Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States
With Special Emphasis on the TPS-OIC
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Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA)
The Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA) was signed in 2007
and entered into force in the beginning of 2008. It was the first more comprehensive FTA
signed by Pakistan as it incorporates trade in goods, trade in services, investment and
economic co-operation. Tariff reductions are scheduled until 2015 in the case of Malaysia and
2014 in the case of Pakistan. Analysis of Malaysian tariff schedules shows that most of the
reductions were completed by January 2012. At present some 7.5% of all tariff lines remain at
the level of 20% with another 3.5% of lines at 10%. Interestingly, these are predominantly
tariffs for industrial products that remain at 20% and 10% levels, not agricultural products.
There are also tariff rate quotas applicable to a limited number of agricultural products.
Table 24 shows that Pakistan exports to Malaysia can benefit from preference margin of
around 4 percentage points, on average relative to the partners for whom Malaysia applies
MFN. However, given a large number of free trade agreements currently implemented by
Malaysia several of its other trade partners benefit from similar or lower applied tariffs (e.g.
almost duty free access in Malaysia for ASEAN countries, preferential tariffs for China, Japan
and other countries) and 2009 data indicate Pakistan’s preference margin of around 1.5
percentage point relative to simple average of the effectively applied tariff from the world. No
data is available to calculate average preferential tariffs granted by Pakistan to imports from
Malaysia. However, by 2014 Pakistan is to grant Malaysia duty free access for products
representing 44% of all tariff lines. This compares to just 5% of duty free MFN tariffs in
Pakistan at the time when the agreements started to be implemented (2008) (WTO et al
(2013)). Tariffs were somewhat reduced for the main products exported by Malaysia to
Pakistan: in the case of palm oil palm oil (accounting for around 60-70% of Malaysian exports
in recent years) specific tariff was cut by 10% in 2008 and by 15% staring from 2010.34
Certain tariff reductions also applied to the second most imported product by Pakistan from
Malaysia, i.e. Petroleum Oils, Oils Obtained from Bituminous Minerals, Preparations Thereof
(HS271000), although precise figures are not available. 35
34 Based on information provided at [Accessed on 8 May 2014].
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Pakistan’s tariff schedules are defined for HS 8-digit lines and it is not possibly to clearly match these to
main imported products.