The Goverment of Pakistan Agrees to Reduce Customs Tariff Slabs

The Federal government has reportedly agreed to reduce customs tariff slabs and fix the maximum slab at 25 percent, expected to be announced in the Trade Policy 2011-12, sources told There was a general agreement on the proposal that there should be fewer slabs, and the maximum tariff should be 25 percent, with the justifiable exceptions.

This will also be the guiding principle along with the Trade Policy. An FBR-led committee, with members from the Ministry of Industries and National Tariff Commission (NTC) would work on the recommendations," sources added. They said "Imports tariffs should be low, to be made part of protection policy principles to be announced with Trade Policy supplement 2011-12, and sectoral approaches to be preferred to rationalise the tariff structure.

On a proposal of Planning Commission 'non-tariff measures including import licensing should not be used to control import and export', Commerce Ministry argues that it was agreed that in fact the government was not using licensing regime. The survey-based determination of quota for availing concession can neither be called licensing nor a non-tariff measure.

The Planning Commission has also proposed that specific (customs) duties be low and uniform. However, Commerce Ministry claims that specific duties are not being used, except in case of edible oil to insulate the consumer from unusual volatility in the international market, sources said

On a recommendation of Planning Commission, Commerce Ministry has suggested that regulatory role of Engineering Development Board (EDB) be critically reviewed by a subcommittee headed by Director General Trade Policy having members from Ministry of Industries, EDB and Federal Board of Revenue(FBR). Commerce Ministry, however, is of the view that such a review should be undertaken under the mandate of ECC by the Ministry of Industries and the Planning Commission.

Sources said that an inter-ministerial subcommittee, led by Ministry of Industries and assisted by the Ministry of Commerce, NTC and FBR will come up with comprehensive proposals on immediate cuts (to a maximum and uniform rate if say 25 percent) in all motor car tariffs and pre-announcement of further tariff cuts and other basic changes to auto sector policies. It will also include immediate cuts in motorcycle tariffs to 15 percent or 20 percent, to be followed by further cuts maximum 10 percent.

Another subcommittee, led by the Ministry of Textile Industry is also working on immediate cuts in all textile and clothing tariffs to a maximum of 10 percent. The government will also establish some systemic process for the economic evaluation of tariff changes that at present are made outside the annual budget cycle and are published in Statutory Regulatory Orders (SROs).