Membership of neighbouring countries of Arabic Free Trade Zone Agreement (AFTZA) and bilateral agreements of developing countries with the European Union (EU) may create unfavourable situation for exports from Pakistan.
The American Business Council of Pakistan (ABC), in its proposals for 2004-05 trade policy has expressed fears that the exports from Pakistan will be becoming highly uncompetitive because of significantly higher duties on import from Pakistan.
The ABC said a number of neighbouring countries were members of AFTZA, benefiting from lower duties on export/import goods within the AFTZA territory and a lot of developing countries had bilateral trade agreements with the EU. So far, Pakistan had no such agreements with any of the countries (with the exception of the US where some bilateral agreements exist for textile industry), it said.
The ABC cited an example, which illustrated how competitive would be the situation for the exports from Pakistan when by 2010, the AFTZA countries would be trading in a number of consumer goods among their members at zero percent custom rate.
For those countries, which are not a part of AFTZA or do not have any bilateral agreements with the AFTZA countries, the ABC said, the import rate on consumer goods would be from 20-40 percent (depending on standard rates for each specific country).
The ABC, therefore, proposed that the government should start working vigorously on free trade agreements (FTA) that would help boost the export.
It further said the government should give incentives to the exporters, eg on machinery, ensure level playingfield for the investors, bring down duty on raw materials, utilities, no duty on imported machinery and equipment, etc.
On the issue of high utility cost of local industries, the ABC said: "While we encourage the government to meet international commitments, we propose tariff reduction through the Organisation of productivity, minimising theft losses, and recovery of dues.
"Allow duty-free imports of co-generation equipment to encourage industry to set up their own generation units," it suggested.
The issues of power generation, duties and taxes on co-generation equipment have also been highlighted by the ABC.
It said despite much publicised claims regarding impending improvement in power generation and distribution by the previous and present regimes, the power situation in the country was far from improved. The electric utility companies were ill equipped to maintain existing power plants and handle the rising power demand in the country, it added.
A way out of this problem, the ABC said, was to promote on-site self-generation by setting up co-generation-based power plants in industry. This solution not only represented better utilisation of the country's diminishing fuel reserves, but also provided higher system efficiencies than conventional generator-based power plants (75 percent vs 30 percent), said the ABC. It further proposed that all types of co-generation equipment should be made duty-free.
The proposals have also been forwarded on duties and taxes on direct gas-fired absorption chillers, retail price printing, release of bank guarantees, cancellation guarantees, shaving preparations, lower healthcare cost-medical testing, and shelf life restrictions.
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