German Pakistan Chamber requests ban on German car imports to be lifted

LAHORE: President, German Pakistan Chamber of Commerce and Industry (GPCCI) , Syed Nadeem Ali Kazmi, in letters to the Minister of Finance, Miftah Ismail, and Minister of Commerce, Syed Naveed Qamar, has urged the government to rescind the ban on imported vehicles from Germany. 

Kazmi wrote to the Ministers stating that “The German Pakistan Chamber of Commerce & Industry urges the immediate removal of the import ban implemented on the automotive sector, since this ongoing crisis brought about by the import ban, such steps are forcing our German member automotive organizations to exit the Pakistan market with tar reaching adverse repercussions leading to over 30,000 cars (Audi, BMW, Mercedes-Benz) being unserviceable and a complete end to German innovative technology transfer in terms of knowledge and skill sets necessary for the maintenance of these vehicles.” 

“You are requested to kindly initiate steps to lift the ban immediately and since, we realize that the administrative steps will take a few days to implement your directives. we must insist on a firm date on which the ban on German automotive imports will be lifted so that we may advise our member accordingly” said Kazmi, terming the import ban as an ‘existential crisis’ for the three German automotive companies 

Kazmi also highlighted the possible ramifications the ban may have on Pakistan’s GSP+ status saying “Germany has been an ardent supporter in the past of Pakistan in the EU for its GSP + status application. GPCCI is concerned that the counter-productive step of German automotive import ban can adversely affect the motivation of Germany who are essential to promote the new GSP+ application in the European Parliament” 

It is pertinent to note that, as Kazmi points out, Pakistan must resubmit its application for the GSP+ Scheme as the current one will expire 2023. Friedrich Naumann Foundation for Freedom Pakistan and Policy Research Institute of Market Economy (PRIME) have already jointly published a paper highlighting how in the absence of GSP+, Pakistan would be subject to 12% tariffs.   

Kazmi also cited the historical and economical ties between Pakistan and Germany to substantiate his argument stating that “Germany and Pakistan have enjoyed close and diverse relations since I95I. Just last year marked the 70th anniversary of the establishment of diplomatic relations” and that “More than 40 German companies have established their presence in the Pakistani market. Some of the well-known German companies based in Pakistan including Audi, BMW, Mercedes-Benz, Siemens, BASF' Bayer' DHL, Metro Cash and Carry, KSB Pumps and SAP' to name a few.”

The import ban was implemented on 19th May 2022. The Government has cited the ban as a necessary measure that has saved the country from defaulting. The ban has since its inception been tapered off. However, imported automobiles have yet to receive any respite.   

Kazmi questioned the efficacy of the import ban citing how German automobile imports only amounted to €100 million which is unlikely to put a dent in Pakistan’s balance of payment deficit. It is worth noting that Pakistan’s overall import of completely-built-up (CBU) vehicles only amounted to $600 million over FY 2021/22, 0.75% of Pakistan’s total imports for the period.