Pakistan to impose NTMs on Indonesia

MUSHTAQ GHUMMAN

ISLAMABAD: Pakistan is all set to impose Non-Tariff Measures (NTMs) on Indonesia on a reciprocal basis aimed at making import of palm oil more restrictive like Jakarta did with Islamabad, well-informed sources told Business Recorder. Indonesia is the biggest economy of ASEAN region with GDP of around $859 billion in 2015. It has also 4th world's largest population of 255 million with per capita income $11,100(ppp) which makes it a lucrative consumer market.

The sources said that to realise the potential of Indonesian market, Pakistan signed a Preferential Trade Agreement (PTA) in 2013 which has now completed three years of its implementation. At the time of signing the PTA, Indonesia's exports to Pakistan were at $936 million (2011) which have increased to $2 billion in 2014, an increase of 112 per cent before slightly dipping down to $1.9 billion in 2015. On the other hand, Pakistan's exports to Indonesia showed a negative growth after the implementation of PTA as exports dropped to $173 million in 2015 from $273 million in 2011 which implies that balance of trade thus was highly tilted in favour of Indonesia.

According to sources, Indonesia got unrestricted market access for their big ticket items ie palm oil and quite conveniently diverted all palm oil trade for Pakistan from Malaysia to Indonesia. Pakistan on the other hand has not been given un-restricted market access. Indonesia, through its very restrictive/ protectionist import policy, has successfully controlled the flow of imports from Pakistan by applying various Non-Tariff Measurers (NTMs).

A review of the PTA was already under way and the second review was expected during the current month. "In view of unacceptable trade deficit, we should use our status as 4th largest importer of Indonesian palm oil, as a leverage to seek a waiver from most restrictive NTMs to get market access," sources added. The Pakistani negotiating team expressed its concerns regarding the ever growing trade imbalance, between the two countries during first review meeting of PTA in August 2016. However, Indonesian side has done very little to address these concerns.

According to sources, the Commerce Ministry on Friday held an internal meeting to discuss a strategy of possible actions and that is to force Jakarta to allow unrestrictive exports from Pakistan without hurting local downstream industry. "As Indonesia is reluctant to provide required market access, Pakistan will consider imposing reciprocal NTMs to convey message to the Indonesian side that the current arrangement can't be allowed for indefinite period," the sources added.

The reciprocal measure may make export more cumbersome by making it compulsory to get Certificate of Origin attested from the embassy of Pakistan Jakarta for palm oil and paper and paperboard. Additionally, mandatory Halal certification for export of palm oil would also add to their difficulties, the sources continued. It is pertinent to mention that PTA was signed during the PPP government on the influence of palm oil importers' lobby who according to insiders also enticed the then top brass of Commerce Ministry and TDAP.