Pakistan, Indonesia tariff talks hit deadlock

Jakarta blames Islamabad for lack of progress in negotiations.

Reuters June 25, 2011


Pakistan and Indonesia have hit a deadlock in talks on a preferential trade agreement (PTA), which includes a duty cut on palm oil from Indonesia, officials from both countries said on Friday.

An Indonesian trade ministry official said Indonesia has walked away from negotiations due to a lack of progress.

The two countries have been discussing the proposed PTA for several years but have failed to bridge differences over the granting of tariff concessions to each other on various goods.

Indonesia, the world’s top palm oil producer along with Malaysia, has been pushing Pakistan to lower its import duty on palm oil to the same level for products from Malaysia.

Under a tariff agreement signed in 2007, Pakistan charges 15 per cent less duty than standard rates on palm oil imports from Malaysia. Malaysia and Indonesia account for 80 per cent of total global supply of palm oil.

A senior Pakistani commerce ministry official said Indonesian officials in recent talks insisted on import duty cuts of up to 15 per cent on paper products. “We tried to convince them that it’s not possible as our paper industry is very small and we have imposed global safeguards and anti-dumping duties on it,” he said on condition of anonymity. “But they were not ready to accept it.” In May last year, a top Pakistani industry official said the country was expected to reach a PTA with Indonesia for palm oil imports although it could take longer than expected. At that time, an official at the commerce ministry said the two countries had held six rounds of talks.

“Pakistan has not been able to be consistent with what they said before,” Mahendra Siregar, Indonesia’s Deputy Trade Minister, told Reuters at a cocoa event in Bandung. “For the time being, we stop the negotiations with them,” he added.

Indonesia has, however, agreed to give concessions to Pakistan on textiles, seafood and agriculture, officials said. The next round of talks would be held in Jakarta but the date has not been finalised yet, another Pakistani official said.

“They will be the host. They should make up their mind whether they want it or not. We are ready to participate if they call the next round.”

In exchange for Indonesian concessions, Pakistan is willing to cut its import duty on Indonesian palm oil, he said. “We are ready for that. The palm oil is not an issue at all.”

Published in The Express Tribune, June 25th, 2011.


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