MoC, NTC finalise National Trade Policy

ISLAMABAD: Ministry of Commerce (MoC) and the National Tariff Commission (NTC) has finalised the much waited National Tariff Policy. Commerce Division and NTC have drafted the National Tariff Policy to make exports more competitive and facilitate the participation of local manufacturers, including SMEs, in global and regional value chains.

According to official sources, this policy will be an integral part of the upcoming Strategic Trade Policy Framework (STPF) 2018-23. The objective of the draft policy is to simplify and rationalize the existing tariff structure for enhancing the efficiency of existing domestic activities, especially in the manufacturing sector and simultaneously, to ensure predictability and transparency.

Commerce Division is formulating the STPF 2018-23 which will provide strategic direction for the export sector for the next 5 years. Tariffs, being one of the instruments of trade policy, play an important role in enhancing export competitiveness and productivity of the domestic industries. Although Pakistan has liberalised its tariff regime since 2005, the tariff structure remains complex and needs to be simplified.

The draft National Tariff Policy recommends to gradually reduce the duty on raw materials and machinery for export-oriented industries. The tariff slabs are proposed to be re-fixed at 5 per cent, 10 per cent, 15 per cent and 20 per cent; the cascading of tariffs with progressive stages of manufacturing is proposed to be retained to promote value addition.

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It proposes to gradually bring the tariff lines, currently at the 3 per cent slab, into the fifth schedule by reducing their duty to zero, however, the reforms may be introduced in phases to provide the domestic industry the time for adjustment.

The draft policy also aims to simplify the tariff structure and reduce distortions. The policy proposes to merge the additional duty of 1 per cent under SRO 1178(I)/2015 into customs duties and the respective tariff lines.

The policy also suggests the elimination of difference in the rates of tariff for the commercial importers and the industrial users of raw materials, intermediate goods and machinery to reduce the cost of production for SMEs. Furthermore, to make the protection regime predictable and facilitate the investment decisions, the draft policy also proposes to provide time-bound protection to the nascent industries. The National Tariff Policy recommendations will be implemented in a period of five years starting from the announcement of the budget 2018-19.

The draft policy has been uploaded on the website of the MoC and sent to all the chambers and trade associations in the country for their feedback by April 27, 2018. A consultative seminar is also being organised with the stakeholders on April 26, 2018, at a local hotel in Rawalpindi. The final draft of the policy will be submitted to the ECC of the Cabinet after stakeholders’ consultations.

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