
The rate of duty on the import of palm stearin would be Rs 8145/MT from January 1, 2008; Rs 8145/MT January 1, 2009; Rs 7692.5/MT January 1, 2010; Rs 7692.5/MT January 1, 2011; Rs 7692.5/MT January 1 2012; Rs 7692.5/MT January 2013 and Rs 7692.5/MT would be charged as duty on the import of this item from January 1, 2014.
The duty rate on the import of RBD palm oil would be Rs 9720/MT from January 1, 2008; Rs 9720/MT January 1, 2009; Rs 9180/MT, January 1, 2010; Rs 9180/MT January 1, 2011; Rs 9180/MT January 2012; Rs 9180 /MT January 2013 and Rs 9180/MT would be charged as duty on the import of this item from January 1, 2014.
Customs duty on the import of margarine, excluding liquid margarine, would be Rs 10260/MT from January 1, 2008; Rs 9720/MT January 1, 2009; Rs 9180 January 1, 2010; Rs 8640/MT January 1, 2011; Rs 8640/MT January 1 2012; Rs 8640/MT January 1, 2013 and duty would be Rs 8640/MT on the import of margarine from January 1, 2014.
Pakistan has given market access to Malaysia on basic raw materials, intermediate goods and machinery. Pakistan has obtained market access for its core export products like fruits/vegetables, seafood, beverages, confectionery, biscuits, gems/jewellery, cotton yarn, cotton fabric, blankets, bed linen, other home textile products and tents/tarpaulins, medicaments and surgical instruments etc.
Under the FBR notification, in case the rate of customs-duty specified in columns of Table-I and column of Table-II, as the case may be, is higher than the rate of customs-duty specified in the First Schedule of the Customs Act, the lower rate of customs duty shall be applicable. Provided that the goods shall be imported in conformity with the "MPCEPA Determination of Origin of Goods Rules, 2007" notified by the Ministry of Commerce vide Notification SRO 1205(I)/2007 read with the Import Policy Order as notified by the Ministry of Commerce, from time to time.
Sources said that the Pakistan and Malaysia comprehensive Free Trade Agreement (FTA) was signed at Kuala Lumpur. FTA is the first bilateral agreement between the two countries. This agreement is Pakistan''''s first comprehensive FTA incorporating trade in goods, trade in services, investment and Economic Co-operation and Malaysia''''s first bilateral FTA with any south Asian country. This Agreement shall provide a strong foothold to Pakistan in the Asean region and help Pakistan achieve summit level partnership with Asean.
Exports from Pakistan were being subjected to higher tariff in Malaysia as compared to similar goods exported from Asean member countries. Resultantly, Pakistan was losing market in Malaysia for its core export product. This agreement would provide level playing field to Pakistani products in Malaysian market.
In trade in services, both countries have provided WTO plus market accesses to each other. In the field of computer and IT related services, Islamic banking, Islamic insurance (Takaful), Pakistan has secured 100 percent equity in Malaysia. Market access in services provided by both countries will impact positively on investment and trade in goods. Mutual recognition arrangements are also part of the FTA. These arrangements will provide a framework for accreditation of education institution and academic programme and facilitate the effective and efficient delivery of services.
Sources said that the agreement also contains a chapter on investment to facilitate entrepreneurs of both countries. The incentives available to both countries will not be available to investors of other countries and the bilateral investment treaty signed by Pakistan will have no impact on the investment provisions under the FTA.
Although both countries have undertaken to reduce/eliminate tariff gradually yet in order to safeguard against any surge of imports due to trade on preferential tariff bilateral safeguard measures have also been agreed by both countries. The Rights and Obligations to initiate trade remedy measures available under the WTO have been kept intact, sources added.
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