ISLAMABAD, Oct 4: Pakistan and United States on Wednesday agreed to constitute a Joint Study Group (JSG) to identify further potential for liberalisation of trade between the two countries.

This understanding was reached at the conclusion of Pakistan-US Council meeting held here under the Trade and Investment Framework Agreement (TIFA) to finalise the TORs of the proposed JSG. Once agreed on this, teams of Pak-US technical experts would be constituted to start discussion on liberalisation of bilateral trade.

Addressing a joint press conference with Secretary Commerce Asif Shah, Assistant US Trade Representative (USTR) for South Asia Douglas A. Hartwick said the study group aimed at facilitating the trade between the two countries.

"The study group will help to have better understanding of each other’s economy," he said.

Answering a question, he said that there was no specific timeframe for the study group for making recommendations in this regard.

Asif Shah added that following finalisation of TORs, the study group would start formal discussion on trade liberalisation. "But I hope that this would lead to a free trade agreement (FTA) between the two countries," he added.

Mr Hartwick, however, clarified that the US did not have any intention to do an FTA with Pakistan at this stage. "We have to first make the ground for it for providing adequate protection to the US investment," he added.

He said that the Bilateral Investment Treaty (BIT) was close to the agreement but “we have not finalised the agreement. We have differences in certain areas. We have to go through those areas".

The assistant USSTR said that during the council meeting both the sides discussed at length about the definition and scope of the reconstruction opportunity zones (ROZs).

"We had a lot of discussion on the products to be considered for tariff concessions. Nothing has been finalised. The US has to get feedback from both Pakistan and Afghanistan on the ROZs. Nothing has been excluded or included. We have to do a lot of work," he explained.

When asked about the possible list of items for export to US from ROZs, Mr Hartwick replied that the list would be broader as possible to attract more investment to these zones.

Answering another question, he said it was not finalised whether textile products would be allowed in these zones. However, he clarified that manufacturing of all textile products was not possible in these zones.

When asked about the exact timing for the establishment of the ROZs, he said, "We are in the early stage. We have not even written the legislation. It is possible that the legislation would be ready for early next year".

He said that Pakistan would get benefit like other countries from the US generalised system of preferences (GSP) scheme, which is set to expire this year. However, he said that it was likely that the GSP scheme might be extended for one or two years until the announcement of the new GSP scheme.

Mr Hartwick commended the number of important steps taken so far to protect IPRs in the country. He said this would help to move Pakistan to a list of countries which were significantly progressing on IPRs, patents regulation and monitoring.

Replying to a query, Asif Shah said that during the meeting the issue of transit trade with Afghanistan was discussed at length. “We are re-negotiating the transit agreement with Afghan government. We do have some administrative problems with Afghanistan which need to be resolved," the secretary added.

A joint statement issued after the meeting said that the next TIFA meeting is scheduled for 2007 in Washington. The United States and Pakistan underscored the importance of the economic relationship and pledged to work to continue to expand bilateral trade and investment opportunities.