TEHRAN (FNA)- Indonesia has asked Iran to reduce import duties on commodities such as crude palm oil, rubber, fiber and paper by 50 percent.
The request was made Wednesday at the 10th joint commission meeting between the two countries as they negotiated a preferential trade agreement (PTA), scheduled for completion later this year.
The PTA negotiation is a follow-up to the Framework Agreement on Comprehensive Trade and Economic Partnership, signed in 2005, in which both countries agreed to pave the way for a free trade agreement (FTA).
“An FTA is usually marked by a reduction in several key tariffs,” Indonesian Trade Minister Mari Elka Pangestu said in Jakarta.
She said the upcoming PTA would be the basis for tariff reductions for several commodities, and the 50 percent cut would apply to goods with import duties of between 15 and 25 percent.
Iranian Information and Technology Minister Mohamad Soleymani said his country would study Indonesia’s proposal before responding to the request at the next meeting in August.
“We’re confident with the PTA in place, total bilateral trade will reach US$1 billion this year, 70 percent of which will hopefully be generated from direct trade,” he said.
The meeting also discussed solutions to the United States-imposed trade embargo on Iran, which has caused Iran to shift from US dollar to other world currencies in its transactions.
“We can use Euros in doing business. In addition there will be a new branch office of a European bank, we can use that as a facilitator so there will be no problem,” Mari said.
The two countries also signed several agreements on environmental policy, international exhibitions and the establishment of an Iran-Indonesia Business Council.
The three-day meeting also touched on action plans for agreements which had already been signed, including the establishment of the US$700 million Hengam fertilizer factory in southern Iran, a joint venture between PT Pupuk Sriwijaya and the National Iranian Petrochemical Company.
Other issues covered at the meeting included Iranian plans to build a US$6 billion refinery in Banten and the construction of a geothermal power plant by an Iranian power company.
In 2007, trade between the two countries reached US$553.1 million, a 37 percent increase from the US$404.4 million recorded in 2006. Iran’s exports to Indonesia made up US$80.2 million, while imports accounted for US$472.9 million.
In January and February this year, bilateral trade was valued at US$116.9 million, with exports making up US$30.4 million and imports making up US$86.5 million.