ISLAMABAD, Jan 23: Pakistan on Tuesday stressed the need for initiating dialogue on the signing of a free-trade agreement (FTA) with Japan to narrow the trade imbalance between the two countries.

Speaking at a joint press conference with Parliamentary Secretary for Economy, Trade and Industry of Japan, Ms Michiyo Takagi, Pakistan’s Commerce Minister Humayun Akhtar Khan said the study group would further carry out sectoral analysis to identify steps for tariff rationalisation.

The setting up of the study group would study how to expand trade between the two countries and to initiate talks on FTA, he added.

Mr Khan said that Pakistan is pursuing a policy of “looking towards the East” and stressed the need for having an FTA with Japan to propel bilateral trade and investment.

He was of the opinion that following the implementation of FTA with China, most of the machinery and raw material would now be imported duty-free while the same would attract normal duty on import from Japan.

“Lack of market access to Pakistan will certainly affect our bilateral trade. The initiating negotiations between us will certainly be a win-win arrangement for businessmen of both the counties,” he said and urged the business leaders and government officials to consider this proposal seriously.

The minister said that since Japan is also a major supplier of machinery, parts and other intermediary goods, “I believe Chinese FTA with Pakistan may adversely affect Japanese exports to Pakistan. Besides, China has also given us market access on all the core products of our exports by eliminating tariff.”

“We have to remove roadblocks and impediments which are presently hampering these relations,” he added.

“I believe we can develop consensus on a viable future strategy for taking the bilateral relations to the new heights,” he remarked.

The minister announced that both sides agreed to revise the convention on avoidance of double taxation treaty. The first meeting for revision of convention would be held in Feb 2007 in Tokyo, he added.

For controlling under-invoicing, mis-declaration and smuggling, it was recommended that Pakistan would control and eliminate under-invoicing and misdeclaration of imported goods by re-designing shipping invoice to at least mention country of origin.

He added that although our bilateral trade, for the first time, touched the figure of around US$2 billion last year, it is still well below our potential. Besides, Pakistan's exports to Japan have indicated a sharp decline, he added.

The commerce minister asked the Japanese delegation for investment in other sectors, like energy sector, banking and IT sectors.

“We would welcome investment in these areas from Japan,” he added.

The Japanese parliamentary sector for economy appreciated the development during the meeting on various issues. “We would like to work together in various areas,” she added.