Eradicating under-invoicing, misdeclaration: Pakistan, China to set up electronic data exchange

Pakistan and China are to establish live electronic data exchange under Pak-China Free Trade Agreement (FTA) aimed at swapping date of imports and exports to eradicate under-invoicing and misdeclaration, well informed sources in Commerce Ministry told Business Recorder.
Trade figures quoted by the two sides differed greatly. As per Pakistan, current total volume of the trade was around $10.1 billion, whereas Chinese side quoted $12 billion. Both sides had agreed that a study may be conducted to find out the reasons for the discrepancy.
Pakistan''s exports to China have declined to $2.1 billion from 2.34 billion. Pakistan was also facing a revenue loss of Rs 22 billion per annum due to an imbalance in the first phase of the FTA with China signed in 2006. Both countries are negotiating second phase of the FTA but no agreement has been reached so far as China has backed out from its earlier commitment of concessions.
The sources said that 4th round of meeting of the working group for the establishment of Electronic Data Exchange (EDE) under FTA was held in Shenzhen, China on 25-26th July, 2016. During the meeting, progress in the development of Electronic Origin Exchange System (EODES) was reviewed.
The issue of concluding a Memorandum of Understanding (MoU) on EODES between Customs Administrations of the two countries as well as revised timeframe for deployment of live electronic module was also discussed, the sources continued. Both countries have already discussed the system testing issues relating to codes of Chinese characters and corresponding units of measurement between China and Pakistan. China agreed to try using CCSID 1208 at the application level suggested by Pakistan to solve the problem. China will provide a co-relationship list of units of measurement to Pakistan.
Both sides have also agreed to establish the origin certificate verification and feedback sub-system in respect of information exchange under EODES as Pakistan had expressed concerns about the verification feedback timeframe. Both countries are in agreement that they will exchange units of measurement on the basis of HS Codes.
The proposed EDE, sources said, is vital for Pakistan as it would enable Pakistan customs to receive export information, certificate of origin and other relevant data in real time electronically, thus obviating any chances of misdeclaration, under-invoicing and/or forgery in certificates of origin. The EDE mechanism would also help customs in reducing dwell time and would be a welcome step towards achieving end-to-end paperless cargo clearance.
Keeping in view the potential economic benefits and the overall policy of the Government of Pakistan to establish electronic data interface with its trading partners to check misuse of trade concessions as well as under invoicing, the Prime Minister Nawaz Sharif has issued directive that the EDI with China must be finalized and implemented within first quarter of FY 2016-17. According to sources, federal cabinet presided over by the Prime Minister, in its previous meeting has allowed Federal Board of Revenue (FBR) to commence negotiations with the Customs Administration of China for signing a Memorandum of Understanding (MoU) on establishment of Electronic Data Exchange in terms of Rule 16(h) of the Rules of Business, 1973.