Eco Trade Agreement (Ecota)

Posted: December 7, 2020 in Uncategorized

Although Pakistan, Iran, Turkey, Afghanistan and Tajikistan agreed in 2008 on the operationalization of ECOTA, it still needs to be implemented due to differences of opinion among members on the interpretation of its main provisions and Tajikistan`s non-ratification of the annexes to the agreement. To be an effective instrument for regional trade integration, the agreement must be renegotiated. The sooner the better. It would prefer to negotiate a bilateral agreement with Turkey on the basis of reciprocity rather than grant unilateral concessions under ECOTA. Second, the agreement has errors in the text. Article 4 contains a positive list of 80 customs items (products) that are effectively negotiated between the contracting parties on the effective date of the agreement; tariffs on these products are reduced to a maximum of 15 units. In the joint declaration, at the end of the 13th summit of the Organisation for Economic Cooperation, it was decided to “double the current level of intra-community trade over the next 3 to 5 years”. Third, the three major contracting parties, Turkey, Pakistan and Iran, see the current agreement as unjustified costs associated with trade liberalization, which runs counter to ECOTA`s objective of applying the principles of general reciprocity and reciprocity of benefits in a manner that benefits all contracting parties fairly. Afghanistan and Tajikistan together account for only 1.97 units of world trade in the ECO region and therefore do not represent the critical mass that can make a significant contribution to intra-ECO trade. The agreement does not recognize that intra-community trade is concentrated on a small number of products. For example, in 2015, Pakistan`s total imports from ECO members amounted to $876 million compared to 1,373 tariff lines (within the six-digit range).

Even operationally, its current architecture does not have the strength to significantly boost intra-ECO trade and achieve the goal of the 13th ECO Summit of doubling trade within 3 to 5 years. Finally, I would like to say that ECOTA, which is a consumer base of 440 million people, offers considerable potential to divert 91 units of world trade from the region from external partners to internal partners, but ECOTA, in its current form, lacks the vitality to serve as a facilitator. On the other hand, Pakistan, designated as a coordinating country for ECOTA, argued that only 80 parts of these products can be added to the positive list, with a tariff of more than 5pc, since the inclusion of products of less than 15 units on the list positively neutralises ECOTA`s trade liberalisation objective. ECO Vision 2025 is optimistic that a large portion of the remaining 91-unit trade “may be redirected to ECO countries when the ECOA Trade Agreement (ECOTA) is in force.” Total intra-regional trade amounts to 9pc of ECC`s global trade of $650 billion, compared to ASEAN`s 24Pc and the EU`s 61pc. There was disagreement on the interpretation of this section between the parties. Turkey, whose MFN tariffs on tariff lines above 80pc are already less than 15pc, said it was free to include these products in the positive list; For its ECOTA partners, this did not mean a further tariff reduction by Turkey. Finally, the potential for trade growth under ECOTA is quite limited, even if the agreement is implemented by consensus on the most liberal interpretation of the terms of tariff reduction. Article 3 allows contracting parties to maintain a sensitive list of 1pc (six-digit) products that will not be included in the agreement; In addition, 20 products may be excluded from the Article 4 tariff reduction.

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