Pakistan awaits Japan’s response to pave way for FTA

ISLAMABAD: Pakistan awaits a response from Japan to finalise an early harvest programme to pave the way for a free trade agreement (FTA) between the two countries, a minister said on Tuesday.

Federal commerce minister Mohammad Pervaiz Malik held a meeting with Japanese ambassador Takashi Kurai on Tuesday, and said Japan being the 6th largest import destination was an important trading partner of Pakistan. “There exists tremendous potential between the two countries to increase bilateral trade.”

The minister said despite GSP Plus status and an average 1.4 percent less duty than developed countries, the tariff imposed on Pakistan’s textile exports was on average 5.36 percent higher than that being faced by competitors like India, Bangladesh, and ASEAN countries.

The commerce minister said Japan was also a very promising market for Pakistan’s leather products but in this sector as well Pakistani products faced an average tariff of 16 percent, along with tariff rate quotas which were higher than that offered to India and Bangladesh. This was rendering Pakistan's leather products uncompetitive. “We want a level playing field,” the minister said.

Pervaiz Malik informed the Japanese Ambassador that Pakistan has framed terms of reference (TORs) for an early harvest programme leading to a FTA, and shared those TORs with the Japanese side. He added that both sides have notified their respective joint trade committees (JTC).

Japanese ambassador Takashi Kurai informed the commerce minister that internal consultation was still being carried out and the outcome would be disclosed by the next JTC which may be held in Japan. He assured the commerce minister of full support of the Japanese government and said more and more interaction of the governments and private sectors of both the countries was required to boost bilateral trade.

The first meeting of the JTC was held on July 24, 2017 in Islamabad. During the meetings, the Pakistan side had raised the issue of pending TORs and final decision on the proposed early harvest programme.

The trade balance has been in favour of Japan, as Pakistan’s exports stood at $40 million and imports $533 million, registering negative trade balance of $493 million in the first three months (July-Sept) period of the current fiscal year 2017-18.

The trade balance witnessed peak in last fiscal year, when Pakistan’s exports fetched $246 million and imports stood at $1.986 billion with Japan, registering negative trade balance of $1.740 billion.

Pakistan’s major exports to Japan included cotton fabrics (woven), cotton yarn, fish and fish preparations, made up articles of textile mat, medical/surgical instruments, baby carriages and sports goods and hosiery.

The major imports included road vehicles and their parts, machinery (all sorts), iron and steel manufacturing thereof, chemical material and products, chemical element and compounds, paper and paper board, ship and boats.