Japan threatens WTO action over Pakistan’s auto export policy

Car manufacturers cite high tariffs, lack of FTAs, and a small market for right-hand drive vehicles as reasons for their export challenges

The Japanese government has issued a warning to Pakistan, indicating a potential move to the World Trade Organisation (WTO) over the mandated export of vehicles by its car manufacturers in Pakistan.

This development follows Pakistan’s directive to its three major Japanese car assemblers—Indus Motor Company (Toyota), Honda Atlas Cars Pvt. Ltd, and Pak Suzuki Motors Limited—to increase their export activities, a demand seen by Japan as a violation of WTO regulations.

The controversy centers around the Auto Industry Development and Export Policy (AIDEP) 2021-26, which enforces a gradual increase in export obligations for automobile manufacturers in Pakistan, setting targets that reach 10% of their total imports by 2025-26.

This policy, alongside Pakistan’s adherence to the United Nations Economic Commission for Europe (UNECE) WP-29 vehicle regulations, aims to boost the local automotive industry’s export capacity.

However, the Special Investment Facilitation Council (SIFC) observed a lack of export initiatives by these Japanese firms, leading to a temporary suspension of their import quotas.

The Pakistani government has requested revised export plans from these companies to align with the AIDEP objectives.

Japan has formally expressed its concerns through multiple channels, including Pakistan’s WTO and Tokyo missions and its Commerce and Industries ministries, arguing that the forced export policy infringes on WTO agreements.

Pakistan maintains that its actions are in compliance with WTO rules.

The issue is set for bilateral discussions between the two governments, with the possibility of escalation to the WTO if a mutual agreement is not reached.

The WTO dispute resolution process may be invoked if Japan remains dissatisfied with Pakistan’s justifications, potentially leading to formal proceedings.

The car manufacturers argue their non-competitiveness in exports is due to additional tariffs, the lack of free trade agreements (FTAs) for automotive parts, and the limited market for right-hand drive vehicles.

They advocate for zero-rated FTAs and local industry development to enhance export competitiveness.

Currently, the auto sector in Pakistan faces 25 legal cases, predominantly involving new market entrants, highlighting the sector’s broader regulatory and operational challenges.

The Japanese Ambassador to Pakistan has engaged with Pakistani officials to discuss these export and quota issues, underscoring the diplomatic and trade tensions between the two nations.


  1. Japanese auto manufacturers should pack up and leave pakistan for good long they have had monopoly and have been selling shitty standard vehicles at extortionate prices

  2. This dispute will be seen under WTO Agreement on Trade Related Investment Measures ( TRIMS). Under this agreement, one of the five prohibited TRIMS is the govt mandatory requirement on investors to export certain fixed amount r percentage of goods.

  3. I think we should blame our regulators and monitoring departments who compromised on quality. we all can guess why did they compromise!!

  4. Govt of Japan will go all out to protect the interest of its car manufacturers. In future before giving permission to any manufacturers all aspects must be considered. Now it is the time counter Japan threat by some other measures.

  5. government should be demanding these automobile companies to start manufacturing the entire vehicle locally and avoid any imported parts. this would be a start and than going forward work towards export policy.

  6. replace all Japanese brands with Chinese. our best friend in all time. we must explore multiple exportable items
    and export market.

  7. Jaanese car manufacturers are selling substandard shit cars and black marketing cars in collaboration with deslers . Three companies should be kicked out of pakistan asap toyota , honda and suzuki

  8. Pakistani car makers should invest in car engines and transmission technology and make it in Pakistan rather than buying it in kit shape from Japan that drains our $ reserves . If Japanese car makers are reluctant in this regard than we should design and make our own cars we certainly have the know how but our car makers lack will to invest their money . Government should layout a policy to switch to local manufactured products within 3 to 5 years time .

  9. japanese monopoly must end. japanese should be kicked out along with there shit cars. that is the time to kick them out. they are the main reasons for mass killing (accidents). ban japanese cars.

  10. Pakistan should make best polocies as per its national interest and implement, obiviously as per intertional rules and cooperations.

  11. True, we should be self sufficient and make our own car, similar to other Asian country. Consider it an opportunity and go ahead. We have enough talent!!!

  12. Huge customs duties and other taxes plus FOREIGN EXCHANGE RESTRICTIONS.



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