ISLAMABAD: Commerce Division is formulating the Strategic Trade Policy Framework (STPF) 2018-23 which will provide strategic direction for the export sector for the next five years.
Tariffs play an important role in enhancing export competitiveness and productivity of the domestic industries. Although Pakistan has liberalized its tariff regime since 2005, the tariff structure remains complex and needs to be simplified.
Commerce Division and National Tariff Commission (NTC) have drafted National Tariff Policy to make exports more competitive and facilitate participation of local manufacturers, including SMEs in global and regional value chains.
This policy will be an integral part of the upcoming 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 manufacturing sector and simultaneously, to ensure predictability and transparency.
The draft National Tariff Policy recommends to gradually reduce duty on raw materials and machinery for export-oriented industries. The tariff slabs are proposed to be re-fixed at 5%, 10%, 15% and 20%. The cascading of tariffs with progressive stages of manufacturing is proposed to be retained to promote value addition.
It proposes to gradually bring the tariff lines, currently at the 3% 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% 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, 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 Budget 2018-19.