Pakistan, nine nations to use duty-free trade area to boost business
Nine nations, including Pakistan, have made the major breakthrough to go ahead and use a big new duty-free area in the Middle East-Asia region.
Pakistan and other countries have broken the deadlock to start the mutual duty-free trade within months under the Economic Cooperation Trade Agreement (Ecota). The arrangement has been finalised under the flag of the Economic Cooperation Organisation (ECO). The deadlock had followed Iran’s reluctance to lower some of its high customs duties, to which other countries had agreed under the Muslin countries Free Trade Area alliance of ECO.
The upcoming foreign trade and investment is to be carried out by ECO Trade and Development Bank ( ECOT&DB). The bank is located in Turkey. It has opened a representative office in Karachi. The bank is funded with SDR 300 million, with Pakistan, Iran and Turkey providing SDR 100 million each.
The Ecota members include some of the big upcoming and booming countries as well as new nations, which have just opened up to international investment, foreign trade and a fast track growth.
The nine member countries are: Turkey, Iran, Afghanistan, Azerbaijan, Kazakhestan, Pakistan, Tajikestan, Turkmenistan and Uzbekistan. The nine nations are members of the ECO, which initiated the Ecota and worked for the new trade arrangement.
The Ecota operations follow the big investment and trade-boosting plans for Pakistan, announced only weeks ago by Saudi Arabia, the UAE, Kuwait, Bahrain and Turkey.
The underlying ideas is to build the region into a huge, brand new and vibrant economic zone, which may, one day, rival European Union in the west and Asean in the east. It will be line with the acknowledged global dream of the 21st century belonging to Asia and China.
This is in sharp contrast, when seen in the context of the aging European and US economic supremacy, already in a prolonged financial crisis and slowdown for several years, and limited chances of its return past robust growth.
The new region will join the UAE, Saudi Arabia, the GCC countries, in the south to Pakistan, China in north east, Central Asian Republics in the north and Turkey flanking with Europe in the west.
Top negotiators of Pakistan’s Ministry of Commerce (MoC) and Ministry of Foreign Affairs (MoF) said: “After persistent endevores by us and other close friends, Iran has accepted the Turkish stand on reducing tariffs on a range of items. Iran’s reluctance has been the key stopper in fulfilling the region’s dreams and finalisation of the new Ecota pact.”
“Just now, a complete consensus has been reached among the nine nations, at a high level meeting at the Pakistani Ministry of Commerce in Islamabad,” the sources said.
What was the deadlock about? The stalemate, between Turkey, Iran and Pakistan was over as to how to interpret Article IV of the draft agreement.
Turkey had taken the position that the proposed “positive list” should also cover the items carrying 0-15 per cent duty. On the other hand, Iran was insisting that such items should also be covered in the positive list which are liable to 80 per cent duty. MoC negotiators in
It will strengthen the region into becoming a formidable economic zone of 21st century, in the very near future
Nawaz Sharif
Islamabad say Iran now has changed its stand and agreed to the Turkish proposal to include such items in the positive list on which the tariff is in the 0-15 per cent range. Ecota has laid down that the member nations will slash their tariffs by cutting these down to a maximum of 15 per cent of the value of importable items. The reduction has to be done in phases spread over the next eight years. But the less developed and war-torn Afghanistan has been allowed to do so over the next fifteen years.
The agreement splits the tradable items into three distinct categories or tariff-lines. These are: “the positive list,” “the sensitive list” and “the negative list.”
The first, or the “positive list” covers all items and goods which are actually traded between the member countries on the date of entering the Ecota into force.
The “negative list” lays down the names and specifications of the products which will stay out of the coverage of Ecota. The “sensitive list” enumerates the items and goods which are not permissible for import into a contracting member of the agreement.
The government negotiators and chief executive officers’ from the key private sector corporations in the nine nations see a major role of the trade organisations, the foreign trade corporations, banks and financial institutions of their countries in carrying the Ecota objectives through and build up, and invest in, business and the vast investment opportunities.
The targets and objectives of the already- established ECO Trade and Development Bank (ECOT&DB), cover mobilisation and deploying the existing financial, natural and manpower resources of the nine nations and help them expand on a fast track basis. The idea is not only to use the existing resources of the member countries, but also to push through and develop the entire regions economic and growth potential opportunities.
The foreign trade will be carried out with the help of the ECO Transit Transport Framework Agreement (TTFA). The agreement caters to all matters relating to transport and trade-in-transit, and will be funded by ECO.
In fact, an experimental ECO Truck caravan was started from Quetta, Pakistan, more than three years ago under the TTFA, but it will start regularly operating with Ecota coming into full operation. It will provide a cost-effective and fastspeed transportation to all ECO cargoes for the nine countries.
Ecota, and its allied financing, development, and freight and transportation arrangements now are on the anvil.
They make a lot of business sense for the nine- countries. But, on the top of it, “it will strengthen the region into becoming a formidable economic zone of the 21st century, in the very near future,” as pro-business Prime Minister Nawaz Sharif says.