Tariff rationalisation plan: implementation through trade policy under study

The government is considering implementing tariff rationalisation plan of the Planning Commission through trade policy for the next fiscal year after approval of the Economic Co-ordination Committee (ECC) of the Cabinet.
Sources in the Finance Ministry said that various tariff measures would be incorporated in trade policy after the approval of the ECC, and the Deputy Chairman of Planning Commission, who is heading the tariff rationalisation plan, is giving final touches to these measures in consultation with concerned Ministry of Commerce and Industries.
The required protection to the local industry would be kept in view in the entire process. Sources said that a summary was moved by the Ministry of Commerce to the ECC on May 3, 2011 along with a consultant''s report on ''Pakistan Trade Policies: Future Directions''. The purpose of the study was reviewing tariff structure, examining tariff slabs including those emerging from implementation of various Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with the view to bring in simplification and remove anomalies.
The draft ToRs for study on tariff rationalisation and trade de-regulation also included critical review of existing protection levels and recommendations for formulation of new tariff protection policy. The report of the Consultants, titled ''Pakistan Trade Policies: Future Directions'', presented to the ECC on May 3 contained 28 recommendations for tariff reforms including general policy statement, recommendations for specific policies and recommendations to remove information gaps and bring transparency.
General policy statement: The recommendations of the consultant''s report included; (1) non-tariff measures including import licensing will not be used to control import and exports; (2) specific duties will not be used; (3) import tariff should be low and uniform; (4) the government will aim to bring all tariffs down to a maximum; (5) uniformity means that tariff on individual products should be the same for all importers.
Recommendations on specific policies: (6) abolish the present Regulatory duties; (7) ''tops down'' tariff cuts back to the 2002/03 general maximum level of 25 percent; (8) pre-announce further "tops down" tariff cuts to a general maximum of 10 percent; (9) require that all concessionary tariffs should be available to all importers including especially trader-importers; (10) as a consequence of the above, abolition of the system of import licensing at present being administered by EDB and by various line ministries; (11) 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 policies; (12) immediate cuts in motorcycle tariffs to 15 percent or 20 percent, to be followed by further cuts to a maximum of 10 percent (13) immediate cuts in all textile and clothing tariffs to a maximum of 10 percent; (14) explicit abandonment of the present "cost plus" and "principle of cascading" approaches to tariff setting; (15) a review of the economic justification for sectors/industries with above normal protection and/or subsidies; (16) a review of the economic justification for the present export subsidies; (17) a review of the economic justification for the use of export taxes; (18) a review of the economic justification for the present bans and restrictions on the import of second-hand products; (19) inclusion of a consumer/buyer interest clause in the anti-dumping law;
Recommendations on information gaps and transparency:
(20) a review of the current situation in which many tariff changes are being made without reference to NTC; (21) 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 SROs; (22) public availability of these evaluations; (23) publication by NTC of its past tariff enquiry reports; (24) publication by National Tariff Commission (NTC) of all future tariff enquiry reports before they are passed on to Ministry of Commerce; (25) MoC to provide publicly available reasons for adopting or not adopting the recommendations of NTC tariff enquiry reports; (26) publication and easy access to information on appeals against anti-dumping decisions; (27) publication on the FBR website of a computable version of the detailed customs tariff schedule which includes for each tariff line customs duties, sales and other domestic taxes, preferential tariffs, changes due to SROs and whether or not imports from India are banned; (28) to make substantial improvement to, and greater user-friendliness of the computable version of the detailed trade database on website of the FBR.