International News 1927 Views

Trade agreement: Pakistan for FTA with Pacific South East nations

Pakistan aims initiate negotiations with Pacific and South East Asian nations on a proposed Free Trade Agreement (FTA) to enhance multilateral trade. Japan, Indonesia, Vietnam, the Philippines in the Pacific region are among the countries in the list to start a dialogue on Preferential Trade Agreement (PTA) which will pave the way towards FTA for promoting trade liberalization, a senior official of Ministry of Commerce told APP here on Tuesday. Replying to another question, he said Pakistan and Indonesia had already agreed on concessions for 20 different items during bilateral negotiations under a Preferential Trade Agreement (PTA).

Both sides discussed 20 tariff lines and Indonesia agreed to give concession on major exports from Pakistan including rice, textile, ethanol, Citrus (Kinnow) and mangoes during renegotiation on PTA, he said.

Concession on 20 tariff lines was a major success for Pakistan; as a result, Pakistani citrus exports to Indonesia will increase from 18 to 35 million tonnes and mango exports will increase to 10 million tonnes in a year, he said. The official added that an earlier restriction on year-round exports to Indonesia had also been removed.

Pakistan and Indonesia had a currently enjoy an annual trade volume of $170 million which is expected to increase after renegotiation on PTA. Both countries agreed to expand PTA and move forward towards a Free Trade Agreement, the official said. He said the Indonesia-Pakistan Preferential Trade Agreement (PTA) was signed in February 2012. The official said the activation of the PTA followed the signing of a Mutual Recognition Agreement (MRA) on plant quarantine and Sanitary and Phytosanitary (SPS) measures between Indonesia and Pakistan. He said through these steps, Pakistani agricultural products will gain greater market access in Indonesia.

Kyrgyzstan and EU for new agreement

Kyrgyzstan and EU are eager to replace the current Partnership and Cooperation Agreement, which has been in force since 1999 with an enhanced agreement that would allow to to build stronger political and economic ties

The Kyrgyz Republic and European Union are opening negotiations on a new agreement. Negotiations towards a comprehensive framework that will strengthen bilateral relations were launched by Luc Devigne, Director for Russia, Eastern Partnership, Central Asia and OSCE, Chief Negotiator on behalf of the High Representative of the Union for Foreign Affairs and Security Policy/Vice-President of the European Commission, Federica Mogherini, and Deputy Minister of Foreign Affairs of the Kyrgyz Republic

The Vice-President, Federica Mogherini said that during his recent visit to Bishkek, the leaders of the Kyrgyz Republic shared with him their ambitious reform agenda and their commitment to strengthen democracy, promote transparency and good governance, and develop new economic opportunities, A new, enhanced agreement will allow us to further support these aspirations, to build stronger political and economic ties, and to create more possibilities to bring benefits both in the EU and in Kyrgyzstan."

The future Agreement will replace the current Partnership and Cooperation Agreement, which has been in force since 1999. In the first round, the EU and the Kyrgyz Republic will look to agree on procedural aspects of the negotiations process and exchange views on foreseen objectives and general principles of the new agreement. It is expected that the new agreement will focus on political cooperation, trade and investment relations, economic cooperation in support of sustainable development, and other aspects of bilateral relations. The aim is to make swift progress during negotiations and to work towards concluding an ambitious agreement as soon as possible, with negotiating rounds foreseen to alternate between Brussels and Bishkek.

China forces Maldives to sign FTA

Meanwhile, the Maldives president Abdulla Yameen’s rushed into the agreement without following legal norms which created considerable anti-China sentiments among his people.

It appears that the Chinese embassy in Male had made it clear to the Maldives that in future all financial assistance to the country would be linked to the signing of the FTA. The FTA would further open the floodgates for Chinese imports adversely affecting Maldives’ fragile balance of payments situation. In its entirety, the FTA would make Maldives an offshore hub for China.

The FTA is unlikely to boost Maldives exports to China, given its narrow export base. However, the inclusion of trade in services, especially mode 3 (commercial presence) and mode 4 (movement of natural persons) would enable China to open tour and travel related representative offices in the Maldives, operate cruise/line-abroad tourist accommodation vessels with 40 bed capacity or more. Opening of the tourism sector to the Chinese would result in loss to Maldivian tourism revenues apart from cutting employment opportunities for locals.

President Abdulla Yameen’s rush to sign a Free Trade Agreement (FTA) with China during his recent visit to Beijing without following constitutional/legal norms has generated considerable anti-China sentiment in the Maldives.

The lopsided nature of the FTA, loaded as it is heavily in favour of the Chinese, would adversely impact on virtually every segment of Maldivian economy. The people of Maldives and its business community are alarmed on the implications of the FTA and view it as an aggressive act by China to pursue its own agenda.

There is no doubt that Yameen has rushed into signing the FTA, a document that has neither been thoroughly reviewed, nor feasibility studies done or discussions held with stakeholders. According to sources within the Maldives government, there was pressure from China on signing of the FTA, the first by Maldives with any other country.

A cursory study of the FTA document will be enough to understand that the FTA is Beijing driven, with little in it for Male. The preamble of the document includes ’strengthening cooperation on jointly building the 21st century Maritime Silk Road’, one of the key goals of the Chinese government under President Xi Jinping. The FTA gives Maldives full market access in China for fish and fishery products, coconut, cotton seeds, processed cheese, eggs, soyabean, etc. at zero duty. In return, Maldives will open up to China its construction, tourism and travel, education, waste management, water management, insurance, traditional medicine, transport including maritime transport services.

The opposition parties in Maldives and the business community have united in their opposition on the FTA, they  attribute the deal also to President Yameen’s underhand dealings in award of contracts to Chinese companies and an effort by Yameen and the China to protect the latter’s investments in the Maldives. In this regard, they handed over (Dec 6, 2017) a signed letter to the Chinese Ambassador in Male Zhang Lizhong, where they expressed deep concern over the signing of FTA. The opposition leaders highlighted that the Maldivian government followed unconstitutional and illegal process in the Parliament to approve the FTA and as such Members of Parliament of the opposition could not recognize the FTA in its current form.

The FTA and similar other steps taken by the Abdulla Yameen government that has blatantly favored China has generated anti-Chinese sentiments in the country. It is to be seen, as to how far the Yameen government is ready to play with local sentiments in his efforts to placate China.

China, like other veto powers like USA, UK and Russia, conduct trade with other nations s  only to promote its own economic plus financial interests and not to promote  other economies just like that.

They are obviously opposed to subsidization of alien economies.

The above mentioned FTA talks are only a part of several such FTA negations and implementations.  


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