Pakistan and Thailand have entered into fifth round of negotiations on Free Trade Agreement (FTA) which, according to the private sector, would be disastrous for a couple of domestic industries, especially the auto sector.
An inter-ministerial delegation headed by a Joint Secretary of Commerce Ministry is in Bangkok to further discuss tariff reduction modalities and tariff lists which have already been exchanged by both sides.
According to tariff reduction modality, Pakistan has expressed its intention to liberalise overall trade by 80-85 per cent by 10 years.
Official sources told Business Recorder, Pakistan has divided the tariff reduction plan in five categories which are as follows: (i) fast track- 40 per cent of tariff lines to be reduced to zero at the entry into force of the agreement; (ii) normal track-B category of tariff lines to be reduced to zero within five years of entry into force of the agreement; (iii) sensitive track- C category of tariff lines to be reduced to zero within 10 years of entry into force of the agreement; (iv) highly sensitive track- 10-15 per cent of tariff lines to be reduced within 10 years of entry into force of the agreement; and (v) 10 per cent no obligation/concession.
According to the proposed tariff reduction modality of Thailand overall trade liberalisation under Pakistan Thailand FTA (PATHFTA) would be 90 per cent in seven years.
Tariff elimination for each category, except the highly sensitive track, would be done on the basis of annual equal reduction as per following way: (i) fast track- 40 per cent of tariff lines and 20 per cent of the import value with zero tariff at the Entry Into Force (EIF); (ii) normal tariff – 20 per cent of tariff lines and 30 per cent of import value with zero tariff would be implemented with three of signing the pact; (iii) sensitive track- 15 per cent of tariff lines and 20 per cent of the import value with zero tariff with 5 years of signing the agreement; (iv) highly sensitive track- 15 per cent of tariff lines and 15 per cent of the import value with tariff reduction within 7 years of signing; and (v) exclusion track- 10 per cent no obligation/ concession not to exceed 15 per cent of the import value.
The sources said for Pakistan immediate reduction in tariff based on 40 per cent would be for 2,811 tariff lines. Tariff lines under Phased Reduction Modality (PRM) would be 3,114 tariff lines and exclusion list on the basis of 15 per cent reduction would be on 1,054 tariff lines.
For Thailand- immediate reduction @ 40 per cent would be on 2,639 tariff lines where 989 tariff lines would remain unchanged. Tariff lines under PRM would be on 2,971 modalities.
The sources said, negotiation between Pakistan and Thailand would be completed in two phases. Phase 1 would be completed by mid-2017 whereas negotiations on phase II would start at the dates agreed by both sides. Phase II would include discussions on IPR, competition, services and investment.
The sources said following actions have been completed so far: (i) text of the agreement except for the issues; (ii) reduction of regulatory duty mechanism; (iii) definition of territory; (iv) electronic data interchange; and (v) tariff elimination and modification.
Pakistan Initial request list comprises 535 which includes textiles, agriculture, prepared foods, leather, sports goods, surgical and cutlery. Immediate concession would be on 303 tariff lines, 133 tariff lines would be phased out 338 tariff lines would be in no concession regime whereas 9 tariff lines would be quid pro quo.
Thailand has requested for access in 785 tariff lines, in chemicals, electronics, auto, textiles, steel, plastics, poultry, seafood, prepared and preserved food.