Thailand has reportedly enhanced the offer list from 750 tariff lines (items) to 1750 tariff lines and sought an offer from Pakistan during the fifth round of negotiations held on 16-17 November 2016 in Bangkok, well-informed sources told Business Recorder.
"Thailand has raised its offer list to 1750 tariff lines and asked Pakistan to offer its tariff lines. Previously Pakistan's offer list was 550 items which will now increase to around 1250 items," the sources added. Pakistani delegation was led by Taimur Tajamal, Joint Secretary Ministry of Commerce and comprised of officials from relevant Departments and Ministries.
Pakistan has argued that since Thailand is an advanced country, tariff reduction cannot be at par and sought more incentives. Thailand suggested Pakistan implement tariff reduction in 10 years whereas Thailand would implement it in seven years, the sources continued.
Thai authorities stated that Pakistan would be given a status of a poor country. In the first year, some tariff lines would be zero and in the second round tariff reduction would be undertaken in five years whereas Thailand would implement it in three years. Pakistan should reduce tariff on the remaining list in 10 years and Thailand would do so in seven years, sources revealed adding that Pakistan has to prepare and present its offer to Thailand in the next round.
Pakistan also raised the issue of Non Tariff Barriers (NTBs) imposed by advanced countries which do not allow exports of trading partners as per the agreements. Pakistan argued that it cannot meet Thailand's standards even if tariff reduction is allowed.
Pakistani team found the NTBs list and asked Thailand to make it mandatory to write additional criteria against each tariff line and give commitment that no NTBs would be imposed in future on Pakistani products without prior intimation. In case of NTBs Thailand would give compensation to Pakistan through substitution.
Pakistan has also sought commitment that Thailand's NTBs would also be discussed with the offer list. Thailand has agreed to compensate Pakistan through a mechanism to be finalised during the next round, which was a major breakthrough for Pakistan, the sources maintained.
Thailand, sources said, maintained that Regulatory Duty (RD) cannot be imposed under the FTA and sought Pakistan's stance. The Pakistan team argued that when Pakistan would assess tariff reduction modality, then this issue would be looked into but sought reasonable time ie around five years given the commitments made by Pakistan with the IMF for balance of payment conditions.
Pakistan has not made any commitment on auto sector with the Thailand government. Pakistani team argued that its auto sector is regulated through an auto policy which was recently approved by the ECC. If Pakistan extends incentives to the auto sector under the proposed PATHFTA, then this sector would be regulated through two regimes, which is not possible.
The Pakistani team argued that since the principals of auto sectors of both Pakistan and Thailand are Japanese companies ie Honda and Toyota, it would be wise that they should sit together with their principals and evolve a consensus on incentives under the FTA regime.
For instance, if the principal of Toyota wants to purchase parts from Thailand then he should seek consent of Pakistani partner, the sources continued. Commerce Ministry has also decided to convene a meeting of local auto industry to take them on board with respect to decisions taken in the fourth round held in Bangkok. The new list would also be shared with the industry.
Commerce Ministry will also sit with the Engineering Development Board (EDB) and the auto industry and would propose to give something to Thailand. Both sides showed their satisfaction on the progress made so far and agreed to move forward on concerned matters in the next engagement of the 6th round to be held on 22-23 December 2016 in Islamabad.