4. INTRODUCTION
Trade policy is a collection of rules and regulations which pertain to
trade.
Every nation has some form of trade policy in place, with public
officials formulating the policy which they think would be most
appropriate for their country.
The purpose of trade policy is to help a nation's international trade
run more smoothly, by setting clear standards and goals which can
be understood by potential trading partners. Things like import and
export taxes, tariffs, inspection regulations, and quotas can all be part
of a nation's trade policy.
Some nations attempt to protect their local industries with trade
policies which place a heavy burden on importers, allowing domestic
producers of goods and services to get ahead in the market with
lower prices or more availability.
5. TRADE POLICY OF PAKISTAN
In order to address the challenges confronting Pakistan
on the economic fronts, Ministry of Commerce
has
launched
a
comprehensive
three
years Strategic Trade Policy Framework (2012-15)
document.
It would provide the reference to different trade measures
by the Ministry of Commerce and other ministries from
time to time.
The overall objective of the STPF is to achieve
sustainable high economic growth through exports with
the help of policy and support interventions by the
government, industry, civil society and donors.
6. WHO MAKE IT
The latest trade policy announced by the
government of Pakistan was the strategic trade
policy framework for the year 2012-2015.
Prime Minister Raja Pervaiz Ashraf approved the
Strategic Trade Policy Framework 2012-2015
Makhdoom
Amin
Fahim,
Minister
for
Commerce, announced the policy after getting
formal approval from the cabinet.
7. SALIENT FEATURES OF STRATEGIC
TRADE POLICY 2012-2015 ARE:
Mark-up support for future import and purchase of machinery ,
Export finance scheme for selected export sectors,
Ad hoc relief at 3%of Freight on Board (FOB) to offset the
impact of high cost of utilities in selected sectors,
Establishment of Export Import Bank (EXIM Bank) to increase
exports and make them competitive with regional competitors
such as India and Bangladesh,
Promotion of service sector through institutional arrangements,
Promotion of regional trade especially trade with China, Iran and
Afghanistan,
Mobilization of new investment in export oriented industry with
establishment of Special Economic Zones.
9. TARIFF AND NON TARIFF
BARRIERS
TARIFF BARRIERS:
A tariff designed to make imports more expensive than
domestically produced products. That is, a tariff barrier is
a tax imposed upon imports to protect local industries and
companies.
NON TARIFF BARRIERS:
Any measure other than high import duties (tariffs)
employed to restrict imports.
Non-Tariff Barriers include all measures, other than
tariffs, that are used to protect domestic industry and
discourage imports.
10. REASONS FOR TARIFF:
To protect newly established domestic industries from
foreign competition.
To protect aging and inefficient domestic industries from
foreign competition.
To protect domestic producers from "dumping" by
foreign companies or governments.
To raise revenue.
11. LIST OF TARIFFS IN PAKISTAN
Following are the tariffs in Pakistan:
1 Import duty
2 Export duties
3 Regulatory duties
4 Additional customs duty
12. TYPES OF TARIFFS AND TRADE
BARRIERS
There are several types of tariffs and barriers that a government can employ:
Specific tariffs
A fixed fee levied upon one unit of an imported goods is referred to as specific
tariff.
Licenses
It is granted by the govt to the business to import certain type of product.
Import quotas
It is associated with the issuance of the licenses.
Voluntary export restraints
It is created by the exporting countries rather than importing countries.
Local content requirements
In this restriction can be percentage of goods or a percentage of the value of
the goods.
13. NON-TARIFF BARRIERS TO
TRADE CAN ARISE FROM:
Unreasonable/unjustified packaging, labeling, product
standards
Quota shares
Quality conditions imposed by the importing country on
the exporting countries
Product classification
Import bans
Import licenses
General or product-specific quotas
Complex/discriminatory Rules of Origin
Fixation of a minimum import price
15. BASIS OF IMPORTS
(1) Imports may be made against all
modes of payment subject to procedures
prescribed by the State Bank of Pakistan.
(2) Private sector importers may enter
into Commodity Exchange Arrangements
with suppliers abroad subject to the
procedure notified by the State Bank of
Pakistan
16. IMPORT OF GOODS
Import of all goods is allowed from
worldwide sources unless otherwise
elsewhere specified to be banned,
prohibited or restricted in this Order:
Provided that the amendments brought in
this Order from time to time shall not be
applicable to such imports where Bill of
Lading (B/L) or Letters of Credit (L/C)
were issued or established prior to the
issuance of amending Order.
17. IMPORT OF USED PLANT, MACHINERY AND
EQUIPMENT.
(1)
Plant, machinery and equipment in new or used or
refurbished condition is allowed for relocation of complete
projects in all industrial sectors except for industries
(2) Spare parts on the regular inventory list of projects being
relocated is also permissible for import, whether
new, old, used or secondhand
18. Gwadar special economic zone
Admission of goods into Gwadar Special Economic Zone from
abroad and from the tariff area shall be allowed in accordance
with the rules and procedures to be notified by the Federal
Government.
19. Basis of exports
Exports from Pakistan shall be made under the foreign
exchange rules, regulations and procedures notified by
the State Bank of Pakistan, from time to time, and upon
submission of such documents as may be prescribed.
20. Relaxation of prohibitions and
restrictions
(1) The Federal Government may, for reasons to be
recorded, allow export, export-cum-import or re-export
in relaxation of any prohibition or restriction under this
Order.
(2) The Federal Government may issue authorization for
export, export-cum-import orre-export in respect of any
item. The authorization so issued shall be on its letter
head, consecutively numbered and duly embossed which
shall be valid for a period of six months unless otherwise
specified.
21. Export-cum-import
Imported items may be exported for purposes of repairs,
replacement, or refilling of cylinders and ISO tanks subject
to submission of indemnity bond to customs authorities
undertaking that goods being exported shall be re-imported
after repairs, replacement, or refilling
22. Exports from Gawadar Special
Economic Zone
Export of goods from Gawadar Special Economic Zone
to foreign countries and to the tariff area shall be in
accordance with the rules and procedures to be notified
by the Federal Government.
25. PROCEDURE FOR EXPORTS
NTN
National Tax Number Certificate, which is issued by the
Income Tax Department on filing of application form
accompanied with one attested copy of NIC.
SALES TAX REGISTRATION
Commercial exporter is not required to register with Sales Tax
Department. But if you pay the sale tax on the goods from
local market it will be better for you to get yourself registered
with sales tax department so that you may claim your input
tax deducting on your purchases.
26. BANK ACCOUNT
Current Bank Account is required for export proceedings and
documents.
CHAMBER MEMBERSHIP
Membership certificate of Chamber of Commerce and Industries or
any relevant trade association is required.
27. DOCUMENTS FOR CLEARING AGENT
Once the consignment, to be exported arrives at the port, usually a
clearing agent services are sought. The following documents are
required to provide to clearing agent to clear the consignment.
Packing List.
Commercial Invoice.
Letter of Credit (L/C).
Certificate of Origin which is issued by Chamber of Commerce.
National Tax Number Certificate.
28. Form “E”
Form “E” (State bank form) All exports from Pakistan which are
subject to Foreign Exchange Regulations are required to be declared
on form „E‟ which is in sets of four copies each. The exporter should
submit the full set of Form „E‟ to the bank after it has been
completed and signed by the exporter himself or his authorized
agent.
SUBMISSION OF EXPORT DOCUMENTS TO BANK
All shipping documents covering goods exported from Pakistan and
declared on form “E,, must be passed through the medium of bank
within 14 days from the date of shipment.
29. IMPORTS OF PAKISTAN
Machinery
Petroleum
Chemicals
Vehicles & spare part
Edible oil
Wheat
Tea
Fertilizers
Plastics material
Paper board
Iron & steel
Pharmaceuticals product
30. PROCEDURE OF IMPORTS
NTN
National Tax Number Certificate, which is issued by the Income Tax
Department on filing of application form accompanied with one
attested copy of NIC.
Bank Account
Current Bank Account is required for import proceedings and
documents.
SALE TAX REGISTRATION
Sales tax registration is required to import into Pakistan. For
registration, Form ST-1is required to send to the local sales tax
registration office via post with acknowledgment due.
31. CHAMBER MEMBERSHIP
Membership certificate of Chamber of Commerce and Industries or
any relevant trade association of Pakistan.
SALES TAX ON IMPORT
Sales tax chargeable on import of Pakistan. Every importer is
required to pay sales tax on taxable goods at the rate of 16-18% at
the time of importation. "Taxable Goods" means all goods other
than those which have been exempted from Sales Tax.
33. INCENTIVES FOR EXPORTS
A - Credit Based Incentives
Short Term Financing
Long Term Financing
B - Credit Enhancement Incentives
Pakistan Export Finance Guarantee
34. Short Term Financing
Export Finance Scheme (EFS)
.
Short-term working capital facility for 180 days to
increase the exports
Scheme operates in two parts. Part-1 is the
transaction based while part 11 is performance
based
35. Transaction based facility
Coverage to the extent of 100%
of export order/LC/contract.
Facility is available at both Pre & Post shipment stages to direct
exporters (DE)- Available for 180 days
Facility available to Indirect exporters(IE) at Pre-shipment stage
only-: Available for 120 days
Performance required against every transaction
36. Performance Based
Facility is available to Direct Exporters only
Exporters are allowed a revolving cash credit limit
equivalent to 50% of their total value of goods exported in the
previous year.
Performance is determined on the basis of export of eligible
items made in previous year under both parts of EFS
The exporter can avail facility for the maximum period of 180
days.
37. Long Term Financing-Export
Oriented Projects.
Scheme for Long Term Financing for the Export Oriented
Projects (LTF-EOP)” would allow the eligible financial
institutions to provide funding facilities to the export oriented
units, who meet the financing criteria, on attractive terms and
conditions for import of machinery, plant, equipments and
accessories (not manufactured locally).
38. B - Credit Enhancement Incentives
Pakistan Export Finance Guarantee
The Pakistan Export Finance Guarantee agency, PEFG
has been established with a view to enhance the access
of the Small Medium and Emerging Exporters to bank
credit. The PEFG aims to provide a comprehensive range
of export trade finance guarantees, including both preshipment and post shipment, to exporters
39. EXPORT PROCESSING ZONE
IN PAKISTAN
The Export Processing Zones Authority (EPZA) was
established in 1980 by the Government with the mandate to
plan, develop, manage and operate export processing zones
in Pakistan. The Authority is an autonomous body and
functions under the Ministry of Industries, Production &
Special Initiatives and is administered by a Board of
Directors headed by a Chairman. The Authority has since
been pursuing an extensive industrial programme for setting
up EP Zones in the country
40. Karachi Export Processing Zones – Phase I is fully
developed while phase II is being developed on 100
acres of land
EPZ,s at Risalpur ,Sialkot and Gujranwala are being
developed under Joint Venture arrangements.
Some exclusive project are also converted into
EPZ are Saindak EPZ,Duddan (DEPZ),Reko Diq EPZ
and Tuwairqi EPZ
41. Incentives
Free movement of capital
No minimum or maximum limit for investment
Duty free imports of machinery, equipment and material
No sales tax on electricity and gas bills
Obsolete/old machinery can be sold in domestic market of
Pakistan after Payment of applicable duties and taxes.
Freedom from National import restrictions
Foreign Exchange control regulations of Pakistan not
applicable.
Production oriented labor laws to be solely regulated by the
authority.
Relief from double taxations subject to bilateral agreement
43. CHALLANGES
External Factors
•Economic downturn in our major markets
•Consumer confidence erosion in USA
•Economic slowdown
•Buyers’ perception of Pakistan as a supplier of
low quality products and inability to deliver in
bulk and in time
•Negative travel advisories
44. Internal Factor
Large Scale Manufacturing growth
declined
Long term structural issues
Rapid change in monetary policy
Competition in export market
High cost of finance
Law and Order
Energy Crisis (Electricity and Gas)
Lack of International Competitiveness
Investment declined
45. Opportunities
Favorable market access owing to bilateral 19 trade
agreements
Potential of doubling the value- addition of cotton of
which Pakistan is the 4th largest producer
Strong resource base in many sectors (food, building
stones, gems & jewelry, leather, rice, cement, light
engineering)
Growing Services Sectors
46. Export measure
Herbal Health supplements
Export of handicrafts
Export of Halal food Products
Automobile sector
Development of Export Clusters
Export Quality & Standard
47. CONT’D
Federal Export Promotion Board
Trade dispute settlement
Trade Development Authority of Pakistan (TDAP)
Management Efficiency
Northern Areas
Export facilitation
Trade Diplomacy
48. Import Strategy and
Measures
Import of mobile transit mixtures / Dumpers
Import of used buses
Used cryogenic containers
Secondhand / used cement bulkers
Import of Prime Movers
49. CONT’D
Import of Used Dump trucks
CFC based compressors
Import of Static Road Rollers
Imports from India
Import of CNG busses from India
