PC formulates new auto policy: abolition of RDs, duty rates cut proposed

The Planning Commission is formulating an auto policy, envisaging the government to abolish the regulatory duties and reduce customs duty on import of auto parts from zero to 10 percent.
The documents available with Business Recorder say that the Planning Commission opines that reduction in duties would provide competitive edge to new entrants in the auto sector and also would bring down the swelling prices of local cars.
The Planning Commission has proposed to rationalise tariff by abolishing the present regulatory duties in the auto sector, which would provide competitive edge to new entrants.
For providing safeguards to new entrants in auto the sector, a meeting was held on March 31 in the PC. The high-powered meeting was attended by Ministry of Industries and Production, Engineering Development Board, Federal Board of Revenue, Ministry of Commerce, National Tariff Commission, Ministry of Petroleum, Ministry of Finance, Economic Affairs Division to discuss the initiatives of the Planning Commission.
The objective of this meeting was to reach consensus on rationalisation of the present tariff in the auto sector which would eventually help in reducing the prices of local industry''s products, and give way to new entrants showing interest to come to Pakistan, in CBU or in SKD or CKD shape.
Experts said that zero rated regime and a procedure which is not only one-sided by any Ministry but also against the local industry. They said that the idea floated for duty/tariff rationalisation is to be checked and to be countered by stakeholders.
The PC recommendations are against the general policy statement which came as per this working paper which states that the non-tariff measures licensing will not be used to control imports and exports. Specific duties will not be used. Import tariffs should be low and uniform. Government will aim to bring all tariffs down to a maximum rate of 10 percent. Uniformity means that tariffs on individual products should be the same for all importers, including trader/importers.
In its recommendations, the PC pushed the government to abolish the present regulatory duties. In addition to this, it asked for topping down tariff cutbacks to the 2002-03 general maximum level, which is 25 percent. Pre-Announce further tops down tariff cuts to a general maximum of 10 percent.
The PC suggested that all concessionary tariffs should be available to all import licensing at present being administered by the Engineering Development Board and by various line ministries. The Commission has demanded immediate cuts (to a maximum and uniform rate of say 25 percent in all motor car tariffs and pre-announcement of further tariff cuts and other basic changes to auto sector polices.
Other recommendations include immediate cuts in motorcycle tariffs to 15 percent or 20 percent to be followed by further cuts to max 10 percent. Immediate cuts in all textile and clothing tariff to a maximum of 10 percent, and review of the economic justification for the present bans and restrictions on the import of second-hand products.