An Analysis of the Pakistan-Indonesia PTA & a Framework for Negotiating the Pakistan-Indonesia FTA

The Pakistan-Indonesia Preferential Trade Agreement was signed in February 2012. Notable concessions granted under the PTA included Indonesia’s full concession on kinnow and Pakistan’s 15% Margin of Preference on the standard tariff rate to palm oil products. In 2013 Pakistan’s exports to Indonesia amounted to USD 144 million, whereas imports from Indonesia amounted to USD 1.2 billion. A closer analysis of the PTA terms reveals that Pakistan has failed to secure favourable concessions on several high potential exports, items on which Indonesia’s other trade partners such as China and India frequently face better terms. 80% of the top 50 high potential items (including plastic and cotton products) identified in this report have received no concessions under the PTA, and represent trade potential of USD 1.54 billion. On the other hand, Indonesia has been granted concessions that are either consistent with or more favourable than concessions granted by Pakistan to its other trade partners. Therefore concessions must be secured on high potential products before the PTA can serve as a basis for the Pakistan-Indonesia FTA.