Ministry seeks tariffs structure rationalisation

ISLAMABAD: Ministry of commerce on Saturday called for simplification of tariffs structure to propel manufacturing sector and support local industries, while proposing reduction in duties on imports of raw materials used by export-oriented sector.

“Although Pakistan has liberalised its tariff regime since 2005, the tariff structure remains complex and needs to be simplified,” a commerce ministry’s spokesperson said in a statement. “Tariffs, being one of the instruments of trade policy, play an important role in enhancing export competitiveness and productivity of the domestic industries.”

Ministry of commerce and National Tariff Commission finalised a draft of the national tariff policy to make exports more competitive and facilitate participation of local manufacturers, including small and medium enterprises, in global and regional value chains. The policy will become part of the upcoming Strategic Trade Policy Framework 2018/23, which is currently under preparation. The framework would provide strategic direction to the export sector for the next five years, said the spokesperson.

He said the objective of the draft policy is to simplify and rationalise the existing tariff structure for enhancing the efficiency of existing domestic activities, especially in manufacturing sector and to ensure predictability and transparency.

The ministry proposed gradual reduction in duty on raw materials and machinery for export-oriented industries.

The tariff slabs are proposed to be re-fixed between five to 20 percent. “The cascading of tariffs with progressive stages of manufacturing is proposed to be retained to promote value addition,” the spokesperson added.

The ministry also proposed to gradually bring the tariff lines, currently at the three percent slab, into the fifth schedule by reducing their duty to zero. The reforms may, however, be introduced in phases to provide the domestic industry the time for adjustment.

The draft of the policy also aims to simplify the tariff structure, and reduce distortions. It was proposed to merge the additional duty of one percent under a statutory regulatory order (SRO 1178(I)/2015) into customs duties and the respective tariff lines. The ministry proposed the elimination of difference in the rates of tariff for the commercial importers and the industrial users of raw materials, intermediate goods and machinery to reduce the cost of production for small and medium enterprises. It recommended provision of time-bound protection to the nascent industries to make the protection regime predictable and facilitate the investment decisions.

The draft of the policy has been uploaded on the website of the ministry of commerce and sent to all the chambers and trade associations in the country for their feedback by 27 April.

A consultative seminar is also being organised with the stakeholders on 26 April. The final draft of the policy will be submitted to the Economic Coordination Committee of the cabinet after stakeholders’ consultations.