ISLAMABAD, July 25: Defence ministries of Pakistan and the US would be lead agencies under the new bilateral cargo transit agreement to be signed soon.

Pakistan on Wednesday moved a step closer to signing the agreement which would replace the current arrangement governing Nato transit routes, with its approval by the federal cabinet.

“The cabinet approved the Memorandum of Understanding (MoU) between Islamic Republic of Pakistan and United States of America for the transit of US cargo to and from Afghanistan through the territory of Pakistan,” a statement issued after the cabinet meeting said.

Little details about the new agreement were publicly known.

But, knowledgeable sources say it would in essence be very much similar to the current mechanism.

The new agreement is for transit of US cargo from the time it takes effect to 2014. Other nations that are part of Isaf and are interested in having similar arrangements would have to accede to the Pak-US bilateral MoU.

The major difference between the existing and the new arrangements is that the former was reportedly under a verbal agreement, while the latter is all written down and upfront.

One of the salient features of the MoU is that it introduces the concept of Central Coordination Authority to oversee its implementation.

The defence ministry would be Pakistan’s CCA with the defence secretary acting as the chief liaison officer. Representatives of the Federal Board of Revenue and security would also be part of the coordination authority.

During the course of negotiations, Pakistan tried to introduce provisions for demurrages and charges for special services, but had to drop them because of US reluctance to pay any fee.

The US would now only be paying to its contractors while the facility would be completely free of any charge on the part of Pakistan.

The MoU approved by the cabinet also has a negative list attached to it. In most likelihood the negative list includes the lethal equipment which parliament had disallowed from being transported through Pakistani territory.

To ensure compliance with the negative list, the MoU has a provision for scanning all cargo.

The parliamentary guidelines on US/Nato ties approved by a joint sitting of parliament on April 12 had laid down a detailed procedure for signing MoUs with foreign governments.

The defence secretary informed the cabinet that all stakeholders had been consulted for the finalisation of the MoU in the light of recommendations of the parliamentary committee.

Now that the federal cabinet has given its nod, the final step before signing the MoU remains a statement by the defence minister in both houses of parliament.