ISLAMABAD: Ministry of Commerce (MoC) through national level consultations has identified agriculture, auto, textile and pharmaceutical as vulnerable sectors in case of any threat to local industry due to import surges from India.
It has been decided most of the concerns would be addressed including these industries’ products in the sensitive list, which would provide protection through the prevailing rate of Customs duty.
In fact in cases of urgency the government and National Tariff Commission (NTC) can take suo-moto action and impose safeguard duties immediately if needed.
After the signing of Non-Discriminatory Market Access (NDMA) agreement by both the countries, Pakistan’s exports to India are expected to increase in approximately 3 years from $325 million to around $1.3 billion wherein textiles, manufactured items and agricultural products are expected to post potential export increase.
According to the official details, the Commerce Ministers of Pakistan and India held a meeting on January 18, 2014 in New Delhi. During the meeting, the two sides, inter-alia reached an understanding to normalise trade relations and provide NDMA on reciprocal basis, instead of granting Most Favourite Nation (MFN) status by Pakistan to India. The proposal is reflected in the joint statement issued thereafter.
Renowned independent research institutions, think tanks, economists and trade experts as well as one by MoC and Trade Development Authority of Pakistan have conducted various studies on Pakistan-India trade normalisation.
A recent study carried out by Beaconhouse National University With 2010-11 as base year estimated there would be import bill savings up to $727 million per annum, GDP of Pakistan would improve by 1.5 percent, net increase in employment has been estimated at 169,000 employment opportunities, with the provision of jobs in industrial sector the number of poor will decrease by 1 million and consumer welfare gains to be around Rs 70 billion per annum.
India has 614 items in its South Asian Free Trade Area (SAFTA) sensitive list vis-à-vis Pakistan, which means these items are presently not scheduled for tariff reduction under the SAFTA regime. Incidentally, the said list contains most of Pakistan’s export interest items like textiles, manufactured items, agriculture products, footwear, chemicals, marble and stones etc.
The MoC has been in consultation with domestic stakeholders both from public and private sectors through various mechanisms and fora. In February and March 2014, intensive consultation sessions were held with four major sectors that feel vulnerable i.e agriculture, auto, textile and pharmaceutical on improving mechanisms to protect the local industry in case of any threat to local industry due to import surges from India.
Most of the concerns would be addressed in the sensitive list, which will provide protection through the prevailing rate of Customs duty. Import of finished medicines is regulated through the Drugs Regulatory Authority of Pakistan, which will continue to exercise authority over which medicines are permitted for import. Further protection, if needed will be possible through Sanitary and Phytosanitary (SPS) measures. In case any of Pakistan’s domestic producers face a threat of serious damage due to a surge in imports or due to any unfair trade practices by India, Trade Defense Laws (i.e the Anti-dumping, Countervailing Duties and Safeguards Ordinances) will be invoked. In fact in cases of urgency the government and NTC can take suo-moto action and impose safeguard duties immediately if needed. Steps are also underway to strengthen the capacity of the NTC to operate these laws more effectively.
Pakistan and India have signed three agreements-Agreement of Cooperation and Mutual Assistance in Customs Matters, Bilateral cooperation Agreement on Mutual recognition between Pakistan Standard and Quality Control Authority and BIS and Agreement on Redressal of Trade grievances.
All these agreements have in built provisions mechanisms for dispute resolutions, besides addressing issues related to Non-Tariff barriers. Two countries would also establish a mechanism at the ministry level for such incidents. Moreover, Article 20 of SAFTA Agreement provides detailed mechanism of dispute resolution by the Committee of Experts.
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