ISLAMABAD: The government is all set to impose restrictions on import of those items through Afghan Transit Trade which are being smuggled to Pakistan and hurting its industry and economy.
Joint Secretary (FT-II), Commerce Ministry, Maria Kazi, in a letter to Member (Customs Operations) FBR stated that several meetings have been held in Ministry of Commerce in the last two weeks, and data and recommendations of Federal Board of Revenue (FBR) and joint presentation by Ministry of Commerce and the FBR were given at the Prime Minister’s Office which were shared with the Apex Committee of SIFC on September 8, 2023.
According to her, as the volume of Afghan Transit Trade (forward) via Pakistan increased by 67% during FY 2022-23 to USD 6.71 billion from USD 4.016 billion during FY 2021-22, the huge trade deficit created by the surge in Afghan imports is neither plausible nor understandable keeping in view its limited export potential and other funding sources especially after the imposition of multiple types of sanctions on the interim Afghanistan government.
“Comparative analysis of the major forward Afghan Transit Trade items of previous two years clearly shows that the increased volume of major import items of Afghanistan transiting via Pakistan i.e. fabrics, tyres, black tea, home appliances, toiletries and cosmetics etc is attributable to low volume of imports by Pakistan of these very items due to imposition of import restrictions by Pakistan on import of non-essential and luxury goods during the same period,” she added.
The MoC further stated that substantial increase in incidence of smuggling of these items has not only caused loss of revenue but has also rendered import curtailment measures of the government ineffective, curtailed revenue and caused injury to the domestic industry.
The Ministry of Commerce, she further contended, is submitting a summary to ban fabrics, tyres, black tea, home appliances, toiletries and cosmetics etc under Afghan Transit Trade, for which the SRO will be issued after approval of the competent authorities.
Moreover, as Customs duty in Afghanistan is extremely low as compared to Pakistan, and this facility is being misused with the connivance of businessmen from both sides, the FBR should to take the following measures to curb the misuse of Afghan Transit Trade: (i) the requirement of Revolving Insurance Guarantee for all Afghan Transit goods has to be substituted by the FBR with bank guarantee at 100% of the assessed value; and (ii) processing fee at 10% ad valorem shall be imposed on the Afghan Transit goods showing unjustified increase in forward transit cargo Afghanistan’s Customs duties on these goods are negligible.
The SIFC Executive Committee has directed secretary Commerce and chairman FBR to propose a mechanism for curbing smuggling of following identified smuggling prone items including the financial impact for adopting such a mechanism: (i) fabric of all sorts (respective all headings); (ii) machinery (chapter 84 & 85); (iii) tyres (PCT 40,11); and (iv) black tea (0902.3000-4090).
Secretary Commerce, secretary Finance and chairman secretary Commerce have been asked to examine the impact and viability of imposition of processing fee at 10 ad valorem against each consignment of above smuggling-prone items.
They have been directed to evaluate the viability and requisite instruments for substituting insurance guarantee with bank guarantee for each consignment which is released after uploading of T-1 form in WeBoc for transit trade.
The three have also been asked to develop a plan including financial benefit of enhancing existing threshold of: (i) 20 percent to 25 percent scanning of all ATT consignments at port of entry and port of exit(border stations); and (ii) 5 percent to 10 percent for examination of all ATT consignments at port of entry and port of exit (border stations).
The MoC and Foreign Affairs Ministry have been directed to review Afghanistan-Pakistan Transit Trade Agreement (APTTA) to counter smuggling of goods and report progress to the Executive Committee of SIFC on new APTTA negotiations which are underway. And Secretary Commerce has been directed to notify Committee on Afghan Transit Trade.
Copyright Business Recorder, 2023