Commerce Ministry has moved draft of recommendations to government for establishment of joint business council with Russian Federation
ISLAMABAD: Pakistan has requested the Russian Federation to reconsider signature of preferential trade agreement (PTA) and free trade agreement (FTA).
PTA is a trade pact between countries that reduces tariffs for certain products to the countries who sign the agreement. However, tariffs are not necessarily eliminated, but they are lower than countries not party to the agreement. It is a form of economic integration.
While, the FTA is an agreement between two or more countries to establish a free trade area where commerce in goods and services can be conducted across their common borders, without tariffs or hindrances but (in contrast to a common market) capital or labor may not move freely. Member countries usually impose a uniform tariff (called common external tariff) on trade with non-member countries.
“The Commerce Ministry has moved draft of recommendations to the government for the establishment of Joint Business Council (JBC) with the Russian Federation,” a source at the ministry told Customs Today. “Moreover, on the recommendations of the committee under the chairmanship of the finance minster has been formed to resolve the issue of Pakistani exporters claims against Russian Federation at the earliest.”
The source said that Pakistan initiated the process of starting PTA negotiations leading to an FTA with the Russian Federation in 2004, but the Russian side, at that point of time, was of the view that PTA/ FTA could only be considered once Russian Federation would become member of the World Trade Organisation (WTO).
He added that Russian Federation became member of WTO in 2012 and the Pakistani government once again insisted to sign PTA/FTA, but the Russian Federation was of the view that as Customs Union (CU) had been established among Belarus, Kazakhstan and Russia, therefore the PTA/FTA negotiations could only be started after consulting other CU partners.
The source said that on the Commerce Ministry’s recommendations, the government found the issue of Pakistani exporters’ claims against Russian Federation as major bottleneck in bilateral trade relation therefore the government pursued these claims actively.
“A committee has been formed under the chairmanship of the finance minister to resolve the issue at the earliest,” the source added, saying that now the Russian side had conveyed to government to respond to request for signing PTA/FTA after consulting other CU partners.
FTAs reduce barriers to exports, protect interests and enhance the rule of law in the FTA partner country. The reduction of trade barriers and the creation of a more stable and transparent trading and investment environment make it easier and cheaper for companies to export their products and services to trading partner markets.
