Indonesia to Remove Duty on Kinnow Import

Indonesia has agreed to scrap import tariffs on Pakistani kinnow (a species of oranges) and the concession will come up for discussion in the eighth round of talks to firm up a preferential trade agreement between Jarkarta and Islamabad, sources say.

A high-level trade delegation has left for Jakarta for the two-day talks, which will begin on September 15, 2011. The Indonesian side will be led by the director general for international trade while Pakistani team will be headed by Commerce Secretary Zafar Mehmood.

The Indonesian tariff concession on kinnow, which came on the demand of Pakistan, is expected to pave the way for a preferential trade accord before the end of this year. So far, the two sides have held seven rounds of talks since June 2006.

According to sources, the seventh round in Islamabad had ended inconclusively as Pakistan refused to offer tax and duty concessions on import of ceramics and chemicals from Indonesia. However, Pakistan did offer conditional duty concession on palm oil import.

On the other hand, the Indonesian government was reluctant to provide duty concessions on Pakistani textile products, which dominated the export industry of Pakistan. Failure to strike a deal on these issues has stalled the progress of trade talks between the two sides.

Sources said Pakistan would press Indonesia during the new round of talks to reduce or remove duty on export of textile, sports goods, surgical instruments, fresh fruits, vegetables and seafood. They said if Pakistan got duty-free or concessionary access for its textile products, surgical tools and kinnow, it would offer 15 per cent duty concession on import of Indonesian palm oil.

Pakistan imports $1 billion worth of palm oil every year. Earlier, Indonesia had a share of 55 per cent in these imports while Malaysia accounted for 45 per cent. However, since the signing of a free trade agreement between Pakistan and Malaysia, which provided 15 per cent duty concession on palm oil imports, Kuala Lumpur has curtailed Jakarta's share to 30 per cent and increased its market to 70 per cent.