MoC seeks end to regulatory duty on imported goods

Commerce Ministry (MoC) has reportedly approached the Economic Co-ordination Committee (ECC) of the cabinet for eliminating regulatory duties on imported goods agreed by the tariff reforms committee headed by the Deputy Chairman Planning Commission, well-informed sources told Business Recorder.
An Australian consultant Garry Persul has prepared a report - tariff rationalisation- under the guidance of Deputy Chairman Planning Commission, Dr Nadeem-ul-Haq and the Commerce Ministry as the co-ordinator of the committee is presenting these recommendations before the ECC in its next meeting.
The ECC, in its meeting on July 20, 2010 had constituted a committee headed by the Deputy Chairman Planning Commission and comprising Chairman BoI, Secretaries Commerce, Finance, Textiles Industry , Industries and Production and Chairman National Tariff Commission (NTC) to review the tariff structure for the entire industry to determine optimal tariffs. Notably absent was any representation from the Federal Board of Revenue.
The consultant presented their report titled "Pakistan trade policies: future directions" to the tariff reforms committee chaired by the Deputy Chairman Planning Commission. The consultant presented 28 recommendations to the committee; that were deliberated in detail. The sources said four working groups comprising MoC, NTC, Ministry of Industries, EDB, FBR and CCP have been recommended to look at the issue and come up with results before June 2012 in consultation with different industries and stakeholders.
There was an agreement on two recommendations between the committee and consultant: (i) import tariff should be low and uniform; and (ii) committee was unanimous in supporting removal of regulatory duties except FBR which had concerns that it might result in revenue loss.
The committee expressed disagreement or concerns on the following points of consultant's report (a) specific duties will not be used; (b) non-tariff measures including import licensing will not be used to control import and export;(c) uniformity means that tariff on individual products should be the same for all importers including trade importers;(d) abolish the present regulator duties;(e) top down tariff cut back to 2002~3 general max level of 25%;( f) pre-announce further top down tariff cuts to a general maximum of 10%; (g) require that all concessionary tariffs should be available to all importers including traders-importers;(h) as a consequence abolition of the system of import licensing at present be administered by EDB and by various line ministries;(i) immediate cuts to a max and uniform rate of say 25% in all motor car tariffs and pre-announcement of further tariff cuts and other basic changes to auto sector policies;(j) immediate cuts in motor cycle tariffs to 15% or 20% to be followed by further cuts to a maximum of 10%; (k) immediate cuts in all textile and clothing tariffs to a maximum of 10%; and (l) explicit abandonment of the present cost plus and principle of cascading approaches to tariff setting.
The committee argued that for recommendations pertaining to subsidies above normal protection and export taxes etc, there is the need for greater economic justification. Other recommendations are as follows: (1) review of the economic justification for sectors/industries with above normal protection and / or subsidies;(2) a review of the economic justification for the present export subsidies ;(3) a review of the economic justification for the use of export taxes;(4) a review of the economic justification for the present bans and restrictions on the import of second hand products ;(5) inclusion of a consumer / buyer interest clause in the anti dumping law and (6) review of the current situation in which many tariff changes are being made without reference to NTC.
The committee recommended establishment of some systematic process for the economic evaluation of tariff changes that at present are made outside the annual budget cycle and which are published in SRO's Ministry of Commerce being the secretariat of the tariff reforms exercise proposed to the ECC to discuss the recommendations of the Consultants study in the presence of the Chairman of the tariff reforms committee and its members to facilitate discussions.
The following dedicated working groups are recommended to be constituted for further deliberations on the issues raised by consultant and other stakeholder in active consultation with the industry: (i) Working group to propose draft protection policy framework and address the export subsidies, anti-export bias and FDI and FTA related issues to be headed by Secretary Commerce with its Secretariat at NTC;(ii) working group for rationalising the protection to local manufacturing and to be headed by Secretary MOI&P with its Secretariat at EDB; (iii) working group for issues related to Customs tariff, trade related taxes and enforcement of protection policies to be headed by Secretary Finance with its secretariat at FBR; (iv) working group to protect the consumer welfare the working group to be headed by Chairperson CCP and its secretariat to be based at CCP.
The current cycle of the tariff reforms may be completed by June 2012 under the existing tariff reforms committee which would steer the remaining phases of the tariff reforms. The tariff reforms committee in addition to the existing members would induct DG Trade Policy, MoC as the Secretary Committee
The committee will finalise within one week of the approval of ECC the ToR's of the four working groups who would co-opt an independent expert if needed. The working groups would present their respective work plans, within two weeks of their constitution, along with resource requirements. MoC would present a quarterly progress report to ECC on the implementation of interim protection policy framework and policy objectives.