RECORDER REPORT
ISLAMABAD: Commerce Ministry is unlikely to get approval of five-year Strategic Trade Policy Framework (STPF) 2018-23 from the incumbent government due to slow consultative process, well informed sources told Business Recorder.
The prevalent STPF 2015-18, prepared by former Commerce Minister, Engineer Khurram Dastgir Khan (now Defence Minister) has not achieved the desired results due to partial implementation of the schemes and incentives announced by him.
The country’s exports have shown growth for the last few months due to better international environment and efforts of incumbent Commerce Division’s team. However, imports are still on higher side due to which trade deficit is hovering around $ 27.5 billion.
An official statement issued by the Commerce Division on Saturday says that it is formulating STPF 2018-23 which will provide strategic direction for the export sector for the next five years. Tariffs, being one of the instruments of trade policy, play an important role in enhancing export competitiveness and productivity of domestic industries. Although Pakistan has liberalized its tariff regime since 2005, the tariff structure remains complex and needs to be simplified.
Commerce Division and National Tariff Commission (NTC) have drafted National Tariff Policy to make exports more competitive and facilitate participation of local manufacturers, including SMEs, in global and regional value chains. This policy will be an integral part of the upcoming STPF 2018-23. The objective of the draft policy is to simplify and rationalize the existing tariff structure for enhancing the efficiency of existing domestic activities, especially in manufacturing sector and simultaneously, to ensure predictability and transparency.
The draft National Tariff Policy recommends gradually reducing duty on raw materials and machinery for export-oriented industries. The tariff slabs are proposed to be re-fixed at five percent, 10 percent, 15 percent and 20 percent; the cascading of tariffs with progressive stages of manufacturing is proposed to be retained to promote value addition.
Commerce Ministry has proposed to gradually bring the tariff lines, currently at the three percent slab, into the Fifth Schedule by reducing their duty to zero, however, the reforms may be introduced in phases to provide the domestic industry the time for adjustment.
The draft policy also aims to simplify the tariff structure, and reduce distortions. The policy proposes to merge the additional duty of one percent under SRO 1178(I)/2015 into customs duties and the respective tariff lines. The Policy also suggests 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 SMEs.
Furthermore, to make the protection regime predictable and facilitate the investment decisions, draft policy also proposes to provide time-bound protection to the nascent industries.
The National Tariff Policy recommendations envisaged implementation during a period of five years starting from the federal budget 2018-19.
The draft 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 April 27, 2018.
A consultative seminar is also being organized with the stakeholders on April 26, 2018 at a local hotel in Rawalpindi. The final draft of the policy will be submitted to the ECC of the Cabinet after stakeholders’ consultations.
