KUALA LUMPUR, Oct 1: Pakistan and Malaysia on Saturday signed “Early Harvest Programme” for free trade between the two countries. The agreement was signed by Privatization and Investment Minister Dr Abdul Hafiz Sheikh and Malaysian Minister for International Trade and Industry Rafidah Aziz.

Under the programme, which will be effective from January 1, 2006, the two countries will grant reduced tariffs on 125 and 114 export items, respectively. The initiative will expire upon implementation of the FTA, or March 31, 2007, whichever is earlier.

“Malaysia and Pakistan agreed to pursue an Early Harvest Programme aimed at delivering benefits to the private sector of both countries ahead of the FTA as well as providing impetus for an early conclusion of the FTA negotiations,” Malaysia’s trade ministry said in a statement.

The EHP was based on 2004 import statistics and the Most Favoured Nation (MFN) applied tariff rates of January 1, 2005 of both the countries.

It covers products with MFN tariffs of 10 per cent and below and upon implementation products with MFN tariffs of five per cent would be eliminated and 10 per cent would be accorded a margin of preference of 50 per cent.

Pakistan’s EHP offer to Malaysia covered 5.49 per cent of import value (RM146.3 million) involving 125 tariff lines for machinery, mechanical equipment and appliances constituting 36 per cent of the total EHP value. It also included plastic products (30.08 per cent); chemical products (20.2 per cent); rubber and rubber products (six per cent); and timber products (5.4 per cent).

Malaysia’s offer to Pakistan includes 114 tariff lines covering import of RM22.7 million or 10.97 per cent of its total imports from Pakistan. The products included textile and clothing (95.3 per cent of the total EHP value); agricultural products (4.7 per cent); and jewellery.

The two countries agreed to continue negotiations for concluding the FTA by mid-2006. The decision to negotiate bilateral FTA between Malaysia and Pakistan was made during the official visit of Malaysian Prime Minister Abdullah Ahmad Badawi to Pakistan in February.

According to official sources, bilateral trade between the two countries in 2004 was to the tune of RM2,870.9m. Malaysia’s exports to Pakistan were to the tune of RM2,664.9m, while imports from Pakistan amounted to RM206.00m. Total trade during January–July 2005 amounted to RM1,634.2m, with exports valued at RM1,509.4m and imports worth RM124.8 million.