The decisions taken at the second ministerial
meeting of the Economic Corporation Organization (ECO), held in
Islamabad last week will prove a milestone in promoting regional trade
between Pakistan, Iran, Turkey, Afghanistan and Central Asian States.
The ECO ministers termed the signing of ECO trade
agreement as a major development at a joint press conference. They
were highly optimistic that the agreement would serve as a catalyst to
boost trade besides increasing volume of investment in the region.
The agreement provides that all the members would
bring down their tariff to 15 per cent in 8 years in various phases.
As per agreement, the ECO countries trade ministers would meet once a
year to review progress of implementation of the accord. The next
conference would be held in Turkey in 2003-04.
While giving details of the agreement, Commerce
Minister Humayun Akhtar Khan, said that the reduction in tariff would
be 10 per cent per annum and one of the six groups formed to review
the progress of ECO accord would meet once a year for a follow up.
Other five groups would cover the remaining five major areas and
submit their review report on their respective fields such as
transportation, agriculture, bilateral trade, investment and
exploration of new areas to enhance cooperation among member
countries. Moreover, an ECO data bank would be set up to exchange
information among member countries.
Addressing the inaugural meeting of ECO ministerial
conference, the Prime Minister asked member countries to seriously
ponder over making a free trade region to boost trade and improve
economic conditions of the masses. "The ECO countries have to move
ahead and remove the barriers in free flow of trade," he added.
The prime minister offered the ECO member countries
to utilize Pakistan's geographical advantage as a gateway to the
Indian Ocean and an avenue for access to South East Asia. "The
establishment of Gwadar Deep Sea Port is not only an achievement for
Pakistan but also a milestone in generating greater trade for ECO
countries," he added. He invited the landlocked ECO countries to use
the Gwadar Port as key to greater trade through sea routes.
The signing of the Regional Trade Agreement
providing for a uniform tariff of 15 per cent for inter-ECO trade, can
appropriately be described as a historic event as this would
facilitate liberalized market access and increase volume of regional
trade. The agreement also aims at removing non-tariff barriers and
initiating effective steps to identify goods and services that may be
traded between the ECO countries. The reduction in tariff would
however, be implemented in a phased manner over the next eight year.
At the same time, it has also been decided that about 80 per cent of
the goods normally covered under customs tariff, would be brought
within the agreed regime of 15 per cent duty.
The agreement in the first step by the ECO member
countries seriously address the issue of effectively boosting regional
trade that has remained deplorably low over the last so many years as
pointed out by the Commerce Minister in his speech. He was right in
his observations that the existing policies to maintain a restrictive
travel visa procedure and the absence of any preferential treatment to
each other in imports and exports have continued to discourage
expansion in trade between them. The proposed lowering of customs
tariffs by the ECO member countries appears to have been inspired by
the WTO policies to liberalize global, trade exchanges. By the year
2005, a number of countries who have signed the WTO agreement would
bring down their customs tariffs to minimum levels in compliance with
the WTO requirements.
In this process, the maximum tariff is likely to
come down below 15 per cent in many of the developed countries over
the next three years. Pakistan would also have to reciprocate in the
transaction with its major trade partners. It is already making
efforts to sign free trade agreements with friendly countries, notably
with USA in addition to other countries like Sri Lanka, Bangladesh.
At the same time special agreements have been
signed with the European Union for greater market access in textile.
As a reciprocal action, Pakistan would allow lower tariffs on the
import of agreed items from the friendly countries. Against this
background, the lowering of tariff between ECO member countries would
appear to be inadequate compared with the present global trend.
Moreover, the decision to implement the process of reduction tariff in
phases over the next eight years will mean a tardy movement towards
the objective of bringing the ECO countries closer in respect of
bilateral trade. It would be preferable to implement the decision for
reduction in tariff with immediate effect and thereby afford an
opportunity to the member countries for entering into bilateral
agreements for quicker expansion of trade. Further, the ECO members
should also make a move to accord most favoured national treatment to
each other and should make necessary changes in their foreign trade
policies towards that end.