Secretary Commerce, Zafar Mahmood on Tuesday acknowledged that a consensus on the negative list for India has not evolved due to divergent views of stakeholders including the public sector.
"We should have evolved broad consensus on the list but it could not happen. We are still making efforts to convince the stakeholders so that the list can be submitted to the Cabinet which is meeting on Wednesday (today)," he said while answering questions raised by the members of the Senate's Standing Committee on Commerce, headed by Senator Ilyas Bilour.
These views have come at a time when the deadline of February 2012 committed to India is due to expire. Senator Haroon Akhtar Khan, Senator Abdul Razak Khan, Senator Gulshan Saeed, Senator Safdar Abbasi, Senator Islam-ud-Din Shaikh and Senator Sameen Siddiqui took up different issues with Secretary Commerce. The issues included export of sugar, impact of negative list on local industry, export of liquor to non-OIC countries, besides delay in initiation of DTRE scheme for ghee/cooking oil exporters of Khyber Pakhtunkhwa (KP).
Secretary Commerce argued that Commerce Ministry did talk with all the stakeholders before the finalisation of the negative list. He revealed that he personally visited different chambers and other trade bodies in this regard, adding that Pakistan will be a beneficiary of trade with India as influx of Indian goods through third country will end.
"If we have to fulfil the requirements of Safta, we have to trade with India under the MFN treatment. If a single item is included in the negative list, trade cannot be considered as being on the basis of MFN. We have to phase out negative list by the end of current year," he continued. In reply to a question by Senator Haroon Akhtar, he informed the committee that the Commerce Ministry has submitted a negative list of 636 items to the Cabinet.
According to reliable sources, the revised negative list is above 1000 tariff lines to be considered by the federal cabinet on Wednesday (today). According to Secretary Commerce, under the WTO rules Pakistan cannot bar any country from doing normal trade and in the case of India Pakistan is facing an embarrassment at different international fora.
"We are trying to place our threatened industry on the negative list so that we can prepare a joint strategy later on," Mehmood added. Answering a question, Secretary Commerce said that tariff with China will be five per cent less than India because of Free Trade Agreement (FTA). Secretary Commerce informed the committee that as a student of economics he held the view that the world has progressed only because of international trade.
He, however, acknowledged that most of the industries in Pakistan fear that when Indian goods enter Pakistan freely, it will have a negative impact on their sales. Giving an example, Secretary Commerce said that auto industry based in Pakistan is earning substantial profit but not enhancing their production which implies that it is disadvantaging our consumers.
"We have to maintain a balance between consumers and the industry," he continued. Senator Haroon Akhtar argued that trade normalisation with India is inevitable as Pakistan had to pass this process sooner or latter and added that the process should have been done long before.
However, he said Pakistan should not go so fast ahead which may result in backlash to the local industry. "Who will be held responsible in case of backlash to the local industry, so we must take effective measures for genuine protection," he maintained. Senator Sameen Siddiqui requested Secretary Commerce to protect local industry including textile sector. She also sought some clarifications for gems.
Senator Islam-ud-Din Shaikh said that Commerce Ministry should put refined sugar on negative list to protect local sugar industry and growers who are not getting due return on their crops. He informed the committee that the landed FOB cost of imported sugar is $700 per ton at Karachi and with the inclusion of General Sales Tax (GST) its price is Rs 70 per kg. According to him, sugar mills have produced one million tons sugar surplus, and he requested the government to allow export of 0.5 million tons.
Secretary Commerce clarified that sugar will be put on negative list so that the government could take corrective measures to mitigate the influence of sugar importers. Senator Haroon Akhtar Khan, who is also a sugar mill owner, expressed his concern over zero duty on imported sugar that he argued will destroy the local industry.
The committee unanimously requested the Commerce Ministry to allow export of 0.5 million tons of sugar keeping in view the interests of sugar industry as well as consumers. In reply to a question by Senator Sameen Siddiqui, Secretary Commerce informed the committee that Commerce Ministry has allowed export of liquor to non-OIC countries (Organisation of Islamic Countries) but its import from India has not been allowed.
Answering another question, Zafar Mahmood said that visa regime for businessmen of both the countries will be liberalised, adding that businessmen will be exempted from police reporting. Secretary Commerce mentioned that Turkey is Pakistan's friend but Turkey recently imposed an 18 percent additional duty besides 6 per cent duty on some of Pakistani textile products.
"If we have to accept India as global trading partner we have to phase out negative list," he said, adding that Indian importers are afraid of doing business with Pakistan because of law enforcing agencies. Some Senators raised the issue of maltreatment of Pakistani businessmen by Indian agencies against recently. On the issue of DTRE scheme for the ghee/cooking oil manufacturers of KP, Member Customs FBR Mumtaz Haidar Rizvi, who holds an additional charge of Chairman FBR, apprised the committee that a new summary is being submitted to the Economic Co-ordination Committee (ECC) of the Cabinet to remove ambiguity.
Senators recalled that the committee had decided on August 16, 2011 that DTRE scheme should be extended to the terrorism hit ghee industry of Gadoon (KP) and Balochistan but did not include those units established in Hattar Industrial Estate. This scheme was approved by the ECC. However, ghee units in Hattar challenged the decision of the ECC and got stay order from Islamabad High Court (IHC).
Rizvi informed the committee that according to him, IHC order does not bar DTRE concession to the proposed ghee units, but at the same time it also allows inclusion of new units in the scheme. He further stated that the FBR is submitting another summary to the ECC to amend the already issued SRO. The committee expressed satisfaction over the commitment given by FBR.
Committee members who are retiring next week also lauded the role of the committee and its contribution in national affairs as an important arm of the Parliament. Secretary Commerce and Mumtaz Haider Rizvi also praised the retiring Senators for their valuable contributions in the committee and Parliament as well.