Dec 14

Pak-Indonesia Preferential Trade Agreement

In November 2005, Pakistan and Indonesia concluded a Comprehensive Economic Partnership Agreement, which stated that countries had begun negotiations for a EPZ in 2006. The latter agreement was reached after the two countries successfully concluded the eighth round of negotiations on 1 September 2011. It is hoped that after the PTA enters into force, overall trade between the two countries will reach $2 billion next year and that improved trade relations will lead to a move towards the next goal for Pakistan, namely the conclusion of a comprehensive bilateral free trade agreement with Indonesia. Since its signing, at least three rounds of negotiations have taken place during the period 2016-2017 and an amendment to the agreement was signed on 27 January 2018, bringing the number of products covered by the agreements to 279 Indonesian and 320 Pakistani products. In addition, negotiations have begun to upgrade the PTA into a trade-in-goods agreement (TIGA), with two new rounds of negotiations in 2019-20. [5] The first round of negotiations took place in Islamabad in August 2019. [6] According to Indonesian Trade Minister Enggartiasto Lukita, the current agreement could still be amended into a free trade agreement in 2018. [7] Although trade between the two countries increased significantly after the signing of the agreement, Indonesia`s exports to Pakistan remained significantly higher than Pakistan`s exports to Indonesia, with $2.53 billion exported by Indonesia and $296 million exported by Pakistan in 2017-18. [8] This deficit is at the root of Pakistan`s request to amend the agreement. [9] Prior to the agreement, the two countries had concluded a comprehensive economic partnership framework agreement in November 2005.

The full agreement was signed on 3 February 2012 in Jakarta after six rounds of negotiations. [1] Indonesia formally ratified the agreement in November 2012[3] and the clauses came into force in September 2013. [4] The preferential trade agreement between Indonesia and Pakistan is a preferential bilateral agreement between Indonesia and Pakistan on 3 February 2012. Under the PTA, Indonesia will grant Pakistan market access at preferential prices for 216 products, including fresh fruit, cotton yarn, cotton fabrics, finished clothing, sporting goods and leather goods. PTA`s list of Pakistani offers for Indonesia includes a total of 287 preferential tariff lines and has agreed to treat Indonesian palm oil products in the same way as Malaysia under the Pakistan-Malaysia Free Trade Agreement (FTA). The comprehensive agreement included a single ten-item chapter, the initial agreement containing lists of relevant Pakistani and Indonesian products for 232 Indonesian and 311 Pakistani products. [1] In particular, the agreement allowed Pakistani relatives to enter Indonesia duty-free and granted Indonesian palm oil a preferential margin of 15% upon entry to Pakistan. [2] The completion of the MRA between Indonesia and Pakistan removed the non-tariff barriers faced by Pakistan`s exports from Kinnow to Indonesia and allowed the importation of fruit through the port of Jakarta.

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