Pakistan and Malaysia are signing agreement on Early Harvest Programme (EHP) next week, reducing tariff on 239 industrial and agricultural products, to be effective from next calendar year, official sources told Business Recorder.
The federal cabinet, in its meeting on December 1, had approved EHP between Pakistan and Malaysia with the directions that the agreement should be vetted by the Ministry of Law besides inclusion of dates in the agreement, the sources added.
The sources said Malaysia has agreed to reduce tariff on 114 Pakistani products while Pakistan will give concessions to Malaysia on 125 items.
According to sources, the Most Favoured Nation (MFN) tariffs, which were on January 1, 2005 at 5 and 10 percent on the products included in the EHP would be reduced to zero and 5 percent respectively.
The rules of origin for EHP have threshold of value addition of 40 percent to confer the origin. Besides, products specific rules of origin for textiles and jewellery were also agreed upon with consensus, the sources maintained.
"The EHP will be implemented from January, 1, 2006 and merged into the Free Trade Agreement (FTA) to be operational by March 31, 2007. In case FTA is not operational by the due date, the agreement on EHP will expire," the sources further added.
They said, the Central Board of Revenue (CBR) will notify tariff concessions while Commerce Ministry will notify rules of origin and authorise EPB to issue certificate of origin for exports to Malaysia.
Commerce Secretary had briefed the cabinet that EHP with Malaysia would provide a foothold to Pakistan in Asean countries, open up a large market and help improve balance of trade between the two countries.
According to the agreement both countries have agreed to settle all disputes concerning the interpretation, implementation or application of the agreement amicably by mutual consultation pending the establishment of the formal dispute settlement procedure and mechanism under the FTA.
The World Trade Organisation (WTO) provisions governing safeguard actions, emergency measures and other trade remedies, including anti-dumping and countervailing measures, shall be applicable to the products covered under the EHP and shall superseded and replaced by the relevant disciplines to be negotiated and agreed to by the parties under the FTA.
It may be mentioned here that Pakistan and Malaysia signed EHP in principle in October last at Kuala Lumpur during the visit of Prime Minister Shaukat Aziz wherein tariff lines of both the countries were also exchanged for further review.