STPF 2015-2018 is a failure, top MoC official tells Senate body

Secretary Commerce Younus Dagha on Tuesday acknowledged that Strategic Trade Policy Framework (STPF) 2015-18, a brain child of former Commerce Minister, Khurram Dastgir, was a failure but the government cannot disown it. He made these comments during a briefing to the Senate Standing Committee on Commerce and Textile presided over by Senator Shibli Faraz. The meeting was attended by four senators - Mufti Abdul Sattar, Naseema Ehsan, Rubina Khalid and Haji Saif Ullah. However, except Senator Rubina Khalid none of the senators raised any questions, remained silent and merely signed the attendance sheet that would guarantee payment of TD and DA.
The secretary commerce said that the ministry is formulating a five year Strategic Trade Policy Framework 2018-23 for which consultations with the private sector have been ongoing on for the last three months. The chairman standing committee argued that there is no need of such a policy when implementation is not in the hands of the Commerce Division but added that the STPF is an attractive label however it did not materialize and Pakistan has to meet its economic goals. He suggested structural adjustments.
The commerce secretary stated that in the new trade policy the focus will be on gender, service policy, trade, investment and tariff with the commitment that this time things will be different from the past. All the stakeholders including private sector are being taken on board on the new proposed policy. He said if STPF 2015-18 was not a success the next one would be successful. Cross cutting policy implications will be brought together in one document.
Director General Trade Policy Nauman Aslam informed the committee that a full fledged chapter on investment in trade related industry is being included in the new policy in addition to another chapter on tariffs and RDs to be finalised with FBR and other stakeholders. He said the commerce ministry has taken a position that it should be taken on board with respect to decisions on export related issues.
The secretary commerce explained that during a meeting of Monetary and Fiscal Policy Board held last year and headed by the finance minister, he raised this issue and argued that tariff policy should reflect trade policy. The finance minister who presided over the meeting directed the State Bank of Pakistan, Finance Division and FBR to sit with Commerce on tariff related issues.
He said that commerce ministry took the stance that tariff on import of raw material should be rationalised to facilitate local industry. For the last few months not to entertain summaries on RDs without taking Commerce Division on board has become the norm in the ECC. Commerce will make this policy part of new trade policy, he added.
The secretary commerce said that the coverage of two per cent duty drawback will be expanded in terms of items and countries. The secretary commerce stated that predictions as to the success of the second round of Free Trade Agreement (FTA-II) talks with China remains a challenge but mutual discussions indicate that China is in the mood to accommodate Pakistan; he expressed the hope that the next round would be better and positive though there is a lot to negotiate.
The secretary commerce said that Pakistan had asked China to take corrective measures and whatever concessions have already been extended to other trading partners should also be extended to Pakistan. The Chinese have indicated their willingness at this and Pakistan is in discussions with them and it is hoped that there will be substantial progress before the next round which is expected next month. "Chinese side is positive and mutual discussions are being held in an atmosphere of accommodation," he added.
The chairman questioned the capacity of the commerce ministry to discuss technical issues of the FTAs, the secretary commerce replied that there was an impression in the past which was right to some extent based on past experience but now the ministry has improved its capacity through hiring of consultants.
The secretary commerce stated that perhaps last time there was some deficit of consideration besides capacity issues. However, now the ministry goes through each and every tariff line as consultants conduct comparative studies with other countries. Presently, talks on FTAs are better than in the past, he contended.
On a question raised by the chairman standing committee, the secretary commerce said that Pakistan has reached final stage with Indonesia and good news will be shared at the end of the current month whereas negotiations with China will be finalised next month.
Talking about Turkey, the secretary commerce said there is no progress on FTA talks with Turkey and therefore he is in no position to talk about it. The chairman standing committee jokingly said "relations with Turkey have not moved forward from that of a brother, if they make Mian Shahbaz Sharif brother in law, then perhaps things can become better," to which the secretary commerce replied that "the PTI is ahead in matters relating to marriage."
Replying to a question regarding trade with Malaysia, Joint Secretary (Admin), Dr Nazim Latif said that Pakistan is making efforts for enhancement of rice quota, adding, "we have achieved success in Indonesia with respect to rice quota enhancement but Malaysia has not made any such commitment." Pakistan's import of edible oil has shifted from Malaysia to Indonesia.
The secretary commerce argued that Pakistan should change its cropping pattern in consultation with provinces as the country is surplus in wheat and sugar which are being exported with subsidy. In reply to a question regarding Afghanistan, the secretary commerce said that Kabul had scrapped a scheduled meeting of secretary level talks of APTTCA in September last year on the plea that they would not hold any such a meeting without Indian participation, which is inappropriate in bilateral talks.
"Afghanistan policies are being hijacked by one country," the secretary added; the chairman standing committee who recently Afghanistan concurred. He said, Pakistan had invited Afghanistan for ECO Commerce Minister's conference to be held in Islamabad but the invite was declined. There is trust deficit between the two countries, he added.
However, negotiations with Iran on trade were encouraging and both countries are willing to enhance bilateral trade but issue of banking channels is hindering progress. Talking about the GSP plus review by the European Union, the secretary commerce said "A parliamentary delegation led by Defence Minister Engineer Khurram Dastgir Khan will visit Europe and a lot of hard work is needed in the next few months'. The chairman standing committee complained about the arrangements for the trip that he has had to make personally referring to it as a terrible trip.
On TDAP, the chairman standing committee observed that the organisation is facing capacity issues, and proposed that the organisation should conduct an intellectual exercise to take it on new lines. He said if he was the Secretary Commerce, he would have also been clueless. TDAP has no data base to analyse sectoral and international trade.
Secretary Commerce acknowledged that there were capacity's issues in TDAP adding that the Ministry has started work and consultants are being hired to analyse trade data. "We are now online with Weboc, PRAL and State Bank of Pakistan so that all the agencies can co-ordinate with each other," he continued.
Shibli Faraz said that Pakistan's engineering side is very weak and needs attention. The government must focus on it. He stated that the commerce ministry cannot be accused of the decline in exports. The secretary commerce stated that the Senate Standing Committee on Commerce gave 63 recommendations from 2015 to 2017 of which 52 have been implemented whereas 11 are under compliance.
Replying to a question on investment in CPEC projects including power projects, the secretary commerce said repatriation of Chinese investment in power sector will start from 2021-22, adding that $ 3-4 billion will be repatriated per year. He said that the commerce ministry is preparing a plan to rationalize power tariff of export oriented industry which will be adjusted from the Rs 180 billion export incentive package.
The committee was informed that the refunds of Rs 24 billion have been paid to the exporters during the current fiscal year. The committee was further apprised that Custom Wing has been established in Balochistan after which smuggling of Rs 9.5 billion has been stopped.