Federal Cabinet which is scheduled to meet on November 29, 2011, will ratify the much awaited Preferential Trade Agreement (PTA) with the D-8 countries, after five years of its signing, official sources told Business Recorder. According to the PTA, tariff above 25 per cent will be reduced to 25 per cent, above 15 per cent and below 25 per cent will be lowered to 15 per cent and above 10 per cent and below 15 per cent will be reduced to 10 per cent.
The Developing - 8 (D-8) is an arrangement for development of co-operation among the eight Muslim countries, which include Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey. In order to enhance co-operation in the area of trade among the member countries, a High Level Trade Official (HLTO) consisting of the technical experts of the member countries, was constituted to discuss and finalise the PTA.
The sources said, the Ministry of Commerce led the negotiating team of Pakistan for the PTA with the approval of the Cabinet obtained in December 2004. After the finalisation of the agreement, a summary was moved to the Prime Minister for approval and signing of the agreement in terms of Rule 16(2) of the Rules of Business, 1973. The agreement was subsequently signed during the D-8 Summit held in Bali (Indonesia) on 13-14 May 2006.
Under article 34, the agreement will enter into force when at least four of the D-8 members submit instruments of ratification to the D-8 secretariat. The agreement has been ratified by Iran, Malaysia, Nigeria and Turkey and has entered into force on 25th August 2011.
The agreement envisages tariff reduction on 8 percent of tariff lines having MFN tariff of above 10 percent in four equal instalments for all D-8 members except Bangladesh. Being an LDC, Bangladesh has been allowed eight years for reduction of tariff. The tariff reduction modality under the agreement will be as follows: (i) Tariff above 25 percent shall be reduced to 25 percent; (ii) tariff above 15 percent and below 25 percent shall be reduced to 15 percent and; (iii) tariff above 10 percent and below 15 percent shall be reduced to 10 percent.
For the products to be eligible for preferential treatment, the agreed Rules of Origin require at least 40 percent value addition. It means a manufacturer can import up to 60 percent of its inputs for manufactured goods. Agriculture produce and live animals have to be wholly produced and obtained in the territories of the parties to be eligible for tariff concessions.
The offer list for the D-8 PTA of Pakistan contains a total of 254 items. The offer list was finalised by the Ministry of Commerce in consultation with all the relevant stakeholders of Pakistan including the Ministry of Industry, Ministry of Textile Industry, the Federal Board of Revenue (FBR) and the then Ministry of Food and Agriculture (now devolved).
The concurrence of the stakeholder ministries is at Annex-D. Pakistan will not be offering major tariff concessions under the agreement as the D-8 end rate will be above the tariff rates offered by Pakistan to other FTA partners for these tariff lines.
The Commerce Ministry, sources said, has sought Cabinet's approval on the followings; (i) The D-8 PTA may be ratified by Pakistan; (ii) the offer list of Pakistan for the D-8 PTA may be approved; (iii) The text of the Rules of Origin and the Operational Certification Procedures (OCP) for the D-8 PTA may be approved; (iv) FBR may be directed to notify tariff concessions for D-8 members on a date and time to be agreed by D-8 members; and (v) Ministry of Commerce may notify Rules of Origin and authorise the Trade Development Authority of Pakistan to issue certificate of origin for exports to D-8 member states under the agreement.
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