pakistans import management strategy

7/30/2019 Pakistans Import Management Strategy

1/23

2008

WTO CELL

TRADE DEVELOPMENT

AUTHORITY OF

PAKISTAN

9/8/2008

Pakistans ImportManagementStrategy


2/23

2 | P a k i s t a n s I m p o r t M a n a g e m e n t S t r a t e g y

1. INTRODUCTION

Pakistan has been experiencing severe macroeconomic problems since thelast one year. Two biggest economic problems faced by the new government

are inflation and the trade deficit. This report focuses on the later and

suggests a strategy for reducing the deficit through import management.

Trade deficit, defined as exports minus imports, started increasing in 2003-

04. The deficit figure increased from $1060.1 in 2002-03 to $3278.5 in 2003-

04, showing a rise of 209 percent. The average growth in trade deficit since

2003 is colossal 92%. Table 1 shows that the trade deficit has reached 20.75

billion US dollars in 2007-08, which is even higher than the total exports of

Pakistan.

Table 1: Pakistan's Trade* (in US $)

Year Exports Imports BalanceFY 03 11160.2 12,220.3 -1060.1FY 04 12313.3 15,591.8 -3278.5FY 05 14,391.0 20,598.0 -6207FY 06 16,451.0 28,581.0 -12130FY 07 16,976.0 30,540.0 -13564

FY 08 19,220.0 39,968.5 -20748.5* Excluding Re-Exports & Re-Imports

Source: Federal Bureau of Statistics, Govt. of Pakistan.

Chart 1, below, shows that the trade deficit has increased by around 7.2

billion dollars in 2007-08, which is the highest ever increase in one year. This

is not because of lower exports but due to the unprecedented rise in imports.

Pakistan achieved its export target of $19.2 bn in 2007-08, with a growth of

13.22 percent. However, the sharp surge (31%) in imports took the deficit to

all time high. The upward sloping steep part of the curve in the front page

diagram depicts the severity of the situation. The decade-wise trend line

shown as a dotted line shows the long-term rising tendency of the trade

deficit.

TRADE DEVELOPMENT AUTHORITY OF PAKISTAN


3/23


If this growth in trade deficit is not controlled at this stage it can make the

economy more vulnerable. Government of Pakistan, realizing this problem,

constituted a high-level committee to examine different proposals to deal

with the issue. The committee comprises of secretaries from Ministries of

Finance, Commerce, Industries & Production, Agriculture Food & Livestock,

and the Chief Executive of Trade Development Authority of Pakistan (TDAP).

This report, prepared by the WTO Cell of TDAP, is to be presented to the

Chief Executive, TDAP.



4/23


2. THE IMPORT PICTURE

The external trade data for the years 2006-07 and 2007-08, released byFederal Bureau of Statistics, is reproduced in Table 2 with some

modifications.

Analysis of the data reveals that out of the total $ 9.4bn rise in imports, $

7.45bn i.e. almost 80 percent was contributed by few commodities that are

shown in red in the table. The import values of these commodities, namely

wheat, spices, soybean oil, palm oil, power generating machinery, CBUs &

CKDs of motor cycles, CKD/SKDs of buses, trucks and other heavy vehicles,

crude petroleum, petroleum products, raw cotton, worn clothing, fertilizer

and iron and steel scrap, have increased more than 20 percent in 2007-08over 2006-07. Highest growth was recorded in wheat (1269%), CBUs of

motorcycles (165%), soyabean oil (154.5%), fertilizer (98%), palm oil (76%),

petroleum products (65%), iron & steel scrap (63%), power generating

machinery (59.5%), spices (58%), crude petroleum (45%), and CKD/SKDs of

motorcycles (40%).

Table 2: IMORTS OF SELECTED COMMODITIES

COMMODITIES* July- June,2007-2008

July- June,2006-2007

%Change

(000) $ %

Total Imports 39,968,496 30539709 30.87A. FOOD GROUP 4,209,742 2,742,275 53.51 1. MILK,CREAM & MILK FOOD FOR INFANTS 74,344 84223 -11.73 2. WHEAT UNMILLED 860,001 41559 1,969.35 3. DRY FRUITS & NUTS 79,452 68185 16.52 4. TEA 202,099 213812 -5.48 5. SPICES 85,270 54021 57.85 6. SOYABEAN OIL 103,488 40666 154.48 7. PALM OIL 1,614,390 915779 76.29

8. SUGAR 14,750 260334 -94.33 9. PULSES (LEGUMINOUS VEGETABLES) 200,755 244773 -17.98 10. ALL OTHERS FOOD ITEMS 975,193 818923 19.08

B. MACHINERY GROUP7,376,38

36,686,34

6 10.32 11. POWER GENERATING MACHINERY 1,178,246 738511 59.54 12. OFFICE MACHINE INCL.DATA PROC EQUIP; 300,391 317313 -5.33 13. TEXTILE MACHINERY 438,270 502898 -12.85 14. CONSTRUCTION & MINING MACHINERY 260,452 222201 17.21 15. ELECTRICAL MACHINERY & APPARATUS 767,565 656631 16.89



5/23


16. TELE COM2,241,419 2,206,069 1.60

A. MOBILE PHONE 744,525 833555 -10.68 B. OTHER APPARATUS 1,496,894 1372514 9.06 17. AGRICULTURAL MACHINERY & IMPLEMENTS 136,661 168392 -18.84 18. OTHER MACHINERY 2,053,379 1874331 9.55

C. TRANSPORT GROUP

2,251,11

6

2,395,85

5 -6.04

19. ROAD MOTOR VEH. (BUILD UNIT,CKD/SKD)1,344,760 1,414,033 -4.90

19.1 CBU453,375 451,529 0.41

A.BUSES,TRUCKS & OTH. HEAVY VEHICLES 209,653 208555 0.53 B.MOTOR CARS 238,539 241017 -1.03 C.MOTOR CYCLES 5,183 1957 164.84 19.2 CKD/SKD 543751 577695 -5.88 A.BUSES,TRUCKS & OTH. HEAVY VEHICLES 135,177 107319 25.96 B.MOTOR CARS 346,036 425760 -18.73 C.MOTOR CYCLES 62,538 44616 40.17 19.3 PARTS & ACCESSORIES 299,118 342096 -12.56 19.4 OTHERS 48,516 42713 13.59

20.AIRCRAFTS, SHIPS AND BOATS 880,949 944662 -6.74 21.OTHERS TRANSPORT EQUIPMENTS 25,407 37160 -31.63

D. PETROLEUM GROUP 11,380,048 7,335,177 55.14 22. PETROLEUM PRODUCTS 6,158,023 3,734,335 64.90 23. PETROLEUM CRUDE 5,222,025 3,600,842 45.02

E. TEXTILE GROUP 2,348,808 1,566,329 49.96 24. RAW COTTON 1,291,809 646,568 99.79 25. SYNTHETIC FIBRE 286,537 235,066 21.90 26. SYNTHETIC & ARTIFICIAL SILK YARN 295,397 250,121 18.10 27. WORN CLOTHING 68,243 55,540 22.87 28. OTHR TEXTILE ITEMS 406,822 379,034 7.33

F. AGRICULTURAL AND OTHER CHEMICALS GROUP 5,828,912 4,429,516 31.59

29. FERTILIZER MANUFACTURED 890,068 450,413 97.61 30. INSECTICIDES 101,270 96,552 4.89 31. PLASTIC MATERIALS 1,308,995 1,152,627 13.57 32. MEDICINAL PRODUCTS 539,606 429,973 25.50 33. OTHERS 2,988,973 2,299,951 29.96

G. METAL GROUP 2,542,409 2,346,147 8.37 34. GOLD 24,696 223,666 -88.96 25. IRON AND STEEL SCRAP 623,832 381,929 63.34 36. IRON AND STEEL 1,343,715 1,191,198 12.80 37. ALUMINIUM WROUGHT & WORKED 146,433 183,282 -20.11 38. ALL OTHER METALS & ARTICALS 403,733 366,072 10.29

H. MISCELLANEOUS GROUP 738,115 661,258 11.62 39. RUBBER CRUDE INCL. SYNTH/RECLAIMED 140,687 114,759 22.59 40. RUBBER TYRES & TUBES 154,365 151,310 2.02 41. WOOD & CORK 51,015 46,159 10.52 42. JUTE 47,278 48,822 -3.16 43. PAPER & PAPER BOARD & MANUF.THEREOF 344,770 300,208 14.84

ALL OTHERS ITEMS 3,292,963 2,376,806 38.55(*) Provisional



6/23


Group-wise Summary of Imports

CommoditiesValue inthousand $

Growth Share

G R A N D T O T A L 39,968,496 30.87 100A FOOD GROUP 4,209,742 53.51 10.53B MACHINERY GROUP 7,376,383 10.32 18.46C TRANSPORT GROUP 2,251,116 -6.04 5.63D PETROLEUM GROUP 11,380,048 55.14 28.47E TEXTILE GROUP 2,348,808 49.96 5.88F AGRICULTURAL AND OTHER CHEMICALS GROUP 5,828,912 31.59 14.58G METAL GROUP 2,542,409 8.37 6.36H MISCELLANEOUS GROUP 738,115 11.62 1.85I ALL OTHERS ITEMS 3,292,963 38.55 8.24

Above table is showing increasing trend of imports of all group of

commodities. The highest import growth is recorded in Petroleum, Food andTextile group, which was around 50%. On the other hand a 6% decline was

recorded in Transport Group. Overall imports increased by 31% in 2007-08 in

terms of value calculated in US$, while in terms of Pak rupees this growth

rate was 36%.

Petroleum Group constituted the largest share in our import bill which was

28.5%, while Machinery Group and Agriculture & Other Chemical Group, was

second and third highest groups, with 18.5% and 14.6% share, respectively.

Below is more detailed analysis of each of the import groups:

Commodities

2007-08 2006-07 Growth

Unit MT Value

Rs. Mn

Value

000 $

Unit MT Value

Rs. Mn

Value

000 $

Unit

MT

Value

Rs. Mn

Value

000 $

FOOD GROUP -264,29

34,209,74

2166,24

12,742,27

5 - 58.98 53.51Milk, Cream & MilkFood For Infants 29,107 4,640 74,344 39,586 5,108 84,223 -26.47 -9.16 -11.73

Wheat Unmilled1,823,41

5 54,091 860,001 135,960 2,518 41,5591,241.1

42,048.1

7 1,969.35Dry Fruits & Nuts 116,369 4,962 79,452 115,051 4,136 68,185 1.15 19.97 16.52

Tea 102,261 12,659 202,099 112,136 12,965 213,812 -8.81 -2.36 -5.48Spices 132,909 5,393 85,270 86,198 3,275 54,021 54.19 64.67 57.85Soyabean Oil 108,382 6,455 103,488 48,492 2,468 40,666 123.50 161.55 154.48

Palm Oil1,766,47

1101,82

21,614,39

01,710,437 55,529 915,779 3.28 83.37 76.29

Sugar 36,605 912 14,750 586,543 15,722 260,334 -93.76 -94.20 -94.33Pulses(LeguminousVegetables) 333,899 12,635 200,755 520,922 14,839 244,773 -35.90 -14.85 -17.98



7/23


All Others FoodItems - 60,724 975,193 49,681 818,923 - 22.23 19.08

The above table shows that Palm Oil has the biggest share of 35.38% in

overall Food Group imports. Value of its imports was increased by 76.3%

however, quantity increased by 3.3% only. This shows that this increase in

import bill is because of the price factor, which has grown rapidly in

international markets over the last fiscal year. Almost entire import of this

item comes from Malaysia and is included in Pak-Malaysia FTA. Pakistan has

allowed its import under Tariff Rate Quota regime with specific duty. So, it is

not advisable to take any preventive fiscal measures to reduce its imports.

This is an essential food item; therefore any tariff hike would further increase

inflation, since being an essential food ingredient, it is a very price inelastic

good.

As regards, edible oil (Palm Oil plus Soya bean Oil), the jump in import value

occurred essentially through continued rise in world prices of edible oils, like

palm oil, soya bean oil, canola and rapeseed oil. Malaysia (largest producer

of palm oil), USA (largest producer of soya bean oil), Canada (largest

producer of canola oil), and Europe (largest producer of rapeseed oil), all

engaged in biodiesel production in a big way, diverting their largest

commodity away from edible oil market. This supply constraint, in addition to

other reasons like ballooning fuel prices, resulted in high import prices for

Pakistan for palm oil and soya bean oil, while the quantities imported did not

change significantly. It is forecast by commodity analysts that prices ofoilseeds would not increase this year, and are in fact likely to fall. This should

then be reflected in lower world edible oil prices, and thus lower import for

Pakistan. Simultaneously there is an urgent need for MINFAL to mobilize its

Oil Seed Corporation to launch some kind of OIL SEED UGAO campaign

nationwide.

The second biggest import item, in Food Group, is wheat, whose import bill

increased by a whopping 1970% in the just-ending fiscal year. This very

large import of wheat last year was an extraordinary circumstance, when

due to mistaken forecast of surplus production, wheat was allowed to beexported. Later when the mistake was realized, it was too late, and a large

quantity had to be imported at high price, as the world wheat prices had

gone very high by then. In the current year, the government should be very

careful, and closely watch the local production, and distribution, to

discourage speculation, and hoarding. Moreover, an export ban, along with



8/23


tight border control to thwart smuggling, would assure that high import of

wheat is not required this year.

Commodities

2007-08 2006-07 Growth

Value

Rs. Mn

Value

000 $

Value

Rs. Mn

Value

000 $

Value

Rs. Mn

Value

000 $

MACHINERY GROUP

463,43

4

7,376,38

3

405,48

3

6,686,34

6 - 14.29 10.32

Power Generating Machinery 74,651

1,178,24

6 44,787 738,511 - 66.68 59.54

Office Machine Incl.Data ProcEquip; 18,799 300,391 19,237 317,313 - -2.28 -5.33Textile Machinery 27,453 438,270 30,482 502,898 - -9.94 -12.85Construction & Mining

Machinery 16,421 260,452 13,475 222,201 - 21.86 17.21Electrical Machinery &

Apparatus 48,214 767,565 39,824 656,631 - 21.07 16.89

Tele Com

140,17

2

2,241,41

9

133,78

4

2,206,06

9 - 4.77 1.60A. Mobile Phone 46,486 744,525 50,543 833,555 - -8.03 -10.68

B. Other Apparatus 93,686

1,496,89

4 83,241

1,372,51

4 - 12.55 9.06Agricultural Machinery &

Implements 8,535 136,661 10,218 168,392 - -16.47 -18.84

Other Machinery129,18

92,053,37

9113,676

1,874,331 - 13.65 9.55

Among machinery group Telecom apparatus has the greater share of 20.3%.

Power generating Machinery had 16% share in all machinery group import

bill. Other important item seems Mobile phone whose import has declined by

11%. Machinery Group consists of capital goods which are required for

production and are thus essential for the growth of the manufacturing sector.

Electric generators comprise a large proportion of Power Generating

Machinery. Import of generators has increased substantially during the last

2/3 years, because of insufficient power availability in the country. Before

2006-07 Generator having capacity below 20 kVA (for residential or shop

use), was not imported in great quantity. Usually capacity of 75 kVA or above

was imported for commercial/industrial purpose. Now due to acute shortage

of electricity in the country, small generator for household purpose is also



9/23


imported in large quantity. If electricity is available as per domestic

demands, the import of generators is likely to go down significantly.

Commodities

2007-08 2006-07 Growth

Unit MT Value

Rs. Mn

Value

000 $

Unit MT Value

Rs. Mn

Value

000 $

Unit

MT

Value

Rs. Mn

Value

000 $

TRANSPORT GROUP140,32

12,251,116

145,358

2,395,855 - -3.47 -6.04

19. ROAD MOTOR VEH.

(BUILD UNIT,CKD/SKD) 84,344

1,344,76

0 85,735

1,414,03

3 - -1.62 -4.9019.1 CBU 28,403 453,375 27,373 451,529 - 3.76 0.41

A.Buses,Trucks & Oth.

Heavy Vehicles 13,187 209,653 12,646 208,555 - 4.28 0.53B. Motor Cars 14,889 238,539 14,609 241,017 - 1.92 -1.03C. Motor Cycles 327 5,183 118 1,957 - 177.12 164.84

19.2 CKD/SKD 34256 543,751 35,022 577,695 - -2.19 -5.88A.Buses,Trucks & Oth.

Heavy Vehicles 8,556 135,177 6,507 107,319 - 31.49 25.96B. Motor Cars 21,798 346,036 25,809 425,760 - -15.54 -18.73C. Motor Cycles 3,902 62,538 2,706 44,616 - 44.20 40.17

19.3 PARTS & ACCESSOR 18,598 299,118 20,748 342,096 - -10.36 -12.5620.AIRCRAFTS, SHIPS AND

BOATS 3,087 48,516 2,592 42,713 - 19.10 13.5921.OTHERS TRANSPORT

EQUIPMENTS 54,422 880,949 57,371 944,662 - -5.14 -6.74

Motor Cars in CBU form, is a large chunk of consumer goods imports in the

Group, which could be a good candidate for tariff hike. Being a an elastic

good, it is likely that with tariff increase on motor cars in CBU form

(H.S.Code------), the import value of around $250 million, in each of the lasttwo fiscal years, would shrink. Though the target of import reduction would

be met by this step, it is important to think through the likely chain of events

in the domestic market. As the price of imported cars goes up (due to

suggested tariff increase), the domestic car assemblers would get additional

tariff protection, which they are most likely to exploit by increasing the

prices of domestically produced cars.



10/23


11/23


Commodities

2007-08 2006-07 Growth

Unit MT Value

Rs. Mn

Value

000 $

Unit MT Value

Rs. Mn

Value

000 $

Unit

MT

Value

Rs. Mn

Value

000 $

TEXTILE

GROUP -

146,93

0

2,348,80

8

94,998

1,566,32

9 - 54.67 49.96

Raw Cotton 898,819 80,7131,291,80

9 461,106 39,234 646,568 94.93 105.72 99.79Synthetic Fibre 139,733 17,950 286,537 131,553 14,249 235,066 6.22 25.97 21.90Synthetic &

Artificial Silk Yarn 127,243 18,518 295,397 118,089 15,164 250,121 7.75 22.12 18.10Worn Clothing 176,766 4,287 68,243 156,681 3,367 55,540 12.82 27.32 22.87Othr Textile

Items - 25,462 406,822 22,984 379,034 - 10.78 7.33

Textile Group: The increase in imports of this group is basically the

increase in import of Raw Cotton, which has shown a big increasing trend for

the last few years, jumping the most (nearly 100%) in the year 2007-08. Thisagain is an area in which MINFAL can give an input as to why the local cotton

crop is unable to provide enough raw materials to the upstream industry.

Despite rising world prices for cotton, the government needs to study what is

holding back the increase in local Raw Cotton production.

Commodities

2007-08 2006-07 Growth

Unit MT Value

Rs. Mn

Value

000 $

Unit MT Value

Rs. Mn

Value

000 $

Unit

MT

Value

Rs. Mn

Value

000 $

Agricultural And

Other Chemicals

Group -

365,44

3

5,828,91

2

268,60

7

4,429,51

6 - 36.05 31.59

Fertilizer

Manufactured

2,029,32

0 55,156 890,068

1,478,94

7 27,306 450,413 37.21 101.99 97.61Insecticides 27,714 6,353 101,270 29,089 5,848 96,552 -4.73 8.64 4.89

Plastic Materials 822,967 82,069

1,308,99

5 815,794 69,897

1,152,62

7 0.88 17.41 13.57Medicinal Products 15,775 33,889 539,606 12,304 26,080 429,973 28.21 29.94 25.50

Others -

187,97

6

2,988,97

3

139,47

6

2,299,95

1 - 34.77 29.96

Agriculture & Other Chemical Groups: The biggest increase in this

group has been in Fertilizer Manufactured, and Plastic Material, both of which

are agricultural input and industrial input respectively. While the quantitieshave increased with the value for fertilizer, plastic material has witnessed

price increases, reflecting rising world crude oil prices. Additional tariff on

these items would not be advised, as these are inputs to the national

agriculture and national industry, respectively.



12/23


Commodities

2007-08 2006-07 Growth

Unit MT Value

Rs. Mn

Value

000 $

Unit MT Value

Rs. Mn

Value

000 $

Unit

MT

Value

Rs. Mn

Value

000 $

METAL GROUP -

159,58

6

2,542,40

9

142,27

9

2,346,14

7 - 12.16 8.37Gold 1,052 1,542 24,696 24,369 13,565 223,666 -95.68 -88.63 -88.96

Iron And SteelScrap

2,097,737 38,949 623,832

1,492,703 23,163 381,929 40.53 68.15 63.34

Iron And Steel

2,131,65

5 84,600

1,343,71

5

2,086,70

9 72,241

1,191,19

8 2.15 17.11 12.80Aluminium

Wrought & Worked - 9,171 146,433 11,113 183,282 - -17.48 -20.11All Other Metals &

Articals - 25,324 403,733 22,197 366,072 - 14.09 10.29

MetalGroup: Import of this group increased by 8.4% which is very much

normal. However, import of gold has been decreased by 96%. Import of Iron

& Steel Scrap is increased by 63.3%. This increase was because of relativelylarger import of ships for breaking. This was also confirmed by Ship Breakers

Association. They have also pointed out that its import is expected to decline

in the coming financial year due to SBP restriction of 35% cash margin on

L/C. International world price of steel is going up rapidly, therefore import of

steel scrap should be encouraged, failing which import of steel would add to

our import bill in the coming financial year.

Commodities

2007-08 2006-07 Growth

Unit MT Value

Rs. Mn

Value

000 $

Unit MT Value

Rs. Mn

Value

000 $

Unit

MT

Value

Rs. Mn

Value

000 $

MISCELLANEOUSGROUP - 46,246 738,115 40,096 661,258 - 15.34 11.62Rubber Crude Incl.

Synth/ Reclaimed 84,403 8,819 140,687 81,959 6,958 114,759 2.98 26.75 22.59

Rubber Tyres & Tubes

7,945,11

7 9,640 154,365

8,905,46

8 9,174 151,310 -10.78 5.08 2.02Wood & Cork - 3,188 51,015 2,799 46,159 - 13.90 10.52Jute 128,857 2,966 47,278 126,436 2,963 48,822 1.91 0.10 -3.16Paper & Paper Board &

Manuf. thereof 431,005 21,633 344,770 418,394 18,202 300,208 3.01 18.85 14.84

Miscellaneous Group: All items under this category are Raw materials and

are of essential nature. These items are used by our domestic industries fordomestic consumption as well as for exports. Therefore any measure to

decrease its import is not advisable.



13/23


3. COMMENTS & CONSIDERATIONS

Commodities are the way to go: Countries in the Developing Worldhave always been grumbling about the unjust terms of trade. Whether

in the 1960s or the 1980s, the refrain in the international trade forumshas been that most developing countries are producers of commodities(whose prices are stagnant), while the Developed countries produceindustrial goods (whose prices are buoyant). This results in unequalterms of trade between the two groups, thus trapping the DevelopingCountries in perpetual poverty. Now in a long, long time, there hasarrived an opportunity for the hewers of wood and drawers of water.Thanks to the liberalization of international trade, great wealth hasbeen generated globally. Tremendous growth rates achieved bycountries like China and India, have resulted in unprecedented demandfor commodities, resulting in historically high prices. Our trade deficit islargely due to dollars expended on commodities, especially cotton,wheat, sugar, etc which Pakistan has a great potential to boostproduction of, given the large population engaged in agriculture.Similarly, import bill for petroleum can be significantly reduced, bydeveloping biofuels like ethanol and biodiesel, both requiring anagricultural production base which potentially Pakistan does possess.We should be celebrating and gearing up to take advantage of therising commodity prices instead of mourning over them.

Falling Exchange Rate is an implicit tariff on imports: We are

living in an era of liberal trade regime. Using a floating exchange ratein a market economy, trade balance is the most important factor(besides interest rate and inflation) in determining our exchange rate.Vice versa, the floating exchange rate is also a corrective to negativetrade balance. As the trade deficit rises sharply (like in our case), therupee starts to depreciate against dollar and other currencies of ourmajor trading partners. This automatically would make our importsmore expensive (for the local population) and our exports cheaper andmore attractive for our trading partners. Thus as the basic economictheory would predict, imports should fall (if they are elastic) andexports should rise (if there are no supply constraints), correcting our

deteriorating trade balance. In such a scenario, the talk of using tariffmeasures to restrict imports is not advisable, as the depreciatingcurrency is already taxing the imports. In case of Pakistan, rupee-dollarexchange rate has changed from Rs.61 to Rs. 72 (in August 2008),thus imposing an implicit tariff of around 20 percent on all of ourimports. In such a situation, imposing tariff on even non-essentialswould be of dubious use, besides creating distortions in the economy,resulting in what economists term as a net welfare loss.



14/23


To increase your exports you have to increase your imports: Amercantilist mindset of the 1960s is still strong and kicking in Pakistanwhen it is suggested that somehow we can strategize and boost ourexports while at the same time cutting our imports through imposing

tariffs. In this day and age of integrated trade and intra-industry trade,this dictum does not work. The more one aspires to boost exports, thegreater is the need to allow imports freely. China is a great example.While its annual exports are around one and a quarter trillion dollars,its imports are not far behind being near to the trillion dollar mark.

Short-term, and Long-term Strategy: Even if under severe

circumstance an economy decides to cut down its imports, it needs to

design short-term, medium-term and long-term strategies. If the short-

term focuses on reducing imports to improve balance of payment

position, long-term shall focus on enhancing both exports and imports.

Contractionary Fiscal & Monetary Policies: If the rise in imports is

mainly because of rising aggregate demand due to rising incomes and

remittances, and falling interest rates, contractionary monetary and

fiscal policies can also bring down the imports. Since the State Bank

has already taken a stringent stance, a downward pressure on imports

is expected. With the rise in interest rates and raised margin

requirements the imports are expected to fall. This stance would get a

support from the fiscal side when tariff or non-tariff measures aretaken.

Inflation vs Trade Deficit: Increasing the tariffs on imports can

reduce the trade deficit, but it can also push inflation up, which is

already galloping at a high rate. Hence, extreme care is necessary in

identifying the exact tariff lines to be taxed. Price elasticities of the

products need to be taken into account. Impact on substitutes &

complementary products also needs to be considered.

Which Commodities to be targeted for tariff hike? : Our imports,when broken down into components, fall into the categories ofindustrial raw materials, capital goods, foods & grains, fuel & energy,pharmaceutical & other life saving drugs, and consumer goods.Industrial/agricultural raw materials, fuel & energy, and capital goods



15/23


cannot be considered for possible tariff hike, as it would have a directnegative impact on the countrys industrial/agricultural growth.Similarly, foods & grains (which includes edible oil, wheat, sugar, etc.)are not good candidates for tariff hike, since it is a necessity for thewhole population, and would cause further food inflation, which is likely

to hit the common man. Pharmaceutical & other life-saving drugscannot be further taxed for obvious reasons. Thus the only remainingcategory, consumer goods, can be labeled as non-essential goods, andbe looked at for possible tariff hike. An attempt has been made to pickand choose such imported consumer goods for tariff hike, which eitherare produced locally as well, or which if not produced locally areconsumed by the middle and upper classes. These could be items likeimported cheese, mobile phones, toys, apparel, etc. Table---- atannex-----, details such possible items from the non-essential consumergoods category. Possible raised tariff levels are also suggested in thetable, taking into consideration our Bounded Tariff commitments at the

W.T.O.



16/23


Annexure

LIST OF NON ESSENTIAL ITEMS

S# HS Code Description

Bound

duty

Current

duty

Previous

dutychange

1 1801.0000 Coca beans , whole broken raw 100 5 5 0

21804.00

00 cocoa butter, fat and oil 100 5 5 0

31806.10

00 Cocoa powder chocolate 100 30 20 10

41806.20

10 chocolate preparation 100 30 20 10

51806.20

20 chocolate crumbs 100 10 10 0

61806.31

00 Filled bars 100 30 25 5

73303.00

10 Eau-De-Cologne 75 35 20 15

8 3303.0020 Perfumes 75 35 20 15

93304.10

00 Lip Make up Preparations 75 35 20 15

103304.20

00 Eye Make-up 75 35 20 15

113304.30

10 Nail Polish 75 35 20 15

123304.91

10 Powder 35 20 15

133304.99

90 Talcum Powder 50 35 20 15

143305.10

00 Shampoo 75 35 25 10

153305.30

00 Hair Lacquers 75 35 25 10

163305.90

10 hair cream 75 35 25 10

173305.90

20 Dyes for hair 75 35 25 10

183306.10

10 Tooth Paste 75 35 25 10

193307.10

00 Pre-shave, shaving or after shave 75 35 25 10

203307.20

00 personal depdorants 75 35 25 10

213307.30

00 Perfumed bath and salts and other 75 35 25 10

22

3307.41

00 "Agarbatti" 75 35 25 10

233307.90

10 contact lens solution 70 35 20 15

243401.11

00 For toilet use|(including medicated) 50 35 25 10

253401.19

00 Soap in other forms 75 35 25 10

263401.30

00 surface activity products washing skins 75 35 25 1027 3403.19 Greases 70 20 20 0



17/23


10

283404.20

00 artificial waxes and prepared waxes 70 5 5 0

293404.90

10 sealing waxes 70 10 10 0

303405.10

10 For footwear 75 25 25 0

313405.10

20 For Leather 75 10 10 0

323405.20

00 Polishes,cream for Wooden furniture 75 10 10 0

333405.30

00 Polishes and similar preparations for coach work 75 25 5 20

343405.40

00 pastes powders 75 5 5 0

353406.00

00 Candles , tapers and the like 75 25 25 0

363407.00

10Dental wax and other preparations for use indentisery 70 10 10 0

373601.00

00 Propellent powders 75 20 25 -5

383602.00

00 Prepared explosive 75 20 20 0

393603.00

00Safety Fuses, detonating fuses, caps, electricdetonators 75 20 20 0

403604.10

00 Fire works 75 25 25 0

413605.00

00 Matches 75 25 25 0

423606.10

00 liquid or liquid gas fuels, Cigarettes lighters 75 20 20 0

436401.10

00 Footwear incorporating a protective metal 75 25 25 0

446401.92

00 covering the ankle but not corering the knee 75 25 25 0

45 6402.1200 Ski boots, 75 25 25 0

466403.40

00 footwear with outer soles of leather, 75 25 25 0

476404.11

00Sports wear, tennis shoes, basket ball, gym trainingshoes 75 25 25 0

486406.10

00 upper and parts thereof other than stiffeners 70 20 20 0

496406.20

10 of rubber 75 25 25 0

506406.91

00 of wood 75 25 25 0

516406.99

00 of other material 75 25 25 0

52 6501.0000 Hat forms hat bodies and hoods of felt 70 20 20 0

536502.00

00 Hat shapes plaited or made by assembling strips 70 20 20 0

546504.00

10 straw hats 70 20 20 0

556505.10

00hats and other headgear knitted or crocheted Hairnets 70 20 25 -5

566506.10

00 safety headgear 70 20 20 0



18/23


576507.00

00Head bands, linings covers, hat foundations, hatframes 70 20 20 0

586601.10

00 Garden or similar umbrellas 75 25 25 0

596601.91

00 having telescop shaft 75 25 25 0

60

6602.00

10 walking stick ans seat stick 75 25 25 0

616603.20

00 umbrella frames including frames mounted on shafts 70 20 20 0

626701.00

00 Skins and other parts of birds 70 20 20 0

636702.10

00 Of plastics 75 25 25 0

646702.90

00 other material 75 25 20 5

656703.00

00 human hair, dressed thinned,bleached 70 20 20 0

666704.11

00 completE Wigs 70 20 20 0

67

6704.20

00 Of human hair 70 20 20 0

686901.00

00 Bricks, blocks tiles & other Ceramic goods 75 25 25 0

696902.10

10 capable of resisting tempreature 75 25 25 0

706903.10

00 other refractory ceramic goods, retorts, crucibiles 60 10 10 0

716903.20

10 cold tundish lining sets, 20 20 0

726904.10

00 building bricks 75 25 25 0

736905.10

00 roofing tiles 75 25 25 0

74

6906.00

00 ceramic pipes 75 25 25 0

756907.10

00 wall tiles 75 25 25 0

766910.10

10 wash basin 75 35 25 10

776910.10

20 bath tubs 35 25 10

786910.10

50 Sink 35 25 10

796910.10

60 Toilet ceramic 35 25 10

806911.10

10 Dinner Sets 75 35 25 10

816911.10

20 Dishes 75 35 25 10

826911.10

30 Plates 75 35 25 10

836911.10

4 Tea cup and saucers 75 35 25 10

847001.00

00 Cullet and other waste and scrap of glass, 60 10 10 0

857002.10

00 Balls 70 20 20 0

867002.20

00 Rods 70 20 10 10



19/23


877002.31

00 Of fused quartz or other fused silica 70 20 20 0

887002.39

10 neutral glass tubing 70 20 20 0

897003.20

00 wired sheets 75 25 25 0

90

7005.10

00 Non wired glass 75 25 25 0

917005.21

00 coloured throughout the mass 75 25 25 0

927005.30

00 wired glass 75 25 25 0

937006.00

10 Glass plate worked 75 25 25 0

947006.00

20 Glass sheet worked 75 25 25 0

957007.11

11 Rear or window glass 50 35 35 0

967007.11

12 Glass for Doors , window, sliding , wind screen 50 35 -35

97

7007.19

00 Laminated safety glass 75 25 25 0

987013.28

00 Drinking Glass 25 25 0

997015.10

00 Clock and watch glasses for correctivespectacles 60 10 25 -15100

7018.9010 Eye glass 60 10 10 0

101

7019.3100 Mats 60 5 5 0

102

7019.9020 Glass Wool 10 10 0

103

7020.0020 For vacuum flasks 25 25 0

10

4

7101.10

00 Natural Pearls 55 5 5 0105

7101.2000 Worked 0 0

106

7101.2100 Unworked 55 5 5 0

107

7102.1000 Unsorted 55 0 0 0

108

7102.3900 simply sawn, cleaved or burted 55 5 5 0

109

7103.9900 Rubies sapphires and emeralds 55 5 5 0

110

7105.1000 Of diamond 55 5 5 0

111

7108.1100 Powder 55 5 5 0

112

8509.4010 Food Grinders 75 30 20 10

113

8517.1100 Line Telephones 50 20 20 0

114

8517.1210 Cellular Mobile Phones

Rs.500/-per

piece 0115

8517.1810 Video Phones 10 10 0



20/23


116

8519.5000 Answering Machine 20 20 0

117

8519.8930 MP-3 Plyer 20 20 0

118

8521.1010 V.C.R 70 20 20 0

11

9

8521.10

20 V.C.P 70 20 20 0120

8525.8040 Digital Camera 10 10 0

121

8525.8050 Video Camera Recorder 10 10 0

122

8528.7211 Liquid crystal display TV 35 25 10

123

8528.7212 Other 35 25 10

124

9101.1900 Wrist-watches 50 5 5 0

125

9101.9100 With electrically operated 50 5 5 0

12

6

9105.11

00 Alaram clocks 50 20 5 15127

9105.1900 Wall clock 50 20 20 0

128

9106.1090 other for motor cars & vehicles 60 5 5 0

129

9107.0000 Time switches with clock or watch 60 5 5 0

130

9108.1100 Fully automatic 50 10 10 0

131

9110.1900 Rough moments 60 5 5 0

132

9111.8000 other cases 50 5 5 0

13

3

9112.90

00 Parts 60 5 5 0134

9114.1000 springs, including , hair springs 50 5 5 0

135

9114.2000 Jewels 50 5 5 0

136

9114.3000 Dials 50 5 5 0

137

9114.4000 Plates & brigas 60 5 5 0

138

9114.9000 Other 60 5 5 0

139

9201.1000 Upright Pianos 60 10 10 0

140

9201.2000 Grand Pianos 60 10 5 5

141

9201.9000 Other 60 10 10 0

142

9202.1000 Played with a boy 70 10 10 0

143

9205.1000 Brass wind instrument 70 10 10 0

144

9206.0000 Percussion musical instruments 70 10 10 0

145

9207.1000 Keyboard instruments 70 10 10 0



21/23


146

9208.1000 Musical boxes 70 10 10 0

147

9209.9100 Parts and accessories for pianos 70 10 10 0

148

9301.1100 Self- propelled 75 15 15 0

14

9

9301.20

00 Rocket launchers, flame throwers, gernade 75 15 15 0150

9301.9010 Fully automatic shotgun 75 15 15 0

151

9301.9021 Bolt action 75 15 15 0

152

9301.9022 Semi automatic 75 15 5 10

153

9301.9030 Machine guns 75 15 15 0

154

9301.9041 Fully automatic pistols 75 15 15 0

155

9302.0012 Revolvers 15 15 0

15

6

9302.00

13 Pistols,multiple barrel 15 15 0157

9303.3010 Hunting or target Shooting Rifels 75 35 25 10

158

9303.3090 Semi automatic 75 35 25 10

159

9401.1000 Seat of kind used for aircraft 55 5 5 0

160

9401.2010 For motor Cars 75 35 35 0

161

9401.2020 For vehicles 75 35 35 0

162

9401.3000 Swivel seats with variable height adjustment 75 25 25 0

16

3

9401.40

00 garden seats and camping equipment 75 25 25 0164

9401.6100 Upholstered 75 25 25 0

165

9401.9010 Other seats 75 35 35 0

166

9402.9020 Hospital bed with mechanical fittings 75 25 25 0

167

9403.1000 metal furniture of a kind use in office 75 35 25 10

168

9403.3000 Wooden furniture 75 35 25 10

169

9403.4000 wooden furniture in kitchen 75 35 25 10

170

9403.5010 Wooden cabnites 75 35 25 10

171

9403.5020 Wooden beds 75 35 25 10

172

9404.1000 Mattress support 75 25 25 0

173

9404.3000 Sleeping bags 70 20 20 0

174

9405.5000 Non electric lamps and lighting fittings 75 35 25 10

175

9406.0020 Dairy live stock and poultry sheds 75 25 25 0



22/23


176

9406.0030 Silos 75 25 25 0

177

9406.0040 for cold storage 75 25 25 0

178

9503.0010 Tricucles, scooter, pedal cars, head gear 75 25 25 0

17

9

9503.00

20 footwear and headgear 75 10 10 0180

9503.0030 Aero models 75 5 5 0

181

9504.2000 Video games 70 20 20 0

182

9504.4000 Playing cards 75 25 25 0

183

9505.1000 Articles of Christmas festival 75 25 25 0

184

9506.1100 Skis 60 10 10 0

185

9506.3200 Golf Balls 60 10 10 0

18

6

9506.40

00 Table tennis 70 20 20 0187

9506.5100 Lawn tennis, Rackets 75 25 25 0

188

9506.5910 Badminton rackets 75 25 25 0

189

9506.5920 Squash rackets 75 25 25 0

190

9506.6210 Footballs, soccer balls 50 20 20 0

191

9506.6910 Cricket balls 70 20 20 0

192

9506.6920 Hockey balls 70 20 20 0

19

3

9506.69

30 Polo balls 20 20 0194

9506.6950 Tennis balls 20 20 0

195

9506.6960 Table tennis balls 20 20 0

196

9506.6991 Volley balls 20 20 0

197

9506.9912 Football bladder 50 10 10 0

198

9506.9920 Cricket bats 50 20 20 0

199

9506.9930 Cricket Wickets 50 20 20 0

200

9506.9940 Cricket pads 50 20 20 0

201

9506.9950 Cricket sets 50 20 20 0

202

9506.9960 Hockey sticks 50 20 20 0

203

9506.9970 Polo sticks 50 20 20 0

204

9507.1000 fishing rods 60 10 10 0

205

9507.2000 Fish hooks, 60 10 10 0



23/23


206

9701.1000 Paintings drawings and pastels 60 5 5 0

207

9701.9000 other 60 5 5 0

208

9702.0000 original engravings prints 60 5 5 0

20

9

9703.00

00 original sculptures and statuary 60 5 5 0210

9704.0000 Postage and Revenue stamps 55 5 5 0

211

9705.0000 zoological, botanical mineralogical etc 55 5 5 0

212

9706.0000 Antiques of an ahe exceeding 60 10 10 0


pakistans import management strategy

Documents