The member countries of Economic Co-operation Organisation (ECO) have reportedly broken deadlock over tariff issues aimed at liberalising trade by declaring the entire block as Free Trade Area by 2015, well-informed sources told Business Recorder. The tariff lines are classified into three lists, ie, positive, sensitive and negative lists.
The positive list consists of all goods actually traded among the contracting parties at the date of entry into force of the agreement. The negative list covers products which shall remain outside the purview of ECOTA. The sensitive list would cover the products that are not allowed for importation in the territory of a contracting party.
The sources said the member countries which met in Tehran last month have submitted interpretations of different articles of agreement through ECO Secretariat to the member countries with the request to keep their interpretations confidential. ECO consists of 9 Muslim countries namely Afghanistan, Azerbaijan, Iran, Kazakhstan, Pakistan, Tajikistan, Turkey, Turkmenistan and Uzbekistan.
According to sources the tariff reduction modality awaiting implementation under the ECO Trade Agreement (ECOTA), member states requires them to reduce tariffs and bring them down to a maximum of 15 percent by 2015 with the exception of Afghanistan which has been granted exemption from implementation for the time being due to political compulsions.
The sources said, Turkey wanted to include 80 per cent of its tariff line in positive list tariff which is already below 15 per cent. However, Pakistan maintains that Turkey should include 80 per cent of its tariff lines in the positive list - tariffs of which are above 15 per cent and remaining 20 per cent be considered as negative items.
The sources further stated that the viewpoint of Iran on tariffs is very close to Pakistan''s. "Pakistan maintains that ECOTA means liberalisation of trade amongst the member countries and not to hurt interests of any member country''s trade," the sources continued.
All member countries submitted their proposed lists according to their own interpretations, however, Turkey wanted its list be kept confidential until other countries unveil their lists. Pakistan, however, requested Turkey to submit official interpretation of lists which have been agreed by the Turkish officials.
Pakistan also succeeded in evolving consensus amongst the member countries that ECO secretariat should conduct an analysis as to how much trade will be liberalised in accordance with the interpretation of Pakistan and what will be impact of Turkey''s interpretation. "We are conveyed that Pakistan''s interpretation should not be considered final as we can withdraw or amend it prior to submission of interpretations by other member countries as we submitted our interpretation to break the deadlock ,'' the sources maintained.
The sources said Pakistan believes that robust implementation of the ECOTA would be a major step towards minimising barriers to trade and ultimately establishing a FTA in the ECO region by 2015. Being the co-ordinating country for ECOTA, Pakistan may play a proactive role in persuading the member countries to fulfil their obligations under the Agreement and to sort out their differences on the format of offer lists for the early implementation of ECOTA.
The articles of agreement of ECO Reinsurance Company were signed by Pakistan, Iran and Turkey on February 10, 2010. The Company is to be based in Karachi. The main purpose of the Company is to supplement existing reinsurance services in the region and promote the growth of national and regional underwriting and retention capacities, minimise the out flow of foreign exchange from the region and support economic development in the region. The Company is a tripartite venture among the three contracting parties. However, only Pakistan has so far ratified its articles of agreements.
The major objectives of the ECO Trade and Development Bank includes mobilising and utilising the financial, natural and human resources of the member States with a view to capitalising on the region''s economic potential. The headquarters of the Bank are in Turkey.
The Bank is the financial arm of the Organisation and has commenced operations with a representative office in Karachi. It has a subscribed capital of 300 million SDR (Special Drawing Rights). Pakistan, Iran and Turkey have equal contribution. The ECO Transit Transport Framework Agreement (TTFA) signed by all the member states except Uzbekistan, and ratified by eight member states (all except Turkmenistan and Uzbekistan) entered into force in May 2006. The agreement addressed all issues relating to transport and transit trade in a comprehensive manner.
The ECO fund for implementation of the TTFA has already been established with contribution of $100,000 from the ECO Feasibility study and general purposes fund. The joint ECO secretariat and Islamic Development Bank (IDB) regional project for the implementation of TTFA worth $512,000 is in its final stages of implementation.
An ECO truck caravan comprising all ECO member states except Kyrgyzstan and Uzbekistan was launched from Quetta (with the inaugural ceremony held in Islamabad on 30th September 2010). This initiative was launched under the Transit Transport Framework Agreement (TTFA).
The Member States allocated US $150,000 as an exceptional case from the Feasibility and General Purpose Fund (FGPF) for the Caravan. Islamabad - Tehran - Istanbul (ITI) container train was started from Islamabad on August 14, 2009. Regular operation of the ITI train began on monthly basis from October 2010. The next meeting of ECO member countries will be held in the first week of October this year in Islamabad. Pakistan''s trade with the ECO member countries stands at $2.3bn. Pakistan''s exports are $1.3bn while imports from these countries stood at $ 1 billion.