Pakistan and Indonesia are to sign the much-awaited Preferential Trade Agreement (PTA) in Jakarta next week, which will ultimately create a Free Trade Area (FTA), official sources told Business Recorder here on Friday. They said that the powerful lobby of Pakistan Vanaspati Manufacturers Association (PVMA), which will be the main beneficiary of the agreement, used 'useful contacts' for its early finalisation.
Commerce Minister Amin Fahim, sources said, will visit Jakarta on January 19-20 to ink the agreement with his Indonesian counterpart Gita Irawan Wirjawan. Indonesia is among those countries which are opposing European Union's trade package for Pakistan's flood affectees. Sources said that the Commerce Minister had met his Indonesian counterpart in Geneva in December when it was decided to sign PTA as early as possible.
According to sources, Indonesian Commerce Minister had agreed that the PTA would serve as a firm foundation on which both countries could build much stronger economic relations. Pakistan and Indonesia signed the Comprehensive Economic Partnership Agreement (CEPA) in November 2005 on the occasion of the visit of President of Indonesia to Pakistan. Under the provisions of CEPA, both countries commenced negotiations to conclude a PTA which would ultimately create a Free Trade Area (FTA) between the two countries.
Under the PTA, Indonesia has agreed to offer market access to Pakistan on about 220 tariff lines at preferential rates. According to the documents, Indonesia will eliminate tariff on export of kinnows, grapefruits, lemons, grapes, peaches, dates, apples, and apricots from Pakistan. Indonesia is a major market for Pakistani kinnow. By 2005, Pakistan had exported kinnow worth $10 million. Indonesia will provide preferential market access at 50 percent MoP on 'halal' food products, such as fruit juices, biscuits and confectionery and dry fruits from Pakistan.
The documents show that Indonesia would eliminate tariff on certain chemicals from Pakistan, such as chlorine, hydrochloric acid, di-sodium carbonate and dyes. Indonesia will provide preferential market access to Pakistan on motorcar tyres, leather products, sports leather garments, gloves, leather accessories, wood products, ceiling fans, cutlery and sports goods.
Indonesia will also provide preferential market access to Pakistan on textile products such as silk fabrics, cotton yarn waste, cotton yarn, cotton fabric, synthetic filament yarn, embroidery, knitted shirts, cotton shawls, cotton tracksuits and clothing accessories. Pakistan's offer list to Indonesia under the Agreement includes total 288 tariff lines for market access at preferential tariff as follows:
Under the PTA, edible oil refineries will get cheaper raw palm oil, which would revive the edible oil refining industry in Pakistan. Besides edible oil, Pakistan has also agreed to provide preferential market access to Indonesia for the following products: some varieties of fish (tuna, trout, shrimps), fresh fruits (coconut, pineapple and mangosteen), edible products (coffee, green tea, black tea, pepper, vanilla, cinnamon, nutmeg, cardamom, coriander, cloves, ginger, turmeric, lactose, maple syrup, cocoa beans, cocoa confectionery, shrimp crackers, malt extract, pineapple juice, soya sauce), industrial inputs - citric acid, varnishes, esters, surface-active ingredients), chemicals (mosquito coils, prepared waxes, oleic acid) and manufactured goods (contraceptives, gaskets of rubber, printing blankets, tanned leather, computer printers, electric amplifiers, digital cameras, flat monitors, golf balls, sunglasses, musical instruments).