Pakistan WT/TPR/S/95 Page 25 - WTO Documents Online

Pakistan WT/TPR/S/95Page 25

III. TRADE POLICIES AND PRACTICES BY MEASURE

(1) OVERVIEW

1. Since its previous Trade Policy Review in 1995, Pakistan has taken steps, often unilaterally,to liberalize its trade regime. These steps are aimed at fostering private sector activity, notablyinvestment. Trade liberalization has been especially marked since January 1999 as a consequence ofcommitments made to the IMF and World Bank as well as efforts by Pakistan to integrate its economyinto the international trading system.

2. The tariff remains Pakistan's main trade policy instrument; its importance increased as aresult of the recent elimination of non-tariff barriers on several items. At the same time, it is a major,albeit declining, source of tax revenue. Pakistan's average applied tariff rate has fallen from 56% to20.4% since its previous Review. Nevertheless, tariff protection is still high, especially for a fewsensitive items, and although efforts are being made to reduce tariff peaks and dispersion, tariff ratesvary widely. Consequently, the tariff remains a potentially important distortion to domesticcompetition and thus an obstacle to the efficient allocation of resources. The scope for improvingefficiency through further substantial cuts in tariffs may be limited by their importance to theGovernment as a source of revenue and by the internal tax system's vulnerability to avoidance andevasion (see below).

3. Some one third of tariff lines are currently bound. Given the reduction in applied rates, thereis a widening gap between bound and applied rates. This imparts a degree of uncertainty to the tariff,with the Government retaining freedom to raise applied rates within bindings; this uncertainty issomewhat compounded as applied tariff rates on 91 tariff lines (down from 241 in 2000/01) (mostlytextiles and clothing) exceed the bound rates by as much as 17 percentage points; steps are to betaken to address this problem.

4. During the period under review, Pakistan's tariff has been simplified considerably. Sometwo fifths of all tariff lines are now concentrated in the 25% to 30% range, although there are nolonger any duty-free lines. Nonetheless, the tariff remains relatively complex, involving 26 differentrates (49 in 2000/01), 13 of which are ad valorem, 11 specific, and 2 compound. Widely differenttariff rates provide considerable scope for misclassification of imports by customs officials. Thecomplexity of the tariff is exacerbated by concessions, although their scope seems to have beenreduced recently. While most tariffs involve relatively transparent ad valorem rates, some 1% oftariff lines are subject to either specific or compound duties, which are intrinsically more opaque thanad valorem rates, tending to conceal relatively high ad valorem equivalent (AVE) rates. Thetransparency of Pakistan's tariff regime has improved through submissions to the WTO IntegratedDatabase as well as its availability on the Internet.

5. Further protection from imports is provided by several other border taxes and charges."Regulatory" duties appear to have been reinstated (for imports of edible oil and oil seeds forcrushing). Moreover, withholding taxes are levied on imports (and exports); these taxes, which maybe deductible from income taxes, are apparently intended to combat income tax evasion. In addition,a capital-value tax is levied on imported motor vehicles.

6. Plans for the simplification of existing complicated registration requirements for importers areunder consideration. In addition, customs clearance for specific items or importers has beenaccelerated by the introduction of an express lane facility and an electronic assessment system. In thecontext of the implementation of the WTO Agreement on Customs Valuation, Pakistan discontinuedthe use of the Brussels Definition of Value, but maintained provisions for setting minimum import

WT/TPR/S/95 Trade Policy Review6

values for a few items. Cash margin requirements on the opening of all import letters of credit wereimposed temporarily, but have now been abolished.

7. Import prohibitions and restrictions have been maintained on a number of grounds. However,virtually all those for balance-of-payments purposes (numerous textiles and clothing articles, chassisfor trucks) were phased out; the importation of certain items depends largely upon the status of theimporter, origin, prior approval or other conditions. The scope of restrictions on imports of useditems has been widened. Imports of a specific type of raw sugar have been prohibited (as of 2000),but seemingly are no longer in force. No contingency measures have been applied. In governmentprocurement, price preferences have been granted to domestic suppliers, particularly for engineeringgoods contracts. Having encountered difficulties in eliminating its local content scheme by the dateset under the WTO Agreement on Trade-Related Investment Measures, Pakistan obtained anextension of the transition period for implementing this commitment.

8. The scope of export prohibitions seems to have been reduced by, inter alia, placing greateremphasis on compliance with international commitments (including those aimed at protectingintellectual property rights). Nevertheless, several restraints (including prohibitions and export taxes)aimed at ensuring adequate domestic supplies and minimum value added for certain items have beenmaintained, although their scope was reduced; these restraints tend to reduce the prices of the goodscovered and therefore constitute an implicit subsidy to domestic users of these goods. Exports ofcertain textiles and clothing items remain subject to access-related restraints in several major markets.Preshipment registration of export contracts is required for certain sensitive items (cotton, rice, urea);preshipment inspection requirements have applied to rice (since 1999). Export subsidies, largelylinked to export-performance requirements, have been provided in various forms, including financialsupport (quality certification, software, sugar, freight costs), concessionary export finance, andexport-processing zones; support to software exports is a new element in this policy since theprevious Review.

9. Support to production and trade is provided through a variety of tax and non-tax incentives;priority areas are science and technology and small and medium-sized enterprises. During the periodunder review, state participation in production and trade has persisted mainly in agriculture,chemicals, transport equipment, fuels, machine tools, mining and energy, as well as in engineering,financial, telecommunication, transport, and tourism services. Financial support has also beenprovided to strengthen quality certification.

10. New legislation has been passed to strengthen the protection of intellectual property rights;however, limited adherence to international treaties in this area, and poor enforcement seem to havecontributed to persistent high levels of piracy and trade in counterfeit goods.

11. As regards competition policy, the elimination of business entry restrictions seems to havereduced industrial concentration.

(2) MEASURES DIRECTLY AFFECTING IMPORTS

(i) Registration and documentation requirements

12. Since the previous Review of Pakistan, there have been no major changes in the list of entitieseligible to import, except for the inclusion in the list of overseas Pakistanis.1 The entities comprise

1 Overseas Pakistanis are allowed to import or send freely importable goods up to an annual value of

US$10,000; these items must be paid with their own foreign exchange earnings and there is no need to open a


any firm holding a registration certificate, commercial importers, industrial consumers, and actualusers.2 Nearly all importers must register as importers with the Export Promotion Bureau (EPB)3;public sector departments are exempt from registration requirements. Only firms listed in publicnotices issued by the Ministry of Commerce may apply for import authorization; a person or familyowning more than one firm, may register one of its firms only. In the year 2000, there were plans toamend the regulatory framework with a view to simplifying registration procedures and introducingan automatic database upgrade.4

13. The EPB issues a so-called "Category Pass Book" to importers of items subject to certainimport conditions (other than freely importable goods), for purposes of opening letters of credit andcustoms clearance (section 2(vi), Table III.3).5

14. Basic documentation requirements remain unchanged (Import General Manifest, bill of entry,invoice, packing lists, copies of letters of credit6, and insurance certificates). In the case of itemssubject to certain conditions, a recommendation/clearance or prior approval from the competentgovernment agency, or certificates from the exporting country may be required (section 2(xi)(a),Table III.3).7 In most cases, in order to obtain the duty concessions for import of machinery and rawmaterials granted to various industrial establishments, importers need to furnish an indemnitybond/bank guarantee to the extent of duty exempted. A certificate of origin may be required for itemssubject to special import (e.g. preferential treatment), depending on the origin.

15. As of February 2000, an Electronic Assessment System (EASY) ensures more speedyassessment and customs clearance as well as reduced contact between taxpayers and the tax collectors(which leaves less scope for corruption).8 At a first stage, EASY has been available to multinationalsand local firms eligible for an "express lane facility" (operated since 1998). EASY covers: dutiableimports by public-sector entities (i.e. federal/provincial governments, state-owned corporations, localbodies); all items subject to specific rates of customs duty (excluding compound rates,section 2(ii)(d)); and, certain items subject to zero rates of customs duty and sales tax. EASY doesnot apply to old/used/second-hand/re-conditioned items, scrap, and items subject to restrictions orbans or duty exemptions (section 2(ii)(i)). A share of 5% of goods are randomly selected by computerfor clearance under "normal" (i.e. ordinary) procedure, which takes about one day.

16. No compulsory storage requirements seem to have been applied.

letter of credit, register as an importer or for sales tax registration by the consignee (Articles 2.2(d) and 2.5 ofImport Policy Order, 1999 and Articles 1.5 and 15.1(o) of Import Export Procedure Order (1999)).

2 GATT (1995).3 Since the previous Review, exemption from registration has been extended to imports of reading

material and goods for mountaineering and imported by some members of trekking expeditions for their ownuse, and to imports by overseas Pakistanis and to importers exempt under the terms of paragraph 9 ofRegistration (Importers and Exporters) Order (1993).

4 Export Promotion Bureau (2000).5 Article 1.1 of the Import Export Procedures Order (1999), and F.E Circular No. 54 of 1998 of the

State Bank of Pakistan [Online]. Available at: http://www.sbp.org.pk/femanual/FE%20Circulars/1998/c54.htmand http://www.sbp.org.pk/femanual/FE Circulars/1998/c54.htm [18 September 2000].

6 When opening the letter of credit the importer must, inter alia, ensure that the import is made at themost competitive price.

7 For example, food colouring material requires a certificate from the responsible agency in theexporting country indicating that it is in use in the country of origin at the time of shipment or registered in thatcountry (Import Policy Order (1999)).

8 Central Board of Revenue online information. Available at: http://www.cbr.gov.pk/customs/igm/easy.html [24 July 2000].

WT/TPR/S/95 Trade Policy ReviewPage 28

(ii) Tariffs

(a) General features

17. The customs tariff is Pakistan's main trade policy instrument. It is announced annuallythrough the Finance Act and published in the official gazette (Gazette of Pakistan ExtraordinaryPart II). In addition, at the start of each financial year the Central Board of Revenue (CBR) publishesthe Customs Tariff along with Notifications (SROs) containing various duty exemptions, rules, andchanges; the Customs Tariff and accompanying regulations are also available at the CBR onlineinformation. Although it has provided import data since 1997, Pakistan has submitted its customstariff to the Integrated Database of the WTO only as from 2000.9 The customs tariff is an important,albeit declining, source of tax revenues; its share of total tax revenues dropped from 30.1% in1994/95 to 13.7% in 2000/01 (section 4(i)).

18. As of 2001/02, the tariff structure has been simplified considerably. As an instrument of tradepolicy, the tariff accords varied levels of protection to domestic industry and is therefore a potentiallyimportant distortion to competition and thus an obstacle to the efficient allocation of domesticresources.10 The tariff is also a complex instrument; based on the 1996 nomenclature of theHarmonized System (HS), it currently (2001/02) contains 5,477 tariff lines (at the 8-digit HS), 13.6%less than in 1996/97, and involves 26 different rates (13 ad valorem rates levied at the c.i.f. value ofimports, 11 specific rates, and 2 compound rates).11 On the other hand more than 99% of tariff ratesare ad valorem, which are more transparent than other tariffs. As a result of subsequent cuts inapplied rates, bound MFN tariff rates are, by and large, considerably higher than applied MFN rates,thereby providing plenty of scope for the authorities to raise applied rates without breaching bindings.The summary indicators highlight these and several of the other main features of Pakistan's customstariff, together with the significant changes that it has undergone during the period under review(Table III.1).12

19. Duties (as well as all indirect taxes and other charges levied at the border) seem to be settledwith the Customs prior to the goods' release from custody.13 In cases of "urgent consignment",however, customs duties may be paid within ten days of clearance.14 Duty payment may also bedeferred for other items under certain conditions (section 2(ii)(j) and Table III.2). Under the1969 Customs Act, the Ministry of Finance, Economic Affairs, Statistics and Revenue and the CBRare empowered to exempt imports from duty and impose regulatory or special customs duties.15

9 WTO document G/MA/IDB/2/Rev.11, 7 June 2001.10 The authorities indicated that the tariff barely offsets high domestic costs of transport, infrastructure,

purchase of technology, and interest rates.11 In 1996/97 there were 60 different rates (22 ad valorem, 20 compound, 5 alternate, and 13 specific

rates).12 All tariff-related estimates in the charts and tables of this report reflect import duties contained in

Pakistan's Customs Tariff and its amendments; only the ad valorem component of compound and alternateduties is used as no ad valorem equivalents are available. No specific rates or occasional/temporary tariffincreases or reductions or other types of duties are taken into consideration in these calculations.

13 U.S. Commercial Service (1999a).14 Urgent consignments are: human body organs, perishable medicines, live animals and plants,

newspapers, journals, radioactive material, replacement parts of computers, machines and drilling components,fertilizer imported by Fertilizer Import Department, etc. (Prior Release of Urgent consignments (Import andExports) Rules (1994)).

15 Various Customs SROs; and GATT (1995).


Table III.1Structure of tariffs in Pakistan, 1996-2002(Per cent)

Indicators 1996/97 2000/01 2001/02 U.R.a

1. Bound tariff lines (% of tariff lines) 36.3 34.8 36.8 36.8

2. Duty-free tariff lines (% of tariff lines) 0.8 4.0 0.0 0.0

3. Non-ad valorem tariffs (% of tariff lines) 1.7 1.1 0.9 0.9

4. Tariffs with no ad valorem equivalent 1.7 1.1 0.9 0.9

5. Simple average bound tariff rate 71.1 62.8 61.5 61.4

6. Simple average applied tariff rate 41.7 24.8 20.4 20.2

Agricultural products (HS 01-24)b 47.2 28.0 21.8 21.8

Industrial products (HS 25-97) 40.8 24.3 20.2 20.0

7. Domestic tariff "peaks"c 0.4 1.1 0.7 0.9

8. International tariff "peaks"d 82.7 61.7 57.2 56.0

9. Overall standard deviation (SD) of tariff rates 22.5 17.8 16.0 16.0

10. Coefficient of variation (CV) of tariff rates 0.5 0.7 0.8 0.8

a Based on 2001/02 nomenclature.b Under the definition, used in the WTO Agreement on Agriculture, the simple average applied tariff on agricultural imports is

43.9%, 26.7%, and 22.1% in 1996/97, 2000/01, and 2001/02, respectively.c Domestic tariff "peaks" are defined as those exceeding three times the overall simple average MFN rate.d International tariff "peaks" are defined as those exceeding 15%.

Note: Calculations exclude specific rates and include the ad valorem component of alternate and compound rates.

Source: WTO Secretariat calculations, based on data provided by the authorities of Pakistan.

(b) MFN tariff bindings

20. As a consequence of the Uruguay Round (UR), Pakistan has expanded considerably itsbinding commitments beyond its minimal undertakings in the past.16 Pakistan has bound 89.6% of itsagricultural tariff lines17 (exceptions including alcoholic beverages, swine and pig meat and productsthereof, mainly on religious grounds), 12.6% of lines pertaining to fishery products, and 27.5% ofindustrial tariff lines (HS code 25-97). Currently, 36.8% of all tariff lines are bound, compared with36.3% in 1996/97 (Table III.1); this tariff line increase reflects the reduction of more unbound tarifflines (sub-positions) than bound lines at the latest customs tariff in force. The authorities indicatedthat Pakistan will gradually increase the number of its bound items as it gains experience inmultilateral, reciprocal tariff-cutting negotiations; as a country suffering from acute fiscalimbalances, it will need flexibility for some time.

21. Since 1996/97, Pakistan's average bound tariff rate has fallen from 71.1% to 61.5%, with afurther decline to 61.4% expected by the end of the implementation period; nonetheless, the gapbetween bound and applied rates has widened as a result of generally faster reductions in the latter,and of the high binding levels for certain items (section 2(ii)(e), Chapter IV(2) and (4). WhileUruguay Round bindings for agricultural items have been in force since 1995, those on industrialitems are being implemented in five (HS Chapters 25-49 and 64-95) or ten (HS Chapters 50-63(textiles and clothing)) equal annual instalments from July 1995.18

16 Pakistan's pre-Uruguay Round binding commitments covered 113 CCCN tariff lines; they had been

waived since 1977 (GATT, 1995).17 This share corresponds to the product coverage under the sectoral definition of the WTO Agreement

on Agriculture.18 Schedule XV – Pakistan.


22. Between November 1977 and December 1995 Pakistan's pre-Uruguay Round commitmentswere waived to, inter alia, allow the introduction of the Harmonized System nomenclature19; in thiscontext, Pakistan notified improvements to its concessions on textiles and clothing products and thesewere approved.20 As of April 1997, its Uruguay Round commitments under Article II of GATT 1994have been waived to allow for the implementation of the recommended amendments to theHarmonized System nomenclature on 1 January 1996, and subsequently to undertake Article XXVIIInegotiations.21 In October 1998, Pakistan submitted documentation required for these negotiations22;reservations regarding Pakistan's proposed HS96 documentation were raised by three trading partners,of which one withdrew its reservation in September 2000, one was consulting with Pakistan byNovember 2000 and the third had to specify its concerns for its general reservation. In 1999, Pakistanmade a notification subsequent to its tariff commitments under Attachment II of the Memorandum ofUnderstanding on Market Access for Textile Products, signed between Pakistan and the EU on27 March 1996.23 The authorities indicated that Pakistan was transposing its customs tariff, at the timeof completion of this report, to HS 2000.

(c) Duty-free items

23. Following changes introduced in the customs tariff, as from 2001/02 no tariff lines are dutyfree as the lowest tariff rate has been raised to 5% (Chart III.1); duty-free entry is allowed on anexceptional basis. Prior to this change (i.e. 2000/01), 4% of the tariff lines were duty free (five timesas many as in 1996/97).

(d) Specific, compound, and alternate duties

24. Specific and compound duties currently account for only 0.9% of all tariff lines, and theirscope has been reduced since 1996/97 (Table III.1); alternate duties (29 items in 1996/97) are nolonger in force. Such duties tend to be more opaque than ad valorem duties and can therefore concealhigh rates. Whereas specific duties presently cover 44 (8-digit HS) tariff lines (e.g. certain oil seeds,vegetable plaiting materials, motor spirit, soya-bean and palm oil, liquid soda), compound duties areapplied to 3 lines (lubricating oil). Ad valorem equivalent (AVE) rates for these duties are notavailable.

25. Pakistan introduced specific duties (set and settled in foreign currency), in July 1999, rangingfrom US$5,000 to US$175,000 per unit on imports of passenger motor vehicles with an enginecapacity exceeding 800 cm3, for a period of one year.24 These duties favoured four-wheel-drivevehicles with an engine capacity exceeding 1,600 cm3.25 In the light of the prohibitively high rate(section 2(ii)(f)) that is regularly applied to automobiles of all types (250%), the only reason foradopting specific duties seems to have been to reduce the ad valorem customs duty burden for aspecific category of buyers (i.e. buyers of large engined four-wheel-drive vehicles).

19 WTO document WT/L/102, 24 November 1995. Pakistan renegotiated modifications of its

pre-Uruguay commitments with nine contracting parties.20 WTO documents G/SP/10, 13 January 1995 and G/MA/SP/2, 8 August 1995.21 WTO documents WT/L/216, 20 May 1997, G/C/W/200, 7 April 2000, and WT/L/400, 10 May 2001.22 WTO document G/SECRET/HS96/40, 10 December 1998.23 WTO documents G/MA/TAR/RS/61, 26 October 1999 and G/MA/TAR/RS/61 Corr.1, 5 May 2000.24 Section 18 of Finance Act (1999) available online at: http://www.cbr.gov.pk/customs/finance/

Act.pdf [24 July 2000].25 Duties on all vehicles up to 1,600 cm3 range from US$5,000 to US$20,000 and are similar for

four- and two-wheel-drive cars. For vehicles with higher engine capacity, the level of duties is significantlylower for four-wheel-drive cars; for example, the rate for a two-wheel-drive vehicle with an engine capacityexceeding 4,200 cm3 is US$175,000, against US$70,000 for a four-wheel-drive car with similar engine capacity.


0

500

1,000

1,500

2,000

2,500

Dutyfree

>0- 5 >5-10 >10-15 >15-20 >20-25 >25-30 >30-35 >35-40 >40-45 >45-50 >50-55 >55-60 >60-65 >65

Calculations exclude specific duties and include the ad valorem component of alternate and compound rates.

WTO Secretariat calculations, based on data provided by the authorities of Pakistan.

MFN 1996/97

MFN 2001/02

Number of tariff lines

Chart III.1 Distribution of MFN tariff rates, 1996/97 and 2001/02

Tariff rates

Note:

Source :

(e) Applied MFN tariffs

26. Since its previous Review, Pakistan has introduced changes to its tariff in accordance with thescheduled implementation of binding commitments under the Uruguay Round, IMF-fundedprogrammes and domestic policy considerations. Between 1993/94 and 2001/02 the overall simpleaverage applied MFN tariff rate fell considerably, from 56% to 20.4% as a result of tariff restructuring(four main tiers and general high tier reduced to 30%).26 The simple average will fall slightly furtheronce the Uruguay Round tariff cuts are fully implemented (Table III.1).

27. Additional decreases in tariff protection may arise from the reduction of the currently appliedrate of 30% to 25% by June 2002.

28. The large and increasing gap between bound and applied rates (due to recent cuts in appliedrates) imparts a high degree of uncertainty to Pakistan's customs tariff (section 2(ii)(b)). Thedifference between average applied and bound rates in 2001/02 was much higher in the agriculturesector (HS definition) than in the industrial sector (Charts III.2 and III.3). Further uncertainty arisesfrom the fact that, in 2001/02, applied tariff rates on 91 eight-digit HS items (mostly textiles andclothing) exceed their binding levels by up to 17 percentage points; this number is lower than in1996/97 (214 items) and 2000/01 (241 items). The authorities are aware of this difficulty and havetaken steps to address it in the next Budget.

26 GATT (1995).


29. In line with the downward trend in bound rates, and especially applied MFN tariff rates, theaverage rate of customs duty collected on total imports has also dropped, from 24.5% in 1994/95 to12.9% in 1999/00 (Chart III.4). This collected duty rate has been considerably lower than the averageapplied MFN rate. The large, albeit declining, gap between these two rates may be attributed,inter alia, to the duty concessions still available on a large number of products (section 2(ii)(j),Table III.2), the possibility that some tariff rates are prohibitive (i.e. automotive sector), andmisclassification of imports.

(f) MFN tariff dispersion

30. The potential efficiency losses associated with the customs tariff depend not just on theaverage applied MFN tariff rates, but also on the dispersion of those rates across products. Judgingfrom three of the four summary indicators (7-10) of tariff dispersion reported in Table III.1, thedispersion in applied tariff rates has declined as a consequence of the changes introduced into the2001/02 tariff; that is, domestic and international tariff "peaks" as well as the standard deviation ofapplied tariff rates have declined (the coefficient of variation has risen slightly). However, thesesummary indicators do not show the increasing concentration of tariff lines in rates ranging between10% and 30% (Chart III.1); at present, 62 eight-digit HS items are subject to duties exceeding 30%.In 2001/02, imports of 9 eight-digit HS items (automobiles) bear the highest ad valorem tariff of250%, while one item (certain fermented beverages) is subject to the second highest rate of 200%, andnine items (beer, other types of motor vehicles) to the third highest rate of 150%; about 24 items(wine, ethyl alcohol, spirits and spirituous beverages, certain types of automobiles, trucks,motorcycles) are subject to tariffs of 100% and 120%.

(g) MFN tariff escalation

31. Escalation remains an important feature of Pakistan's customs tariff in most sectors. It is mostpronounced for fully processed goods (Chart III.5 and Table AIII.1).

(h) Regulatory duties

32. Pakistan appears to have reinstated regulatory duties on imports of edible oil at a rate offive paisa (US$0.0042) per kg. (as from July 1999), and on oil seeds for crushing at a rate of 10% onthe amount of the customs duty collected (as from July 2000); at the time of the previous Review,regulatory duties were apparently merged into the tariffs.27 The stated purpose of this regulatory dutyis the development of a "Cess Fund" to finance the activities of the Pakistan Oilseed DevelopmentBoard. (Regulatory duties are not reflected in the tariff indicators found in Table III.1.)

33. In July 2001, regulatory duties on several other items were abolished.28 Remaining regulatoryduties are to lapse gradually, in line with outstanding agreements with certain industries.

27 SRO 816(I)/99, 1 July 1999; SRO 372(I)/2000, 17 June 2000; and GATT (1995).28 These duties affected: calcium chloride, urea fertilizer, steel bars, formic acid, urea formaldehyde,

moulding compound, BOPP film, medium density fibre board, craft paper, sacks, and jute bags.


0

10

20

30

40

50

60

70

80

25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 78 80 82 84 86 88 90 92 94 96

Per cent

HS Chapter

Average applied rateHS 25-97 (20.2%)

HS DescriptionChapter 25 Salt; sulphur; earths and stone, etc.26 Ores, slag and ash27 Mineral fuels, mineral oils, etc.28 Inorganic chemicals; organic or inorganic compounds of precious metals, etc.29 Organic chemcials30 Pharmaceutical products31 Fertilizers 32 Tanning or dyeing extracts etc. 33 Essential oils and resinoids; perfumery, cosmetic or toilet preparations34 Soap, organic surface-active agents washing prep., etc. 35 Albuminoidal substances; modified starches; glues, etc.36 Explosives; pyrotechnic products; matches, etc37 Photographic or cinematographic goods38 Miscellaneous chemical products39 Plastics and articles thereof40 Rubber and articles thereof41 Raw hides and skins and leather42 Articles of leather, etc.43 Furskins and artifical fur; manufactures thereof44 Wood and articles of wood, etc.45 Cork and articles of cork46 Manuf. of straw, of esparto, etc. 47 Pulp of wood or of other fibrous cellulosic material

HS DescriptionChapter48 Paper and paper board, etc.49 Printed books, newspapers, etc.50 Silk51 Wool; fine or coarse animal hair, etc.52 Cotton53 Other vegetable textile fibres 54 Man-made filaments 55 Man-made staple fibres 56 Wadding, felt and non-wovens; special yarns; twine, cordage, etc.57 Carpets; other textile floor coverings58 Special woven fabrics; lace, etc.59 Impregnated, coated, covered or laminated textile fabrics, etc.60 Knitted or crocheted fabrics 61 Articles of apparel and clothing accessories, knitted or crocheted62 Articles of apparel and clothing accessories, not knitted, etc.63 Other made-up textile articles; sets, worn clothing, etc.64 Footwear, gaiters, etc.65 Headgear and parts thereof66 Umbrellas, walking-sticks, etc. 67 Prepared feathers and down, etc.68 Articles of stone, plaster, etc.69 Ceramic products70 Glass and glassware71 Natural or cultured pearls, precious or semi-precious stones, precious metals, etc.

HS DescriptionChapter72 Iron and steel73 Articles of iron and steel74 Copper and articles thereof75 Nickel and articles thereof76 Aluminium etc. 78 Lead and artilces thereof 79 Zinc and articles thereof 80 Tin and articles thereof81 Other base metals, etc.82 Tools, implements, cutler spoons and forks, etc.83 Misc. articles of base metals84 Nuclear reactors, boilers, machinery, etc.85 Electrical machinery and equipment, etc.86 Railway or tramway locomotives, etc.87 Vehicles other than railway or tramway rolling-stock; etc.88 Aircraft, spacecraft, etc.89 Ships, boats, etc.90 Optical, photographic, etc. apparatus91 Clocks and watches, etc.92 Musical instruments, etc.93 Arms and ammunition, etc.94 Furniture, bedding, etc.95 Toy, games, etc.96 Miscellaneous manuf. articles97 Works of art, antiques, etc.

Chart III.3Average tariff rates on manufactured products by HS chapter, 2001/02 and 2004/05

26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 79 81 83 85 87 89 91 93 95 97

Average bound rate HS 25-97 (45.4%)

Overall average applied rate HS 01-97 (20.4%)

Applied rate (2001/02)

Bound rate (2001/02)

Average final bound rate HS 25-97 (43.9%)

Final bound rate (2004/05)

Calculations exclude specific duties and include ad valorem parts of compound rates. The absence of average bound rates for most chapters is due to these chapters remaining unbound.


Note:

Source:


0

5

10

15

20

25

30

35

40

45

1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01

Chart III.4 Share of customs duties collection in total import value and indirect tax revenue, 1994-2001Per cent

Share of custom duties in total import value

Share of custom duties in total indirect tax revenue

Source : Ministry of Finance, Economic Survey 2000-2001, Appendix Tables 4.3 and 8.2 [Online]. Available at:http://www.finance.gov.pk/ [21 September 2001].

(i) Duty concessions/exemptions

34. In recent years, Pakistan has contained the expansion in the scope of duty (and related taxconcessions) in form of exemptions or deferred payment (Table III.2); at present, more than 60 legaltexts (SROs) provide for activity- or industry-specific concessions that exclude items produced locally(thus protecting local industry); no expiry date has been defined for these concessions. In June 2000,several duty (and related tax concessions) affecting machinery, equipment or parts for specialindustrial zones, sea ports, oil or gas projects, agri-based industries, hi-tech industries, pharmaceuticalindustries, were eliminated or replaced (i.e. hi-tech industries, export industries, pharmaceuticals).

35. Payment of half of customs duties on machinery and spare parts for any project may bedeferred for a period up to three years upon submission of a bank guarantee, undertaking/collateralguarantee and payment of surcharges at an annual rate of 14%, calculated on six monthly basis;deferred payment for whole or part of the duties on import of machinery and spare parts for power,gas, and energy projects is subject to an 18% annual surcharge (which is substantially more than theinflation rate and nominal interest rates).29

29 SRO 490(I), 30 May 1991 and SRO 36(I), 15 January 1994.


0

10

20

30

40

50

60

70

80

Food,beverages

and tobacco

Textiles andleather

Wood andfurniture

Paper,printing andpublishing

Chemicals Non-metallicmineral

products

Basic metal Fabricatedmetal

products andmachinery

Other

Chart III.5Tariff escalation by 2-digit ISIC industry, 1996/97 and 2001/02

Calculations exclude specific duties and include the ad valorem component of alternate and compound rates.


0

10

20

30

40

50

60

70

80

Food,beverages

and tobacco

Textiles andleather

Wood andfurniture

Paper,printing andpublishing

Chemicals Non-metallicmineral

products

Basic metal Fabricatedmetal

products andmachinery

Other

Average applied rate in manufacturing(42 1%)

Note:

Source :

Per cent

First stage of processing Fully processedSemi-processed

Per cent

Average applied rate in manufacturing(20.9%)

1996/97

2001/02


Table III.2Main duty and sales tax concessions, as of 2000/01

Activity Type of concession Entry intoforce

Expiry date

A. Concessions on imports of machinery and equipment not manufactured locally

Machinery, equipment and tools for the manufacture ofjewellery

Exemption from customs duty 10.04.1989 18.06.2001

Machinery Deferment of customs duty 30.05.1991 Undefined

Imports relating to power, gas and energy projects(Rules 1994)

Deferment of customs duty 15.01.1994 Undefined

Machinery and equipment including coal mining equipmentfor balancing, modernization, extension/setting up of newpower generation projects

Exemption from customs duty 02.04.1994 Undefined

Machinery, equipment materials etc. for projects of thepetroleum sector

Exemption of customs duty inexcess of 10% (i.e. applied rate is10%)

09.05.1994 Undefined

Specific machinery of specified export-oriented industries Exemption of customs duty inexcess of specified rates

09.06.1994 18.06.2001

Raw materials for manufacture of goods by industries thatcommence commercial operations up to 30.06.1999 inSpecial Industrial Zones

Exemption from 25% of customsduty


Machinery and equipment for setting up hydel powergeneration projects



Machinery and equipment for transmission system projectsand grid stations



Machinery and equipment for setting up or for balancing,modernization, and extension of power generation throughoil, gas, coal, wind, and wave energy projects



Machinery, equipment, chemicals etc. for Iran-Pak Refineryat Hub, Baluchistan

Exemption from total customs dutyand sales tax


Machinery, equipment, spares, chemicals imported by foreignmining companies

Exemption from customs duty inexcess of 5% (i.e. applied rate is5%) and whole of sales tax, till thecommencement of commercialproduction; and from customs dutyin excess of 10% (i.e. applied rate is10%) and whole of sales tax aftercommencement of commercialproduction.


Machinery, equipment, and construction material for importsunder contracts C01 and C02 of Ghazi Brotha Project.


Machinery, equipment, materials, specialized vehicles,accessories, spares and chemicals as are not manufacturelocally, if imported by Exploration and ProductionCompanies including O.G.D.C.


Components, sub-assemblies and assemblies to the extent of10 percentage points compared with leviable rates on thefinished goods to be produced by such imported components,sub-assemblies and assemblies


Machinery, equipment and construction materials importedby WAPDA or its contractors for Ghazi Brotha Hydro PowerProjects (in excess of 2%)



Table III.2 (cont'd)



Expiry date

Import of machinery (not manufactured locally) byengineering units for export related production

Exemption from customs duty.limited up to 200% of the exportvalue during the preceding financialyear of the claimant and shall beavailable up to 30 June 2000.


Plant and machinery if imported by the service sector, socialsector, and agricultural sector

Exemption of customs duties inexcess of 10% (i.e. applied rate is10%) and whole of sales tax


Machinery, equipment, conversion kits and cylinders, ifimported by CNG companies during the period from1 November 1997 to 31 October 2002

Exemption from whole of customsduty and sales tax


Machinery, equipment, materials, specialized vehicles,accessories, spares, chemicals and consumables, if importedfor the oil pipe line projects

Exemption from whole customsduty and sales tax


Cellular phones if imported by the recognized cellular mobilecompanies

Exemption from customs duty inexcess of PRs 1,250 per cellulartelephone (hand-held set) alongwith one battery and a batterycharger, and whole of sales tax

02.06.1998 18.06.2001

Machinery or spares thereof, imported for setting up amanufacturing unit or for the expansion, balancing,modernization, and replacement of existing units

Exemption from customs duty andsales tax


EM-2 contractors (M/s Cegelec of France and M/s Marubeniof Japan) working on Chashma Hydro Power Project

Exemption from customs duty inexcess of 5% (i.e. applied rate is5%)


Plant and machinery if imported by specified Hi-Techindustries, engineering/capital goods/chemicals agri-basedand other industries and value added or export industries

Exemption from whole of customsduty and in case of engineering/capital goods/chemicals agri-basedand other industries exemption ofcustoms duties in excess of10% (i.e. applied rate is 10%)


B. Concessions on imports of raw materials and components

Raw materials for manufacture of wires and cables, bolts,nuts and machine screws, tubing for transformers, wire rope,welding electrodes, aluminium rod, etc.

Exemption of customs duty inexcess of 10%


Raw materials and components not produced or manufacturedlocally for manufacture of machinery equipment etc., to besupplied to electric power generation projects

Exemption of customs duty 02.04.1994 Undefined

Raw materials and components for the manufacture ofmachinery, equipment, materials etc. to be subject to thepetroleum sector companies



Raw materials, sub-components, and components ofagricultural equipment and machinery

Exemption from customs duty inexcess of specified rates and salestax


Raw materials, sub-components, and components for themanufacture of specified consumer durable goods

Exemption of customs duty inexcess of specified rates and salestax


Raw materials and components to be used in the manufactureof machinery equipment, vehicles, intermediate goods, andcapital goods to be supplied against International Tenders


Raw materials, sub-components, and components for use inthe manufacture of special goods meant primarily for exportor supply to industrial units entitled to import them atconcessionary rates

Exemption form whole of customsduty and sales tax


Materials used in the manufacture of goods supplied toindustrial units or project entitles to concessionary

Repayment of customs duties 14.06.1995 Undefined




Expiry date

Materials, components, modules, and sub-assemblies for themanufacture of electronic equipment and systems

Exemption from customs duties inexcess of specified rates and salestax


Raw material, sub-components, and components formanufacture of automotive vehicles and theircomponents/sub-assemblies

Exemption from customs duty inexcess of specified rates.


Karachi Shipyard and Engineering Works on raw materials,components, machinery etc. for use in building/repairingships, boats, etc.

Exemption from duty in excess of20% (i.e. applied rate is 20%) forlocal use and from whole ofcustoms duty for exports


Goods imported by manufacturers-cum-exporters of gemsand jewellery

Exemption from customs duty 07.08.1997 18.06.2001

Conditional exemption of import duties of raw materials andcomponents as are not manufactured locally


Raw materials and packing materials for manufacture ofpharmaceutical products, drugs, and pharmaceutical activeingredients



C. Other

Goods for manufacture of leather made-ups Exemption of customs duty inexcess of 20% (i.e. applied rate is20%)


Ships for scrapping (Rules 1993) Deferment of customs duty 31.03.1993 Undefined

Ground handling equipment Exemption from customs duty 08.09.1998 Undefined

Hemodialysis machines, etc. Exemption from customs duty andsales tax


Source: Various SROs contained in Central Board of Revenue (1999a), Pakistan Customs Tariff, Volume II AlliedNotifications & Orders, 15th Edition, Islamabad; SROs contained in Central Board of Revenue of Pakistan onlineinformation. Available at: http://www.cbr.gov.pk/budget/sro.htm [24 July 2000]; and Government of Pakistan.

(j) Tariff preferences and rules of origin

Preferences

36. Pakistan continues to grant limited preferential tariff treatment on imports from: Iran andTurkey under the additional Protocol on Preferential Tariff of the Economic the Co-operationOrganization (16 items); signatories to the GATT Protocol relating to Trade Negotiations amongDeveloping Countries (12 items); the Global System of Trade Preferences; Iran, Afghanistan, China,and Nepal (17 product categories)30; and countries participating in the SAARC Preferential TradingArrangements (SAPTA) (677 products, mainly confined to items originating in least developedparticipants, as from July 2000) (Chapter II(6)(ii)(b)). Preferential treatment has taken the form oftariff cuts (between 10% and 30%) or a fixed customs duty (i.e. 25% lower than the rate otherwiseapplied) depending on the arrangement.

Rules of origin

37. Since its previous Review, Pakistan has not applied non-preferential rules of origin. Pakistanuses the rules of origin criteria set under each preferential scheme cited above; minimumlocal-content requirements range from 30% (SAPTA, least developed member) to 50% (GATT

30 These preferences affect only imports by land and include all manufactured articles, manufactured

tobacco, silk, motor vehicles and parts thereof, tea, apples, etc. (SRO 492(I)/88, 26 June 1988 and subsequentamendments)


Protocol, SAPTA regional content) of the f.o.b. value of the product concerned.31 In the context ofthe WTO Committee on Rules of Origin, in 1999 Pakistan emphasized the need for promptcompletion of the work on harmonization in this area; it believes that interim arrangements havetrade restrictive, distortive, and disruptive effects, in particular for developing countries.32

(iii) Customs valuation

38. As of January 2000, Pakistan replaced its Import Trade Price (ITP)33 valuation system withthe declared "transaction value" method under the WTO Agreement on Customs Valuation.Nevertheless, a provision for the setting of minimum values remained in force, although it had notbeen invoked by November 200034; at the time of completion of this Report, the authorities indicatedthat this provision will only apply upon authorization by the WTO (i.e. granting of waiver forretention of minimum values). Under a Customs Valuation Information System (CVIS), Customsstations are being connected through a computer network to exchange data on assessed import valuesof each individual consignment on a daily basis; upon arrival of this data at one central location andscrutiny by the System Administrator, the entire database may be accessed by the general public (onthe Internet) and the Customs stations.35

39. Upon acceptance of the WTO Agreement, Pakistan invoked Article 20.1 of the Agreement onCustoms Valuation to delay its application for a five-year period.36 To implement the Agreement onCustoms Valuation, Pakistan amended the relevant provisions of the 1969 Customs Act in July 1999and in 2000; the date of entry into force of these amendments, which were notified to the WTO, wasto be announced in the official gazette.37 Under these amendments, the authorities may, inter alia,seize and sell under-invoiced merchandise.

40. Pakistan has received WTO and WCO technical assistance (seminars, workshops) forimplementing the Agreement in Customs Valuation.38 In the context of the WTO General Council, in1999 Pakistan suggested a multilateral solution to valuation problems; this would entail access toinformation on values contained in the export declaration from the customs authority of the exportingcountry, and certain modifications to the valuation methods.

31 WTO document G/RO/N/16, 5 March 1997; and GATT (1995).32 WTO document WT/GC/W/354, 11 October 1999.33 Following the cancellation of preshipment inspection contracts, between March 1997 and

December 1999, Pakistan reverted to the ITP valuation system, which was based upon the Brussels Definition ofValue. Values were updated every three months (or one month for goods with abrupt price fluctuations), andwere set on an "all origin" basis; values of identical/similar goods originating from any "economic zone" of thesame economic level were fixed on an eight-zone basis (U.S. Commercial Service, 1999a).

34 Finance Act (1999), available online at: http://www.cbr.gov.pk/customs/finance/Act.pdf[24 July 2000]. To continue using a system of minimum values, Pakistan should have invoked the reservationin paragraph 2, Annex III of the Agreement on Customs Valuation prior to its date of application (i.e.1 January 2000); Pakistan did not invoke this provision.

35 Central Board of Revenue online information, Customs Valuation Information System. Availableat: http://www.cbr.gov.pk/ncvis/index.html [24 July 2000].

36 Pakistan invoked Article 20.2 (delayed application computed value) and paragraphs 2, 3, and 4 ofAnnex II (reservation concerning minimum values, reversal of sequential order of Articles 5 and 6 andapplication of Article 5.2). WTO documents WT/LET/1, 27 January 1995 and G/VAL/W/25, 24 April 1998.

37 WTO documents G/VAL/W/78/Rev.1, 10 November 2000 and G/VAL/N/1/PAK/1, 15 May 2001.38 WTO documents G/VAL/8, 21 October 1996, G/VAL/W/25, 24 April 1998, G/VAL/8/Add.3,

4 May 1998, Job(99)/3169 and Add. 1, 7 June 1999, G/VAL/M/10, 6 September 1999, G/VAL/W/39,14 September 1999, G/VAL/8/Add.6, 27 January 2000, and WT/GC/W/354, 11 October 1999.


(iv) Import deposits

41. Since its previous Review, Pakistan has imposed minimum cash-margin requirements on theopening of all import letters of credit at rates of 30% (from July 1998 to February 1999) and 35%(from October 1999 to July 2000)39; in both cases the requirement was withdrawn progressively. Theauthorities indicated that there is no intention to reintroduce such requirements.

(v) Other levies and charges

42. A few withholding-type taxes have also been levied on imports. As of July 2000, the rate ofthe withholding tax (section 4(i)(a)) was increased from 5% to 6% (edible oil at 3%) of the c.i.f. valueplus customs duties plus taxes and charges on virtually all imports.40 This tax is, in principle,deductible from income tax, which means that it does not constitute an additional levy on imports aslong as the income taxes payable are sufficient to be offset by the tax. If the importer is in anon-taxpaying position, however, (e.g. because the importer is operating at a loss for income taxpurposes, or enjoying a tax holiday), the levy is effectively an import surcharge. (The same applies tosimilar types of withholding taxes on exports (section (3)(ii).)

(vi) Import prohibitions, restrictions, and licensing

43. Import prohibitions or restrictions are operated for the protection of health, national security,environmental conservation, as well as on religious or commercial grounds in accordance withdomestic legislation or international commitments. Imports of any good from any source may betemporarily or permanently suspended to protect public interest. Imports from countries applyingdiscriminatory measures against Pakistan's exports may also be restricted.41 The terms and conditionsgoverning importation are set annually, and are currently found in three Orders.42

(a) Import prohibitions

44. Since its previous Review, Pakistan has continued to prohibit imports of several itemscontained in its negative list (Table III.3, Section A) on an MFN basis; the number of items in this listseems to have been reduced.43 The main prohibitions on commercial grounds affecting numeroustextiles and clothing articles and chassis for trucks were phased-out between July 2000 andJanuary 2001; these prohibitions were introduced for balance-of-payments reasons (GATT 1994Article XVIII:B) in 1997.44 As of September 2000, Pakistan prohibited imports of raw sugar below

39 Initially, cash-margin requirements were imposed at rates of 10% (industrial raw materials) and 20%

(machinery and parts) but were soon withdrawn. WTO documents WT/BOP/S/11, 28 March 2000 andWT/BOP/N/51, 7 July 2000; State Bank of Pakistan, BPRD Circulars Nos. 03, 05, 08, 33, 37, 38 of 1999 andCircular No. 15 and 19 of 2000. Available online at: http://www.sbp.org.pk/bprd/index.htm[18 September 2000].

40 The following importers are exempt: provincial and local authorities; foreign companies held by aforeign government; importers of machinery and equipment for setting up industry; importers entitled to taxholiday, etc. (Ministry of Finance (2000a)).

41 Article 1.4 of the Import Policy Order (1999), SRO 895(I)/99, 3 August 1999.42 The Import Policy Order, the Import Export Procedure Order, and the Import Trade Order, issued

from time to time (latest issue 6 July 1998).43 In September 2000, the list contained 71 items (excluding those of general nature) under around

121 HS headings, compared with 75 in 1994 (GATT, 1995).44 In October 1997, Pakistan submitted to the WTO a list of BOP-restricted items (textile and clothing

products, chassis), but a phase-out programme was announced only one year later; in July 2000, thisprogramme was temporarily suspended due to a worsening in the BOP situation (WTO documentsWT/BOP/N/31, 31 October 1997, WT/BOP/N/31/Add.1, 31 October 1997, WT/BOP/N/40, 12 November 1998,


the grade of 600 ICUMSA45; this measure seems to be no longer in force. Imports of beef from theUnited Kingdom and Northern Ireland, and of animal bones from Afghanistan are not allowed.46

Other changes to the negative list include the withdrawal of a number of products prohibited oncommercial grounds (potatoes, certain textiles and clothing items) and the introduction of two itemson environmental grounds (waste plastics, pressure horns). Certain public-sector agencies may importprohibited items for their own use provided they pay for them from their foreign exchangeallocation.47

Table III.3Main import prohibitions, restrictions, and rights, as of 2001

A. Negative listGeneral

The import of the following items, unless specifically authorized (see Section B and below), is prohibited:

(a) Translation of the Holy Quran without Arabic text;

(b) Goods (including their containers) bearing any words or inscription of a religious connotation, the use or disposal of which mayinjure the religious feelings of any sect, class, or group in Pakistan;

(c) Goods (including their containers) bearing any obscene pictures, writings, inscriptions, or visible representations;

(d) Obscene and subversive literature and anti-Islamic literature;

(e) Second-hand machinery, commodities or reconditioned goods or factory rejects and goods of job-lot, stock-lot or sub-standardquality except for used books, magazines, journals, clothing (including footwear, travelling rugs, and blankets), certainwaste/seconds/cuttings of iron and steel/stainless steel)/tin sheets and plates and re-rollable scrap;

(f) Any goods containing ingredients or parts which may be repugnant to the Injunctions of Islam as laid down in the Holy Quranand Sunnah of the Holy Prophet (peace be upon him), including products and by-products of pigs, hogs, boars or swine;

(g) Dyes based on benzidine or containing it;

(h) Hazardous wastes as defined and classified in the Basle Convention;

(i) Any edible product not fit for human consumption; and

(j) Alcoholic beverages and spirits, including brewing and distilling dregs and waste, and wine lees and argol.

Prohibited product list (specific items)HS item Description

1211.9010 Cannabis herbs and coca leaves1301.9010 Cannabis resin and cannabis balsams1302.1100 Opium1302.1920 Concentrate of poppy straw; extracts and tinctures of cannabis2921.5900 Other (benzidine and its derivatives)2925.1110 Paraphene-tole carbamide and 5-Nitro-2nd proxy-aniline in both tablet and powder or crystalline

forms2930.9010 Allyl-isothio-cyanate2939.3010 Caffeine citrate3604.1000 Fireworks3604.9090 Other (pyrotechnic articles)3704.0010 Cinematograph film wholly or partly exposed in any Pakistani or Indian language, with or

without a sound track and depicting Pakistani or Indian way of living either silent or dubbed, orin which leading roles have been played by Pakistani or Indian actors or actresses


WT/BOP/N/51, 7 July 2000, WT/BOP/N/53, 13 December 2000, WT/BOP/N/53/Add.1, 10 January 2001, andWT/BOP/N/53/Add.2, 10 January 2001).

45 State Bank of Pakistan, F.E. Circular No. 18. Available online at: http://www.sbp.org.pk/femanual/FE%20Circulars/2000/2000.htm [6 October 2000].

46 CBR Import Policy Order (1999). Available online at: http://www.cbr.gov.pk/ [19 July 2000].47 Public sector agencies with foreign exchange allocation are specified in Appendix D of Import and

Export Procedure Order (1999), August 1999.


3706.0000 Cinematograph film wholly or partly exposed and developed in any Pakistani or Indian language,with or without a sound track and depicting Pakistani or Indian way of living, either silent ordubbed, or in which leading roles have been played by Pakistani or Indian actors or actresses

3915.1000, 3915.9000 Waste, parings and scrap, of polyethylene and polypropylene plastics4012.1000 Retreaded tyres4012.2000 Used pneumatic tyres4301.0000 to 4303.0000 Furskins and manufactures thereof, other than raw furskins and tanned or dressed furskins of

sheep, lambs, rabbits, goats, kids thereof and calf6812.5010 Clothing (of asbestos)8438.4000 Brewery machinery8512.3000 Pressure horns8710.0000 Tanks and other armoured fighting vehicles, motorized, whether or not fitted with weapons and

parts of such vehicles, other than armoured security vans9301.0000 Artillery weapons, machine-guns, sub-machine-guns, automatic rifles of all calibre and other

military fire-arms and projectiles (other than revolvers and pistols)9302.0010 Revolvers and pistols of prohibited bores and of calibers higher than 0.46 inches bore9303.3020 Arms of prohibited bores including semi-automatic rifles of 7.62 mm and rifles of 8 mm to 9 mm

bores9303.3030 Arms of calibers higher than 0.22 bore rifles9303.9000 Other (fire arms and similar devices which operate by firing of an explosive charge)9304.0000 Other arms (for example, spring, air or gas guns and pistols truncheons), excluding those of

heading No. 93079305.1000 and 9305.2000 Parts and accessories of articles of heading No. 9301 to 9304, excluding parts and accessories of

heading No. 9305.2900 barrel blanks for recoilless rifles, guns, and mortars9306.1000, 9306.2110,9306.2900, 9306.3019,9306.3029, 9306.3090 and9306.9000

Parts of ammunition and ammunition, except ammunition for weapons of non-prohibited bores

9508.0010 Gambling equipment

B. Prior approval, recommendation and/or clearance requirements (compliance with health and safety requirements)Item Requirement/agencyAnimal semen Recommendation and clearance/Livestock DivisionAnimals and plants, dead or alive,including any recognizable part orderivatives thereof specified inAppendices I, II and III to theConvention on International Tradein Endangered Species of WildFauna and Flora.

Prior approval/Ministry of Food and Agriculture

Cotton seed Prior approval/Ministry of Food and AgricultureSugarcane seeds and bananasuckers

Prior approval/Department of Plant Protection

Vegetable seeds, seed potatoes,flower seeds and other field cropseeds including tubers, rhizomes,roots, cuttings, etc.

Drawing of seeds samples and testing of seed quality/Federal Seed CertificationAgency (Ministry of Food & Agriculture)

Radioactive material and radiationapparatus

Prior approval/Directorate of the Pakistan Nuclear Safety and Radiation Protection (PakistanAtomic Energy Commission)

Calcium carbide, whether or notchemically defined.

Prior approval/Department of Explosives

Explosives Prior approval/Department of ExplosivesSteam and vapour generatingboilers (other than central heatinghot water boilers capable also ofproducing low pressure steam) andsuper-heated waterboilers (HS 8402.0000)

Prior approval/Chief Inspector of Boilers



Used or refurbished cylinders (forcompressed or liquid gas) for usein motor vehicles

Safety certificate/Department of Explosives

Petroleum oils and oils obtainedfrom Bituminous minerals, crudeand processed.

Recommendation/Ministry of Petroleum and Natural Resources or Department of Petroleum andEnergy Resources

Drugs and medicines (allopathic) Registration/Ministry of HealthSecurity paper Recommendation/Security Printing Corporation of PakistanSecond-hand aircraft andhelicopters

Recommendation/Ministry of Defence and Aviation

Second-hand ships for carryingcargo and passengers, oil tankers,liquid cargo carriers, and fishingtrawlers.

Certificate of sea worthiness/Mercantile Marine Department

C. Import rights to authorized or registered entities or firmsItem BeneficiaryBarrel blanks for recoilless rifles,guns and mortars and other partsand accessories of arms

Public sector units authorized to manufacture arms

Ingredients for formulation/manufacture of pesticides

Industrial consumers

Lube base oils Lube/oil marketing companies, refineries and lube oil blending plantsMineral oils Importable by the industrial or commercial importers, including lubricant blending, Lube Oil

marketing companies and refineries on the recommendation of the Ministry of Petroleum andNatural Resources or Department of Petroleum and Energy Resources

Pharmaceutical (allopathic) rawmaterial of pharmaceutical grade inthe form of unprocessedingredients

Pharmaceutical industries holding valid pharmaceutical manufacturing licence

Silver (including silver plated withgold or platinum) gold (includinggold plated with platinum),unwrought or in semi-manufactured forms or in powderform

Companies specifically registered and authorized/Ministry of Commerce

Large agriculture tractors in CKDcondition

Recognized assemblers and prospective investors for progressive manufacturing

Motor cars and other motorvehicles, principally designed forthe transport of persons (other thanthose specified in HS heading87.02) including station-wagonsand racing cars in CKD condition

Recognized assemblers as per deletion programme approved by the Ministry of Industries andProduction

Armoured security vans, includingsecond hand

Banks and security companies for their own use, or for another bank or security company

Aircraft, spacecraft, except aircraftparts

Public sector agencies, private sector airlines, private flying clubs, charter and aviation services,and charitable foundations with valid licences/Ministry of Defence

TV transmission antenna system,field pick-up units STL equipment,VHF set, TV modulator anddemodulator, video projectionsystems, and video switchingsystem

Pakistan Television Corporation and other licensed by the Federal Governments

Transmission apparatus whether ornot incorporating receptionapparatus, excluding fax machines

Pakistan Television Corporation Ltd., concerned public sector agencies, and companies havingagreement with government agencies for supply of cellular and mobile phone facility andrecognized manufacturers and their authorized agents

Source: Government of Pakistan.

45. Although imports of second-hand machinery, reconditioned goods or any kind of factoryrejects are prohibited, some second-hand or used goods not manufactured locally are importable


subject to certain conditions (Table III.3, Sections A and B)48; imports of permissible second-handmachinery are subject to preshipment inspection, however, to ensure that the machinery hasreasonable useable life.

46. Pakistan prohibits all imports from Israel; it has increased progressively the number of(HS) items that may be imported from India from 571 (1993) to 603 (as of July 2000).49

(b) Import approval and restrictions

47. Pakistan maintains that it does not operate an import licensing system; nonetheless, priorapprovals/recommendations/clearance requirements implicitly entail import licensing.50 As ofSeptember 2000, Pakistan had notified its regulatory framework on import-licensing procedures; butit has not submitted any replies to annual questionnaires on its import licensing procedures.51

48. At present, imports of several products are subject to prior approval, recommendations, andclearance from different ministries/departments in accordance with safety and health requirements(Table III.3, Section B). Import authorization from the Ministry of Commerce is required mainly inthe case of the importation, by certain entities, of otherwise banned items: foreign airlines, oil and gascompanies, refineries and mining companies, foreign construction companies, and foreign contractingfirms engaged in various projects in Pakistan; and where no foreign exchange is involved.

49. Certain products may be imported only by the public sector or industrial consumers(Table III.3, Section C). Imports of 19 product categories are subject to various conditions, such asreceipt of certificates by suppliers, payment for imports from the importer's own foreign currencyaccount, etc. Although Pakistan does not maintain any quantitative restrictions, certain imports (e.g.ozone depleting substances, certain chemicals) are subject to quantitative limits determined on adomestic needs basis or by the Central Board of Revenue in consultation with competent governmentagencies.

(vii) State-trading

50. Despite efforts to reduce its involvement in the economy, the State participates in awide-range of trade and/or trade-related activities (Table III.4). Participation seems particularlypronounced in the following activities: trade in certain essential commodities; production/marketingof vegetable ghee, fertilizers, chemicals, cement, transport equipment, fuels, machine tools; oil andgas exploration and exploitation; power production and distribution; financial, telecommunication,transport, tourism, and engineering services. Government-owned industrial enterprises are thought toemploy almost 46,000 workers.52

48 Other exceptions include used books, magazines, journals, clothing (including footwear, travelling

rugs, and blankets), certain waste/seconds/cuttings of iron and steel/stainless steel/tin sheets and plates andre-rollable scrap.

49 Export Promotion Bureau (2000); and Appendix E of the Import & Export Procedure (1999),SRO(I), 898(I)/99, August 1999.

50 WTO document G/LIC/N/1/PAK/1, G/LIC/N/2/PAK/1, 29 May 1996.51 WTO document G/LIC/W/13, 21 September 2000.52 U.S. Commercial Service (1999a).


Table III.4State involvement in enterprises in Pakistan, 2001

Entity Activity Degree of state ownership/situationin privatization programme

GOODSAgriculture

Trading Corporation of Pakistan (merged withCotton Export Corporation of Pakistan and RiceExport Corporation of Pakistan)

Trading of essential commodities Not included in the privatizationprogramme

Manufacturing (including food processing)Industries and production

A&B Industries Gases Production of cooking oil/ghee 100% / excluded from privatizationprogramme. Liquidation under process

A&B Oil Industries .. 100% / privatizedAl-Abbas Ltd. (Rice) .. Not included in the privatization

programmeBela Engineering Ltd. Manufacture/assembly of diesel engines 100% / liquidatedBolan Textile Mills Qeutta Textile: spinning, weaving, processing 100% / privatization under processCivic Centres Corporation Not included in the privatization

programmeDir Forest Industry Complex Production of plywood 100% / excluded from privatization

programme and transferred toprovincial government

Domestic Appliances Ltd. - JV Production of domestic appliances Not included in the privatizationprogramme

E&M Oil Mills Production of cooking oil/ghee 100% / privatization under processENAR Petrotech Services (Pvt) Ltd. Technical consultancy; feasibility

studies; energy conservation studies;technology/process evaluation;conceptual/basic/process engineeringdesign; procurement services; projectmanagement services; supervision ofinstallation and commissioningoperations; installation services forinstrumentation systems.

Not included in the privatizationprogramme

Federal Ceramics and Chemical Corporation Production of ceramics and chemicals Not included in the privatizationprogramme

Ghee Corporation of Pakistan Several firms producing ghee andcooking oil


Harnai Woollen Mills Manufacture of woollen fabric andblankets

81.4% / liquidated

Hazara Phosphate Fertiliser Ltd. Production of phosphate fertilizer 100% / privatization under processHeavy Electrical Complex Production of power transformers. Not included in the privatization

programmeHeavy Mechanical Complex (HMC) Design, manufacture and supply of

industrial plants and machineryincluding complete sugar mills, portlandcement plants and white cement plant,etc.


Karachi Pipe Mills Ltd. Production of G.I. & M.S. pipes Not included in the privatizationprogramme

Koh-i-Noor Oil Mills Production of cooking oil/ghee 45.69% / excluded from privatizationprogramme

Larkana Sugar Mills Sugar manufacture 100% / liquidatedLasbella Textile Mills, Ulhal Textile spinning, weaving, processing 100% / privatization under processLyallpur Chemicals and Fertilizer Ltd. Fertilizer manufacture 75% / privatization under processMaqbool Oil Mills Production of cooking oil/ghee 61.85% / privatization under processMorafco Industries Production of cooking oil 53.10% / privatization under process




National Fertilizer Corporation Several firms producing fertilizers Not included in the privatizationprogramme

National Fertilizer Marketing Ltd. Marketing of fertilizers Not included in the privatizationprogramme

National Refinery Ltd. .. Not included in the privatizationprogramme

Northern foundry and Engineering works .. Not included in the privatizationprogramme

Nowshera Engineering Company Ltd. .. Not included in the privatizationprogramme

Pak-American Fertilizer Marketing Ltd. Fertilizer manufacture 100% / privatization under processPak-Arab Fertilizers Ltd. Fertilizer manufacture: nitro phosphate,

CAN, urea, ammonia, and nitric acid48% / privatization under process

Pak-Dye Chemicals Production of chemical dyes 100% / privatization under processPak-Iran Industry Ltd. – JV .. 100% / privatization under processPakistan Automobile Corporation .. Not included in the privatization

programmePakistan Engineering Company Ltd. Engineering products: machine tools,

electric motors, pumps, bicycles, powerlooms, transmission towers, steelfabrication

65% / privatization under process

Pakistan Industrial Development Corporation .. Not included in the privatizationprogramme

Pakistan Machine Tools Factory (PMTF) Manufacturing of center lathes, millingmachines, turret milling, copy millingand boring milling machines,automotive parts such as gear boxes,transfer cases, axles, steering/timinggears etc.; non-ferrous die castings.


Pakistan Steel Fabricating Company Ltd. Steel mill 100% / excluded from the privatizationprogramme

Pakistan Steel Mills Corporation Ltd. Production of coke, pig iron, billets, hotand cold rolled sheets etc.

100% / excluded from the privatizationprogramme

Pakistan Switchgear Ltd. .. 100% / privatizedPak-Motor Car Company Trading company 100% / excluded from the privatization

programmePak-Saudi Fertiliser Ltd. Fertilizer manufacture: urea 100% / excluded from the privatization

programmePECO (BBW Land lot A & B) Real estate 65% / privatization under processPECO (Kot Lakhpat) Engineering products: machine tools,

electric motors, pumps, bicycles, powerlooms, transmission towers, steelfabrication

35 % / privatization under process

People Steel Mills Ltd. Steel mills 100% / privatizedPIDC Printing Press (pvt) Ltd .. Not included in the privatization

programmePunjab Vegetable Ghee Production of vegetable ghee 100% / privatizedRavi Rayon Ltd. Production of acetic yarn and other by-

products40.36% / privatization under process

Republic Motors Ltd. Workshop/real estate 100% / privatization under processSargroh Vegetable Ghee Production of cooking oil/ghee 100% / excluded from the privatization

programmeShahdadkot Textile Mills Ltd. Textile spinning, weaving, processing 100% / excluded from the privatization

programme. Liquidation under processSind Engineering Ltd. Assembly of Mazda light trucks and sale

of Mazda parts100% / privatization under process

Spinning Machinery Co. Production of machinery 100% / excluded from the privatizationprogramme




State Cement Corporation of Pakistan Cement production Not included in the privatizationprogramme

State Engineering Corporation Manufacturing of power plantequipment; designing, engineering andmanufacturing know-how for industrialplants and machinery


State Engineering Project Co. .. Not included in the privatizationprogramme

Suzuki Motorcycles Pakistan Ltd. – JV Production assembly of motorcycles 4.18% / excluded from the privatizationprogramme

Talpur Textile Mills Textile mills 100% / privatization under processTarbela Cotton and Spinning Mills Spinning and mills Not included in the privatization

programmeTrailer Development Corporation of Pakistan .. 100% / excluded from the privatization

programmeUniversal Vegetable Ghee Production of cooking oil/ghee 77.25% / excluded from the

privatization programmeUtility Stores Corporation (930 stores) .. Not included in the privatization

programmeMining/Quarrying and EnergyPetroleum and NR

AC Rohri Cement Cement production 100% / privatization under processAttock Refinery Ltd. Processing crude oil found in the

northern region.35% / privatization under process

Baluchistan Development Authority Joint ventures in mining projects. Not included in the privatizationprogramme

Degari Collieries .. Not included in the privatizationprogramme

Iran Pak Refinery Ltd. .. Not included in the privatizationprogramme

Jatta Salt Mines .. Not included in the privatizationprogramme

Javedan Cement Ltd. Cement production 95.5% / privatization under processKalabagh Salt Mines .. Not included in the privatization

programmeKarak Salt Mines .. Not included in the privatization

programmeLakhra Coal Development Company Joint ventures in coal Not included in the privatization

programmeLakhara Coal Mines .. Not included in the privatization

programmeMari Gas Company Ltd. .. 40% / not included in the privatization

programmeMeting Collieries .. Not included in the privatization

programmeMustekham Cement Ltd. Cement production 85.3% / privatization under processNagarparkar China Clay .. Not included in the privatization

programmeNational Crescent Petroleum Ltd .. Not included in the privatization

programmeOil and Gas Development Corporation Oil and gas exploration, development,

gas production and sale at the field-gate.100% / privatization under process

Pakistan Mineral Development Corporation .. Not included in the privatizationprogramme

Pakistan Oilfields Ltd. Extraction of crude oil, gas, LPG,sulphur, solvent oil





Pakistan Petroleum Ltd. Oil and gas exploration, development,production and sale at the field-gate.


Pakistan Refinery Ltd. .. Not included in the privatizationprogramme

Pakistan State Oil Company Ltd. Procurement, marketing, distributionand sale of fuel products and lubricants;bottling, marketing, distribution and saleof LPG; and development and operationof petroleum-related infrastructure(terminals/storage, pipeline, etc.)

25.51% / privatization under process

Pirkoh Gas Company Ltd. Production of gas 100% subsidiary of OGDCL /privatization under process

Punjab Mineral Development Corporation Joint ventures in mining projects. Not included in the privatizationprogramme

Saindak Metal Corporation Joint ventures in mining projects. Not included in the privatizationprogramme

Sarhad Development Authority Joint ventures in mining projects. Not included in the privatizationprogramme

Sindh Coal Authority Joint ventures in mining projects. Not included in the privatizationprogramme

State Petroleum Refining and PetrochemCorporation

Petroleum refineries Not included in the privatizationprogramme

Sui Northern Gas Pipelines Ltd. Gas transmission from different fields tocity-gate(s); distribution operations;marketing and sale of natural gas todifferent categories of consumer; smallLPG bottling and sale operations andcompressor repairs facilities


Sui Southern Gas Company Purification of sour gas at the Sui gasfield, transmission, distribution, and saleof natural gas in the provinces of Sindhand Balochistan; bottling anddistribution of LPG in all the fourprovinces of the country, and assemblyof Domestic Gas Meters

89% (direct or indirect) / privatizationunder process

Thatta Cement Cement production 100% / privatization under processWater and power

Faisalabad Electric Supply Company (FESCO) Distribution of electricity to mainlyseven districts of Punjab Province ofPakistan i.e. Faisalabad, Sargodha,Jhang, Toba Tek Singh, Khushab,Mianwali and Bhakkar.


Faisalabad Steam and Gas Turbine Stations .. Not included in the privatizationprogramme

Guddu Power Complex .. Not included in the privatizationprogramme

Gujranwala Area Electric Board .. Not included in the privatizationprogramme

Hyderabad Area Electricity Board .. Not included in the privatizationprogramme

Islamabad Area Electricity Board .. Not included in the privatizationprogramme

Jamshoro Power Company (GENCO-1) Generation of electricity through threethermal power plants i.e. 880 MWJamshoro, 174 MW Kotri and 150 MWLakhra





Karachi Electric Supply Corporation Vertically integrated electricity utilityresponsible for the generation,transmission and distribution ofelectricity in Karachi and suburbs


Kotri Gas/Combined Cycle .. Not included in the privatizationprogramme

Lahore Area Electric Board .. Not included in the privatizationprogramme

Lakhra Fluidised-bed Power Plant .. Not included in the privatizationprogramme

MESCO .. Not included in the privatizationprogramme

Multan Area Electricity board .. Not included in the privatizationprogramme

Muzzaffargarh Steam Power Station .. Not included in the privatizationprogramme

National Engineering Service Pak Ltd. (NESPAK) Multi-disciplinary consultingengineering firm

100% / not included in the privatizationprogramme

National Power Construction Co. Turnkey contractors for power projectstransmission lines


National Tubewell Construction Corporation Ltd. Construction of SCARP tubewells 100% / not included in the privatizationprogramme

Pasni .. Not included in the privatizationprogramme

Peshawar Area Electricity Board .. Not included in the privatizationprogramme

Quetta Area Electricity Board .. Not included in the privatizationprogramme

Shahdra Gas Turbine .. Not included in the privatizationprogramme

Sukkur Steam Plant .. Not included in the privatizationprogramme

Water and Power DevelopmentAuthority (WAPDA)

.. Not included in the privatizationprogramme

SERVICESFinancial servicesFinance

Agricultural Development Bank of Pakistan .. Not included in the privatizationprogramme

Allied Bank of Pakistan Ltd. Commercial bank 49% / privatization under processBankers Equity Ltd .. PrivatizedEquity Participation Fund .. Not included in the privatization

programmeFederal Bank for Cooperatives .. Not included in the privatization

programmeFirst Women Bank Ltd. .. 57.75% (directly and indirectly) (will

stand privatized automatically afterprivatization of UBL)

Habib Bank Ltd. Commercial bank 100% / privatization under processHouse Building Finance Corporation .. Not included in the privatization

programmeIndustrial Development Bank of Pakistan DFI 100% / not included in the privatization

programmeInvestment Advisory Corporation of Pakistan .. Not included in the privatization

programmeInvestment Corporation of Pakistan Managing 26 closed-end mutual funds,

underwriting and project finance73% / privatization under process




Muslim Commercial Bank Ltd. Commercial bank 17% / privatization under processNational Bank of Pakistan Commercial & retail banking and

related services domestically andoverseas


National Development Finance Corporation Development Finance Institution (DFI) 100% / merger with NBP beingconsidered by Finance Division

National Investment Trust Open and mutual fund 58% / privatization under processPakistan Industrial Credit and InvestmentCorporation

DFI 46% / already being managed byprivate sector management

Punjab Provincial Cooperative Bank .. Not included in the privatizationprogramme

Regional Development Finance Corporation .. Not included in the privatizationprogramme

Small Business Finance Corporation .. Not included in the privatizationprogramme

United Bank Ltd. Commercial bank 100% / privatization under processYouth Investment Promotion Society .. Not included in the privatization

programmeInsurance

National Insurance Corporation Insurance Not included in the privatizationprogramme

Pakistan Insurance Corporation Insurance 74% / privatization under processState Life Insurance Corporation of Pakistan Insurance 100% / privatization under process

Communications and mediaTelecommunications

Carrier Telephone Industries Engaged in manufacture of telecomequipment

Joint venture of PTCL with privatesector. Privatization under processwith PTCL

Pakistan Post Office Postal services, a wide range of banking,life insurance, and a number of otherpublic services.


Pakistan Telecommunication Co. Ltd. Provider of basic telephone services tothe private sector in Pakistan

88.12% / privatization under process

Telephone Industries of Pakistan Engaged in manufacture of telecomequipment

Joint venture of PTCL with privatesector. Privatization under processwith PTCL

AudiovisualNational Film Development Corporation .. Not included in the privatization

programmeTransportationSea transport

Gwadar Port .. Not included in the privatizationprogramme

Karachi Port Trust .. Not included in the privatizationprogramme

National Tanker Corporation .. Not included in the privatizationprogramme

Pakistan National Shipping Corporation .. Not included in the privatizationprogramme

Pakistan Railway Pakistan Railways has three businessunits, Passenger, Freight, andInfrastructure. Corporatization of thebusiness units is under process.

100% / not included in the privatizationprogramme

Port Qasim Authority .. Not included in the privatizationprogramme




RailwaysBridge Workshop, Jhelum .. Not included in the privatization

programmeConcrete Sleeper Factories – Five .. Not included in the privatization

programmeLocomotive Factory, Risalpur .. Not included in the privatization

programmePR Freight, Passenger and Infra. .. Not included in the privatization

programmeRailway Carriage Factory .. Not included in the privatization

programmeRailway Construction Co. of Pakistan .. Not included in the privatization

programmeRailway Steel Shop, Moghalpura .. Not included in the privatization

programmeRailway Workshop Complex, Moghalpura .. Not included in the privatization

programmeAviation

Airports – Civil Aviation Authority Business at airports - aeronautical(airside) and non-aeronautical(landside). Landside business at theairports, exclusively under the domainof the Civil Aviation Authority (CAA).Out of 42 airports (7 international and35 feeder airports) the Pakistan AirForce and the CAA jointly use 18airports and the CAA is also responsiblefor management, maintenance, anddevelopment, exclusively operates 19airports (5 are closed).


Duty Free Shops (Pvt.) Ltd. .. Privatized in 1999International Advertising Ltd. .. Not included in the privatization

programmeMidway House (Pvt.) Ltd. .. Not included in the privatization

programmePakistan International Airlines Corporation .. Not included in the privatization

programmePIA Shaver Poultry Breeding Farms Ltd. .. Not included in the privatization

programmeSkyrooms (Pvt.) Ltd. .. Not included in the privatization

programmeConstruction

Federal Lodges Property Lodges No. 1-4 privatized. Lodges No.5 and 6 excluded from the privatizationprogramme

National Construction Ltd. .. 100% direct and indirect / privatizationunder process

TourismFlatties Hotel, Lahore Property 87% / privatization under processMalam Jabba Tourist Resort .. 100% / privatization under processPakistan Tourism Development Corporation Largest chain of 29 motels and 2 hotels

located all over Pakistan.Not included in the privatizationprogramme

PIA Hotels Ltd .. Not included in the privatizationprogramme

PTDC Hotels .. 87% / privatization under process

.. Not available.

Source: Government of Pakistan; Privatisation Commission of Pakistan online information. Available at:http://www.privatisation.gov.pk/information; and State Engineering Corporation online information. Available at:http://www.sec.gov.pk/ [25 October 2000].


51. Although no state enterprise appears to enjoy monopoly rights in trade, the Government,along with numerous state-run corporations, is the country's largest importer.53 In January 1995,number of tasks entrusted to the state-owned (Ministry of Commerce) Trading Corporation ofPakistan (TCP) was reduced.54 These include: the importation of essential commodities inemergency cases, soyabean oil under US PL-480 and CC Credit programmes, palm oil from Malaysiaunder Malaysian credit, industrial raw materials and other bulk items; the utilization of import creditfacilities; exports of selected items of public-sector corporations and agencies; and export promotionactivities (section 3(ix)). The TCP's trading activities have declined; apparently it signed no importor export contracts in 1998-99. Its 1997-98 imports (12,500 tonnes of sugar from Brazil) and exports(rice and fresh mangoes), were well below its 1996/97 import (sugar, palm oil seeds, palm oil) andexport (rock salt, rice, fresh mangoes, clinker) operations. As of January 2001, the Rice ExportCorporation and Cotton Export Corporation have been merged into the TCP.

52. Pakistan considers that it does not maintain any state trading enterprises within the meaningof Article XVII:4(a) of the GATT 1994; it is of the view that existing state firms are not granted anyexclusive or special rights (including statutory or constitutional powers) allowing them to influencethe level and/or direction of foreign trade.55 In the context of the WTO Working Party on StateTrading Enterprises, in 1996-97, Canada, New Zealand, and the United States raised questions on thisissue and on the absence of notifications in this matter; they also enquired about the rights andactivities of the TCP, the Cotton Export Corporation and the Rice Export Corporation, as well trade inagricultural products carried out by the Ministry of Agriculture.

(viii) Government procurement

53. Pakistan is not a signatory to the Plurilateral WTO Agreement on Government Procurement.Domestic legislation on government procurement dates back to 1972; it was amended most recentlyin March 1998.56 By the time of completion of this Report a new amendment was underconsideration. Pakistan accords price preferences to domestic suppliers in order to develop its privatesector; according to the authorities, this practice is recognized by certain international institutions.57

54. As from 1998, all public-sector agencies under the direct or indirect control of theGovernment58 have been "advised" to give price preferences of up to 25% to domestic suppliers ofengineering goods; these preferences vary directly with the degree of domestic value added.59

Furthermore, public sector agencies have been "advised" to procure engineering goods domesticallyand omit such items from the list of barters, credit, and loans, as well as to provide educational and

53 U.S. Commercial Service (1999a).54 Trading Corporation of Pakistan (1997, 1998, and 1999).55 WTO documents G/STR/N/1/PAK, 16 April 1996, G/STR/Q1/PAK/1, 27 June 1996,

G/STR/Q1/PAK/2, 5 July 1996, G/STR/M/4, 15 August 1996, G/STR/N/3/PAK, 21 May 1997,G/STR/Q1/PAK/4, 31 July 1997, G/STR/W/36, 8 October 1999, G/STR/N/4/PAK, G/STR/N/5/PAK, andG/STR/N/6/PAK, 1 February 2001.

56 Purchase Manual (1972); Import of Engineering Goods (Control) Order (1998); and Central Boardof Revenue (1999a), SRO/98, 26 March 1998.

57 GATT (1995), "Replies by the Representative of Pakistan" and additional comments at the TradePolicy Review of Pakistan.

58 "Public sector agencies" include all the statutory or autonomous corporations, attached departmentsor other agencies or bodies under administrative control of the Federal and the Provincial Governments,including private or public companies with government shareholding (Central Board of Revenue (1999a),SRO/98, 26 March 1998).

59 Price preferences are set at rates of 15%, 20%, and 25% for minimum value added of 20%, 20% to30%, and over 30%, respectively. Price comparisons are made in rupees (Central Board of Revenue (1999a),SRO/98, 26 March, 1998).


development contracts for an amount of 10% of their annual procurement budget to local industry onmutually agreed terms. Requirements for inviting tenders and quotations, making enquiries,furnishing earnest money and security deposit are waived if goods and services are procured fromother public-sector agencies. In the case of all industrial and infrastructural projects, the importationof turnkey plants or the awarding of turnkey contracts to foreign manufactures by public sectoragencies are prohibited.

55. Government procurement is in general operated through publicly announced tenders, and inaccordance with the principles of international competitive bidding.60

56. Domestic agents as well as agents of foreign suppliers are generally registered with theDepartment of Investment Promotion and Supplies of the Ministry of Industries and Production,which is responsible for government procurement in Pakistan; final purchase is undertaken by thePurchasing and Inspection Agency. The authorities indicated that a large number of governmentbodies make their suppliers' registration and procurement operations independently. No obligation topurchase exclusively from registered suppliers is in force; nevertheless, registered suppliers do notneed to lodge earnest money upon submission of tender document, and may pay a lower securitydeposit than non-registered suppliers.61 A national independent board or institution for publicprocurement (National Regulatory Authority) was established in order to eradicate corruption in theprocurement process.62

57. In 2000/01, Pakistan's total government procurement market for goods and services wasestimated at PRs 366.1 billion (US$6.3 billion), in terms of current consumption expenditure.63 At thetime of the previous Review, the bulk of government procurement was executed with foreign firms asmajor projects were financed with foreign financial assistance or developed by foreign firms.64

(ix) Local-content requirements

58. Under its August 1987 Indigenization/Deletion Programme, Pakistan has continued to provideincentives in the form of duty concessions on imports of prescribed components and parts, for theassembly and manufacture of engineering goods, electrical items, and automobiles. The programme'sobjective has been to promote industrial development through the exploitation of available resources,transfer of technology, and the strengthening of links between large-, medium-, and small-scaleindustries, while safeguarding Pakistan's external financial position.65 Under agreed time schedules,the enterprises concerned are required to increase progressively the use of domestically producedcomponents and parts.66 The programme, which is open to both local and foreign investors, is notmandatory in principle (see below); it is run jointly by the Ministry of Industries and Production andan Indigenization Committee.67 Plans to expand the programme to the manufacture of deep freezers,

60 U.S. Commercial Service (1999a).61 GATT (1995).62 USTR (2000a).63 Ministry of Finance (2000c), Appendix Table 1.6.64 GATT (1995), "Replies by the representative of Pakistan" and additional comments.65 WTO document G/TRIMS/N/1/PAK/1, 7 April 1995.66 The schedules are established in consultation with the enterprises concerned and the related vendor

industries, and take into account the potential of the local industrial base, the availability of technical know-howin the country, and the facility with which the transfer of technology could be arranged from abroad.

67 GATT (1995).


motorcycles, and tractors was under preparation between 1998 and 1999.68 The authorities indicatedthat the sectoral/item coverage of the programme has not been expanded over the past five years.

59. According to the authorities, the programme has succeeded in stimulating investment in manyjoint ventures and in technical collaboration for local manufacturing; the degree of self-sufficiency inlocal components varies from 58% to 100%. No data are available on the operation and benefits ofthe programme. Some industries have obtained quality certification, such as ISO 9000 and havesucceeded in exporting parts and components.69 On the other hand, concern has been expressed aboutthe allegedly compulsory nature of the programme in the telecommunications equipment sector aswell as the rigidities of sectoral schedules, which do not allow for voluntary increase of local content,and the subsequent rise in tariff preferences conditional upon local content.70

60. In the light of the programme's inconsistency with the provisions of the WTO Agreement onTrade-Related Investment Measures (TRIMs), in 1995 Pakistan notified it to the WTO Committee onTrade Related Investment Measures.71 In 1999, Pakistan together with certain other Membersrequested a seven-year extension of the time-limit (January 2000) for the elimination of its TRIMsprogramme; it also suggested that the TRIMs provisions be revised in order to allow developingcountries to maintain local-content schemes depending on their developmental needs.72 In July 2001,Pakistan was granted an extension of its transition period until end December 2001; subsequently, itrequested an additional extension period. The authorities are exploring a new policy approach in thisarea.

(x) Contingency measures

(a) Anti-dumping and countervailing measures

61. Between January 1996 and 30 June 2001, Pakistan did not resort to any anti-dumping orcountervailing measures.

62. Domestic legislation on anti-dumping and countervailing actions was promulgated in 2000and 2001, respectively, bringing domestic regulations in line with the provisions of the relevant WTOAgreements.73 The National Tariff Commission, which has the investigative authority, is beingre-organized, strengthened, and given further power.74

63. Pakistan has regularly submitted semi-annual reports on the status of its anti-dumping andcountervailing actions. In the context of the WTO Committees on Anti-Dumping Practices andSubsidies and Countervailing Measures as well as in the review of the SCM Agreement Articles 6.1,8, and 975, it has expressed views on, inter alia, the unfair use of anti-dumping measures by developed

68 Ministry of Finance (2000c).69 Ministry of Finance (2000c).70 USTR (2000a).71 WTO document G/TRIMS/N/1/PAK/1, 7 April 1995.72 WTO documents WT/GC/W/354, 11 October 1999, G/C/W/173, 11 January 2000, G/L/466,

7 August 2001, and G/C/W/294, 31 August 2001.73 Anti-dumping Duties Ordinance, 22 December 2000, and Countervailing Duties Ordinance,

3 January 2001.74 Export Promotion Bureau (2000).75 WTO documents Job(99)/3169 and Add. 1, 7 June 1999, WT/GC/W/354, 11 October 1999,

WT/GC/W/355, 11 October 1999, G/SCM/M/22, 17 February 2000, and G/SCM/M/24, 26 April 2000.


countries76, and implementation issues. Pakistan's suggestions for improving the agreements in thisarea included the strengthening of the special and differential treatment for developing countries byincreasing their de minimis margin, and incorporating subsidies that could be essential for achievingtheir legitimate developmental goals into the definition of non-actionable subsidies.

(b) Safeguards

64. During the period under review, Pakistan has not resorted to any safeguard measures underGATT 1994 Article XIX. At the time of the previous Review, Pakistan did not have any safeguardlegislation; at the time of completion of this Report the authorities indicated that legislation has beenprepared and was expected to enter into force soon.77

(xi) Standards and other technical requirements

65. Pakistan considers the standardization process as an essential element for improving industrialproductivity as well as ensuring sustainable export growth.78 The authorities indicated that Pakistanitechnical requirements do not distinguish between foreign and domestic goods.

(a) Standards

General Framework

66. The basic rules concerning the national standards system were updated in 1996.79 ThePakistan Standard and Quality Control Authority (PSQCA) (created by merging the PakistanStandards Institute, the Central Testing Laboratories, and other standards setting bodies) develops andadopts standards as well as providing testing/quality control services and facilities.80

67. However, different ministries and departments are empowered to establish and enforce theirown standards in their area of responsibility81; the PSQCA seemingly coordinates work betweennational and international standards bodies, and is responsible for arranging their publications as wellas for providing consultancy and other services relating to standardization and quality control.82

Coordination among governmental agencies is ensured by sectional committees consisting oftechnical experts from the public and private sectors. For example, technical regulations relating tofood and health safety are established by the Ministry of Health, Social Welfare and PopulationPlanning.83 The Pakistan Environmental Protection Agency (PEPA) is responsible for thedevelopment, implementation, and monitoring of compliance with National Environmental QualityStandards (NEQS) that are approved by Pakistan Environmental Protection Council (section 4(v)).84

76 Since 1996, Pakistan's exports of cotton fabrics and/or bed linen have been subject to anti-dumping

investigation in the EU and South Africa; by June 2000, out of four cases only one (the EU) had led to theadoption of final measures.

77 Export Promotion Bureau (2000); and GATT (1995).78 Export Promotion Bureau online information, (ISO 9000). Available at: http://www.epb.gov.pk/

iso.htm [28 July 2000].79 Pakistan Standard and Quality Control Authority (PSQCA) Act 1996.80 Board of Investment (1999), pp. 43-46.81 GATT (1995).82 Ministry of Science and Technology online information. Available at: http://www.most.gov.pk/PSI/

index.htm [24 September 2000].83 WTO document G/TBT/ENQ/12, 20 August 1998.84 Ministry of Environment online information. Available at http://www.environment.gov.pk/

[25 July 2000]; and U.S. Commercial Service (1999a).


Standards

68. At the time of completion of this Report, there were about 4,621 national standards foragriculture, food, chemicals, civil and mechanical engineering, electronics, weights and measures, andtextile products.85 In principle, ISO, IEC, OIML and other international, regional, and nationalstandards are used as the basis for the preparation of Pakistani standards.86 The authorities indicatedthat more than half of national standards are identical to international standards, while 45% are similarto international standards. Mandatory standards are incorporated in technical regulations ofregulatory authorities for public health and safety.87 No information was available to the Secretariaton the number, product coverage, and compliance with international norms of compulsory/mandatorystandards at the time of completion of this Report. Reportedly, importers experience difficulty owingto domestic quality standards.88

Quality certification

69. Recognizing that quality has become a decisive factor in increasing exports, since 1997/98Pakistan has helped exporters of manufactured goods to achieve ISO 9000/14000 certification throughfinancial support (section 3(iv)) and the strengthening of the institutional setting in this regard.89

Since 1997/98, the Ministry of Commerce has provided financial assistance (PRs 150,000 toJune 2000; PRs 100,000 (US$1,934) since July 2000) to achieve certification; there has been aproposal to extend this support to QS9000 certification. The Ministry of Science and Technologyprovided grants for undertaking professional studies (50% of the cost up to PRs 50,000 per study) infavour of small to medium-sized enterprises (SMEs) intending to improve industrial productivity andmanagement quality and to obtain ISO 9000/14000 accreditation. The programmes of theseministries were merged in 1997.

70. In January 1998, the Pakistan National Accreditation Council (PNAC), an autonomous bodyunder the administrative control of the Ministry of Science and Technology, was created (operationallater) to operate the ISO 9000 registration and certification system.90 Further institutional efforts haveincluded: the establishment of a special section of the EPB to increase awareness and facilitateimplementation of ISO 9000 requirements (2000); and, cooperation of the Board of Investment withthe private sector Pakistan Institute of Quality Control to promote quality management inmanufacturing.91 By 2000, there were ten ISO 9000 certification bodies/firms (mostly foreign) inPakistan. By April 2001, out of 704 applicants 409 companies had obtained ISO 9000 certificationassistance.

Transparency and international cooperation

71. Pakistan has accepted the Code of Good Practice for the Preparation, Adoption, andApplication of Standards.92 Pakistan has notified its enquiry points to the WTO, but has neither takendomestic measures nor actually used the consultation and notification (prior to implementation)

85U.S. Commercial Service (1999a).86 WTO document G/TBT/2/Add.45, 12 February 1998.87 WTO document G/TBT/2/Add.45, 12 February 1998.88 USTR (2000a).89 Export Promotion Bureau online information, (ISO 9000).90 Planning Commission (2000), p. 45.91 Board of Investment online information. Available at: http://www.pakboi.gov.pk/ [20 July 2000].92 WTO documents G/TBT/ENQ/12, 20 August 1998, G/TBT/CS/2/Rev.6, 20 January 2000, and

G/TBT/ENQ/16, 25 April 2000.


procedures under the WTO Agreement on Technical Barriers to Trade.93 In the context of the WTOCommittee on Technical Barriers to Trade, Pakistan has, inter alia, expressed concern about the lackof effective participation of developing countries in the standardization process, implementationissues, definition of international standards in mandatory regulations, and notification issues.94

(b) Sanitary and phytosanitary regulations

72. Pakistan's sanitary and phytosanitary regime is governed largely by legislation dating back to1976 and 1985.95 At the time of completion of this Report, the Pakistan Plant Quarantine Act 1976was being revised in the light of the provisions of the International Plant Protection Convention 1997and the WTO SPS Agreement. The Animal Quarantine and Plant Protection Departments of theMinistry of Food, Agriculture, and Livestock are entrusted with the implementation of measures inthis area; coordination among these departments is seemingly being increased.96

73. The Animal Quarantine Department provides a central certification service to importers andexporters of animals and animal products, and formulates regulations to prevent the introduction ordissemination of diseases of foreign origin; nevertheless, the quarantine regulations are seemingly oflimited scope as they focus on diseased organisms only and not the introduction of invasive species.97

Although uniform standards are applied through examinations and tests in line with international traderequirements, the testing facilities for agricultural goods are reportedly inadequate and standards areinconsistently applied resulting in occasional discrimination.98 The authorities indicated that apest-risk analysis is being put in place.

74. As from January 2000, emergency measures in form of dioxin-free certification have affectedall livestock and livestock products originating in Belgium; this requirement was notified to theWTO.99 As of June 2001, live animals (cattle, buffalo, sheep, and goats), meat and bone meal, tallowcontaining protein, and feed ingredients from BSE infected countries (such as Belgium, Denmark,France, Germany, Italy, Ireland, Luxembourg, Spain, the Netherlands, and the United Kingdom) havebeen prohibited.

75. Pakistan is a member of the three standard-setting bodies explicitly referred to in theSPS Agreement (i.e. the Codex Alimentarius Commission, the International Office of Epizootics, andthe International Plant Protection Convention).100 It has notified the WTO of its national enquirypoint and national notification authority.101 In the context of the WTO Committee on Sanitary andPhytosanitary Measures, Pakistan has highlighted the difficulties faced by developing countries inapplying SPS measures, emphasized the need for increased technical cooperation in this area, andexpressed concern over an EU proposal to set new maximum aflatoxin levels. Pakistan has received

93 These are: the PSI (standardization and certification) and the Ministry of Health, Social Welfare, andPopulation Planning (technical regulations relating to food health and safety) (WTO documentG/TBT/2/Add.45, 12 February 1998).

94 WTO documents Job(99)/3169, and Add. 1, 7 June 1999, WT/GC/W/354, 11 October 1999,WT/GC/W/355, 11 October 1999, and G/TBT/M/19, 27 June 2000.

95 LEAD-Pakistan (2000), Pakistan Animal Quarantine (Import and Export of Animals and AnimalProducts) Act (1985) and Pakistan Plant Quarantine Act 1976.

96 LEAD-Pakistan (2000).97 LEAD-Pakistan (2000).98 LEAD-Pakistan (2000); and USTR (2000a).99 WTO document G/SPS/N/PAK/1, 6 January 2000.100 WTO documents G/SPS/GEN/23, 8 July 1997, G/SPS/R/7, 29 April 1997,

G/SPS/GEN/143/Rev.1/Add.1, 16 June 2000, G/SPS/GEN/143/Rev.1, 8 March 2000, G/SPS/R/19,1 August 2000, G/SPS/GEN/204, 27 September 2000, and G/SPS/GEN/49/Rev.2, 23 October 2000.

101 WTO documents G/SPS/ENQ/10, 9 March 2000 and G/SPS/GEN/167, 9 March 2000.


technical assistance regarding, inter alia, the development of national laws and regulations in the fieldof food safety (from Canada), as well as disinfection technology expertise relating to fruit flies (fromJapan).

(c) Marking and labelling

76. Pakistan has no uniform system of labelling and marking requirements; these requirementsdiffer depending on the item or the regulations of the agency in charge. The Import Policy Orderspecifies labelling and packaging requirements with respect to imports102; the authorities indicatedthat no distinction is made between domestic and foreign goods. Labelling requirements affectimports of edible product, cigarettes, food colours, and pharmaceutical raw materials, drugs, andmedicines. Product-specific labelling and packaging requirements on imports include: the date ofmanufacture and expiry (for food and food colours, packages of insecticides and pesticides);indication of Halal and free from products of haram animals (meat products); warnings both in Urduand English (packets of cigarettes and cigars, etc.).

(3) MEASURES DIRECTLY AFFECTING EXPORTS

(i) Registration and documentation

77. All exporters must be registered with the Export Promotion Bureau (EPB) under similar termsas importers (section (2)(i)).103

78. Preshipment registration of export contracts with the EPB in respect of cotton, rice, and ureahas remained in force during the period under review (Table III.5), while registration of exportcontracts involving potatoes was in force temporarily and is no longer in force (section (iii)(b) below).Exports of several items to Afghanistan require registration, for monitoring purposes.104 Thepreshipment authorization certificate from the EPB for exports of textile items to non-quota countrieswas removed in 1999.105 At the time of the previous Review exports of certain textile products tocountries for which Pakistan had export quotas, and consignments intended for re-export from quotacountries, were also subject to preshipment contract registration with the All-Pakistan TextileAssociation; this measure was removed in 1999/00.106

79. Since July 1999, a system for quality (preshipment) inspection of all rice has been fullyimplemented by officials of the Ministry of Commerce, with the participation of representatives of theRice Exporters Association of Pakistan, to safeguard the market reputation of Pakistani rice.107 Toprovide for efficient and speedy handling of perishable cargo, a "one window" operation for exportsof fresh fruit and vegetables at the Karachi and Multan Airports was to be provided as from 1999.

102 U.S. Commercial Service (1999a).103 Import Policy Order 1999 [Online]. Available at: http://www.cbr.gov.pk/ [19 July 2000]; and

GATT (1995).104 These items include: cotton, live animals, beef and mutton, grains, pulses and beans, blood meals,

meat meals, corn gluten feed and sesame oil cakes, bran and fodder of all sorts, hides and skins, wet blueleather, ferrous and non-ferrous metals, arms and ammunition, maps and charts, unfinished and semi-finishedhockey blades, paper waste, oil-seeds, coke, rock salt, sodium hydroxide, onyx blocks, breeding camels, sodaash, endemic birds, cement and clinker, cinematographic films, rose ringed parakeet, and kitchen items (i.e. ricebasmati, rice irri-6, masur pulse (washed), mash pulse (washed) gram pulse (washed), beef, mutton, sugar, milkfresh, vegetable ghee (tinned and loose), cooking oil (tinned and loose), potato, onion, tomato, red chillies(powder) and garlic (Import Export Procedure Order, 1999).

105 Central Board of Revenue (1999b).106 GATT (1995).107 Central Board of Revenue (1999b).


Table III.5Export prohibitions, rights, and authorization, as of September 2001

Items Exemptions

A. Negative list (i.e. export prohibition)Sann hempIntoxicants and intoxicating liquors (enforcement of Hadd) Ethyl alcohol undentured.Wildlife species of the CITES and all animals, mammals,reptiles and endemic birds protected by any provincialWildlife Act; meat, horns, bones, hides and skinsuntanned/tanned, finished leather or garments made thereof;products and materials related to wild life their derivatives;stuffed/unstuffed, mounted hunting trophies; and preservedspecimens of wild animals

The National Council for Conservation of Wildlife (NCCW) asManagement Authority of Convention of International Trade inEndangered Species of Wild Fauna and Flora (CITES) may authorizeexemptions for: research; trophies from community-managedconservation areas; and commercially-bred sweet-water turtles (uponthe issue of no objection certificate (NOC) by the NCCW).

Wild boar, its meat and skin Non-Muslim registered exporters.Charcoal and firewoodWood and timberFissionable materialAnti-personnel landminesAntiquitiesEdible oil All edible oils in bottles or other consumer packs provided there is

value-addition of 15% for edible uses in packs up to 5 litres and 50%value addition for non-edible uses in packs up to 1/2 litre.

Poppy seeds Exports of imported poppy seeds are allowed if originating incountries where they are grown licitly under provisions of singleconvention.

Toxic chemicals and precursors Export to States or countries that have ratified the Chemical WeaponsConvention.

Counterfeit productsExport of all imported goods in their original or unprocessedforms

Parts obtained from ship breaking; scrapped battery cells; wastedental amalgam; waste exposed X-ray films; over 20 year-oldautomotive vehicles and aircraft provided that export earnings arereceived in foreign exchange; imported goods in their original orunprocessed form, provided that their re-export f.o.b. price is higherby at least 2.5% than their C & F price; specified items importedagainst back to back letters of credit for re-export subject to procedureand conditions notified by the State Bank of Pakistan; re-export of oldand second-hand machinery (directly imported or locally purchased);and, re-export of imported items, purchased against US dollars orother freely convertible currencies, to Central Asian Republics.

B. Exports allowed through public sector agencies onlyHigh-speed diesel and furnace oil

C. Products subject to main authorization requirementsRegistration of contracts with Export PromotionBureau (EPB):All varieties of rice, cotton and urea.Special procedure:CottonPakistan Standard Mark requirements (Pakistan Standards and Quality Control Authority Act of1996):Surgical instruments (as of 28 August 2001).



Items Exemptions

Special procedure(S.R.O. 266(1)/2001, 7 May 2001):Precious and semi-precious stones and gold jewellery(including gold jewellery embedded with indigenous orimported precious or semi-precious stones)No Objection Certificate (NOC):Endemic birds, exotic captive bred birds (guinea fowl, turkeycommon, domesticated or exotic pigeons, Java sparrows,zebra finches, white finches, domestic ducks, domestic geese,budgerigars, cockatiels, love birds, common crows, housesparrows, Japanese quails, bob white quails, day oldducklings, Bengali finches, screne and gimp/fereme finchesand domesticated rabbits (NCCW or the Provincial WildlifeDepartment); arms, ammunition, explosives, and ingredientsthereof; complete rocket and Unmanned Air Vehicle (UAV)Systems and their parts; nuclear substances, radioactivematerial or any other substances prescribed by the PakistanAtomic Energy Commission; equipment used for production,use or application of nuclear energy including generation ofelectricity.Special mechanism for checking the prices etc. for thepurpose of royalty (to be identified):Metals by foreign enterprises (Ministry of Petroleum andNatural Resources)

Source: S.R.O. (880)I/99 (Export Policy Order), 28 July 1999; S.R.O. (898)I/99 (Import and Export Procedures),3 August 1999. Available at: http://www.cbr.gov.pk/ [28 July 2000]; Export Promotion Bureau (2000); andGovernment of Pakistan.

(ii) Export duties and minimum prices

80. There has been a considerable reduction in the use of these instruments during the periodunder review.108 Despite WTO information suggesting the elimination of export duties (including thetax on cotton) and minimum prices as from July 1999, regulatory duties on exports of crushed bones(10%), uncrushed bones (5%) and raw/wet blue hides and skins (20%) are still in force.109 Minimumprice requirements now affect cotton yarn only and are set by the All-Pakistan Textile Association.Such restraints on exports tend to reduce the prices of the affected goods and therefore constitute animplicit subsidy to domestic users of these goods.

81. Pakistan has maintained its withholding tax (i.e. advance payment of personal income tax) forexports at rates of: 0.75% (manufacturers), 1% (specified mineral products), or 1.25% (all otheritems) of the export proceeds.

(iii) Export prohibitions, restrictions, and licensing

(a) Export prohibitions

82. Since July 1999, the scope of export prohibitions seems to have been reduced and focused onhealth, social, or environmental protection in accordance with commitments under internationaltreaties110; the introduction of counterfeit products in the negative list reflects efforts to strengthen

108 At the time of the previous Review, 25 product groups (mainly agricultural items) were subject to

ad valorem rates (ranging from 10% to 45%), specific or compound duties, for revenue reasons or to discourageexports of raw materials (GATT, 1995).

109 WTO document WT/BOP/S/11, 28 March 2000; and Export Promotion Bureau (2000).110 In the past, exports of live animals, meat, animal fat, milk, and milk products were prohibited.


border enforcement of intellectual property rights (IPRs) protection (section 4(iv)).111 A few bans doremain, however, to ensure adequacy of internal supply of "essential" commodities at reasonableprices or to encourage domestic processing or both (as in the case of edible oil).112 The ban onexports of wheat and its milling products was removed in 2000/01.

83. In November 1997, a complaint on export prohibitions (introduced in August 1996)concerning, inter alia, hides and skins and wet blue leather made from cow hides and calf hides waslodged by the EU in the context of the WTO Dispute Settlement mechanism (Chapter II(7)); it wasclaimed that this measure limited access to competitive sourcing of raw and semi-finishedmaterials.113 The authorities indicated that at present exports of this item are subject only toregulatory duties (section (3)(ii)).

(b) Export licensing and restrictions

84. The scope of exports reserved for public-sector agencies has been reduced; coveragepreviously included coke, caustic soda, salt, sodium hydroxide, and cement. As from 2001/02,exports of petroleum and petroleum products have been liberalized; at present exports of furnace oiland high speed diesel oil are reserved for public sector entities only (Table III.5).

85. During the period under review, there has been some change in the range of goods (i.e.removal of agricultural items except rice and cotton) subject to: quality control requirements (mainlyengineering and electrical goods, agricultural items, except rice and cotton have been removed); andto "no objection" certification or special procedures (e.g. precious and semi-precious stones and goldjewellery) (Table III.5).

86. Potato exports have been temporarily subject to quantitative restrictions (100,000 tonnes in1998, 200,000 in 1999), which have not yet been notified to the WTO. The associated exportcontracts have been allocated on a first-come-first-served basis.114 As of 1999, cotton exports, whichin the past were subject to periodic quantitative restrictions, have been unrestricted (including those ofraw cotton from the beginning of the season).115 It seems that exports of urea are also subject toquantitative limitations.

(c) Access-related export quotas

87. Pakistan's exports of textiles and clothing products (Chapter IV(4)(i) have been subject toquotas to varying extents, in the EU, the United States, and Canada under the WTO Agreement onTextiles and Clothing (ATC). When the Multifibre Arrangement expired at the end of 1994, allquotas maintained under it were carried over into the transitional process of the ATC. The EU carriedover 14 quotas with one sub-limit; the United States, one group limit and 35 quotas with one sub-limit; Canada, 11 quotas; and Norway 3 quotas.116 In the first integration stage, Canada removed

111 Action may be taken against exporters of counterfeit products upon receipt of complaint through the

EPB from the holders of the trade mark, franchise or licensee; penal action may also be taken for lodgingunfounded complaints (Export Policy Order, 1999).

112 Exports of edible oil in consumer packs is authorized.113 WTO document WT/DS107/1, 20 November 1997.114 EPB Public Notices: No1(COM)/PT/98, 13 February 1998, and EPB-1-(COM)/PT/98-99/PDD,

5 January 1999.115 Central Board of Revenue (1999b); and Export Promotion Bureau (2000).116 WTO documents G/TMB/N/60 and Add.4 (EU), 19 April 1995 and 26 July 1996, G/TMB/N/61

(Norway) and G/TMB/N/63 (United States), 19 April 1995.


quotas on work gloves, affecting Pakistan.117 As a result of the second stage of product integration,one quota was removed in the United States.118 In Canada, the quota on tailored collar shirts wasremoved in July 1997119 and in 1998, quotas on products in three additional categories were removed,while the quota on category 2, winter outerwear, was increased by 10%.120 Norway has removed allthree quotas with Pakistan.121

88. Certain textile exports from Pakistan have been subject to safeguard action under the ATC.In 1998, the United States took safeguard action on category 301, combed cotton yarn. This matterwas twice examined by the Textiles Monitoring Body122, which recommended that the measures berescinded. In the absence of a mutually satisfactory solution, it was taken to the DSB by Pakistan; apanel was formed on 19 June 2000.123 Argentina took five safeguard actions in 1999 against variousfabric categories from Pakistan. Following examination of these actions and recommendations by theTMB, four of these quotas were removed, and for the fifth, the duration was limited to 18 months.124

89. As of 1998, the private sector has been involved in handling the textile quota allocation, fortransparency purposes.125 Overall textiles quota utilization has been relatively high, exceeding 80% inseveral markets and product categories: up to 132.26% (poplin and broadcloth) in 27 (out of 37)product categories to the United States in 1999; up to 111.55% (cotton fabrics) in 7 (out of 15)categories to the EU; and between 80% and 97.73% (cotton/terry/towel/wash) in 5 (out of 19)categories to Canada. Elements of flexibility contained in the bilateral agreements (i.e. swing fromone category to another and carry over) have allowed for quota utilization beyond 100% subject toadjustments in the following quota year.

(iv) Export subsidies

90. Exports are considered by the authorities to be the linchpin of Pakistan's economic policyfrom the standpoints of self-reliance, balance-of-payments equilibrium, and the need for externalborrowing.126 Therefore, the authorities continue to encourage exports through several tax andfinancial measures, including duty and sales tax concessions on imports used in the production ofexport items; income tax rebates; concessional export finance (removed as of 2001/02); as well assubsidies for production (sections (2)(ii)(j), 3(v), 3(viii), 4(i) and 4(ii)).

91. Since the previous Review, a few direct export incentives have been operated for qualitycertification and freight costs, as well as for exports of sugar (for one year only).127 The cost ofISO 9000 certification for manufacturers/exporters has been financed by the authorities up to anamount of PRs 150,000 (or about US$2,900) in each case128; out of 784 firms qualifying for support,464 received payments amounting to a total of PRs 80.52 million (US$1.4 million). In 1997/98, anexport subsidy for sugar of PRs 4,500 (about US$90) per tonne was applied and apparently involved

117 WTO document G/TMB/N/298, 23 September 1997.118 WTO documents G/TMB/N/213/Add.1, 23 May 1997.119 WTO document G/TMB/N/214/Add.2, 27 June 1997.120 WTO document G/TMB/N/316, 30 January 1998.121 WTO document G/TMB/N/306, 9 October 1997.122 WTO documents G/TMB/18, 29 April 1999, and G/TMB/19, 29 June 1999.123 WTO documents WT/DS/192/1, 3 April 2000 and WT/DS/192/2, 4 September 2000.124 WTO document G/TMB/R/66, 21 July 2000.125 Planning Commission (1998), p. 7.126 Ministry of Finance (2000a).127 WTO document WT/BOP/S/11, 28 March 2000; and Planning Commission (1998), p.7.128 In addition, a maximum of PRs 50,000 has been granted to SMEs for studies aimed at improving

industrial productivity and management quality and to obtaining ISO/9000.


total disbursements of about US$45.5 million.129 The subsidy, covering 25% of freight costs forexports of fresh fruit and vegetables, fresh fishery products, flowers, and confectionery, continues tobe operated and has been notified regularly to the WTO.130 Between 1996/97 and 1997/98 annualdisbursements for this type of support increased by 67%, to US$2.84 million; 93% related to exportsof fresh fruit and vegetables (Chapter IV(2)(ii)(a)). In 1999/00 disbursements dropped toUS$0.38 million. The authorities indicated that at present this freight subsidy covers only potatoes.

(v) Duty and tax concessions

92. Between 1998 and 2001, Pakistan followed the "no-duty, no-drawback" policy in line withexport performance and value-added conditions set for beneficiaries of duty and tax exemptions onimports of export-related items (Table III.2); however, this system is no longer in force.131 At thesame time, reimbursement of duties, sales tax, and other fees paid on imported raw materials for themanufacture of export products has been operated on the basis of drawback rates notified periodicallyby the Central Board of Revenue; the authorities maintain that drawback rates correspond to actualduties, taxes, and other charges affecting export production.132

93. To raise value added in exports of fish and other food items (canned or bottled), of rice (up to5 kg. packs), and of engineering, contracting, and consultancy services (resident Pakistani firms only),the relevant withholding tax rate (for income purposes) has been reduced (section 3(ii)).133

94. Software firms are allowed to re-export capital goods without any (export) levies.134

Furthermore, as of July 1997 software firms are exempt from corporate income tax on export earningsfrom software and related services; in addition, software exporters have been exempt from the 0.5%minimum income tax otherwise payable.135 The authorities maintain that this type of exemption doesnot have any impact on the cost of the product.

95. As at September 2001, none of the measures discussed in this section had been notified to theWTO Committee on Subsidies and Countervailing Measures; questions were raised by the EU andthe United States on these measures in 1997.136

(vi) Export-performance and value-added requirements

96. Since 1998, duty and tax exemptions on imports (other than polyester staple fibre) of allexport related industries have been subject to a requirement of 25% or 40% value added spread over aperiod of ten years (e.g. rice processing, cotton ginning).137 To benefit from exemption from allduties, taxes, surcharges, etc., on imports of all computers and related hardware, peripherals(including communications hardware and software), telematic infrastructure, and softwaredevelopment tools as well as from income tax rebates, a mandatory export obligation in net foreign

129 USTR (2000a).130 Under Article 9:1(d) and 9:(4) of the WTO Agreement on Agriculture, during the implementation

period, developing countries are not required to undertake reduction commitments in respect of these exportsubsidies. WTO documents G/AG/N/PAK/2, 27 May 1997, G/AG/N/PAK/4, 19 February 1998,G/AG/N/PAK/7, 29 April 1999, and G/AG/N/PAK/9, 20 August 2001.

131 Ministry of Finance (2000a).132 Import Export Procedure Order (1999).133 Central Board of Revenue (1999b).134 Pakistan Software Export Board (PSEB) online information. Available at: http://www.pseb.org/

[20 July 2000].135 Pakistan Software Export Board (PSEB) online information; and Central Board of Revenue (2000).136 WTO documents G/SCM/Q2/PAK/2, 20 March 1997 and G/SCM/Q2/PAK/4, 3 April 1997.137 Planning Commission (1998), p.7; and Central Board of Revenue (1999b).


exchange terms (US dollar value) must be met over a period of five years.138 This consists ofexporting software equivalent to three times the c.i.f. value of the imported computer hardware,software, and/or software development tools.

97. To date these measures have not been notified to the WTO Committee on Subsidies andCountervailing measures.

(vii) Export-processing zones

98. Export-processing zones (EPZ) are considered a means for boosting industrialization, creatingjob opportunities, bringing in new technology and know-how, and raising export capacity by creatingfacilities for domestic and foreign investors.139 Establishment within EPZs involves benefits such astax holidays (e.g. capital gains; salary of foreign personnel), indefinite carry forward of losses,exemption of imports from duties and other federal/provincial taxes, and freedom from nationalimport restrictions, as well as exemption from labour laws and various other regulatory regimes(including unrestricted repatriation of capital, profits, and dividends).140 All industries other thanthose classified as "specific" and "competitive", may set up in these zones.141 Since 1980, the ExportProcessing Zones Authority (EPZA), an autonomous body under the Ministry of Industries andProduction, has planned, developed, and operated export processing zones in Pakistan.

99. Pakistan has one EPZ (Karachi Export Processing Zone, since 1981) in which 78 firms withforeign equity are operating; two new EPZs (Sialkot, Rawalpindi) were established under public –private joint-venture arrangements, and about 12 more EPZs are in the process of being established.142

Food processing, plastics, chemicals, fabric/yarn processing, garments, leather products, stuffed toys,precision mechanics and electrical/electronic are among the industries operating in the Karachi EPZ;firms located in this EPZ account for US$74 billion of domestic and foreign investment. So far6,000 jobs have been created in relation to EPZs.

100. A composite scheme of National Industrial Zones (NIZs) appears to have been underconsideration to encompass industrial estates, free industrial zones, free trade zones andexport-oriented units (EOU) and estates for small and medium industries within areas of its boundary,to further promote exports.143 Draft legislation for a National Industrial Zone Authority (NIZA) wasprepared by the Board of Investment (BOI) with technical assistance from UNCTAD.

101. Under Article 3 and Annex I of the WTO Agreement on Subsidies and CountervailingMeasures, certain tax exemptions available under the EPZ regime are classified as prohibited exportsubsidies. However, as a developing country, Pakistan has until the year 2003 to bring its legislation

138 Pakistan Software Export Board (PSEB) online information.139 Export Processing Zones Authority (EPZA) online information. Available

at: http://www.epza.com.pk [29 July 2000].140 Although domestic labour laws are, by and large, applicable, employees of firms in these zones may

not refuse to work, go slow, or go on strike; issues relating to control of employment are governed by ordersissued by the managing authorities of the zone. Domestic and international environmental protection provisionsmust be observed (Board of Investment, 1999, pp. 25 and 27).

141 The "specific" and "competitive" industries cover: arms and ammunition, security printing,currency and mint, explosives, radioactive substances, sugar manufacturing, flour milling, ghee or vegetable oil,beverages (excluding fruit juices), alcohol (except for industrial use), tobacco processing, cotton ginning,carpets, plastic bags, steel re-rolling and furnaces, automobile assembly, and polluting activities (Board ofInvestment, 1999, p. 22).

142 U.S. Commercial Service (1999a); and Export Processing Zones Authority (EPZA) onlineinformation.

143 U.S. Commercial Service (1999a).


into line with WTO provisions. At the time of completion of this Report, no measure discussed in thissection had been notified to the WTO Committee on Subsidies and Countervailing Measures, and asindicated earlier questions were raised by the EU on these or similar requirements in 1997.144

(viii) Export finance, guarantees, and insurance

102. Pakistan has revised its Export Finance Scheme (EFS), which is administered by the StateBank of Pakistan and operated through commercial banks under concessional terms; efforts havebeen made to reduce gradually reliance on preferential interest rates. All value-added products(except 24 items/category) are eligible for a concessional rate set at 10.5% (lower than nominalcommercial lending rates) for export finance and at 9% for export re-finance.145 Lower-value-addeditems (i.e. all types of yarn) and bleached and unbleached cloth have no longer been eligible as ofJanuary and July 2001, respectively. Export finance coverage was to be extended to softwareexporters; the ceiling for re-finance was set at 50% of previous year's exports.146 Otherimprovements to the EFS include: the extension of financial provision to indirect exporters; theextension of export credit from 150 to 180 days; and the reduction of fines to exporters failing tomeet repayment commitments.

103. In 2001, a Foreign Currency Export Finance (FCEF) facility was introduced to providesupport for domestic manufacturers requiring foreign inputs for exportable goods and to increaseaccess to export financing for small and medium-size exporters. The FCEF is to be available to theexporter either for purchase of inputs and raw materials domestically, or to finance their importsagainst import letter of credit to be opened for the portion that will be utilized for export purposes.The FCEF is to be a self-liquidating dollar-based window for pre- and post-shipment finance. Underthe FCEF, market-based export finance will be available to small- and medium-size direct exporters(DEs) and their suppliers (i.e. indirect exporters, IDEs) for inputs linked to an export order. TheFCEF is to run in parallel to the existing Export Finance Scheme (EFS) as an additional and alternatefacility. The financing of inputs under the FCEF facility would be available for a maximum period of180 days for both DEs and IDEs from the date of drawdown of the facility. Non-eligible itemsinclude: arms, ammunition, and other military material; radioactive and associated material; nuclearreactors or parts thereof, fuel (cartridges), non-irradiated nuclear reactors; and luxury and consumergoods.

(ix) State-trading

104. Several state-owned firms (including the Rice Corporation (TCP), Cotton Export Corporation,and other firms in Table III.4) have been involved in export activities. In particular, the TCP(section 2(vii)) has: channelled exports enjoying government credit to certain destinations (e.g.Commonwealth of Independent States, African countries); exported to new/non-traditional markets;exported fresh fruit, vegetables and minerals; and undertaken countertrade operations with countriesfacing cash constraints.147 Despite its export promotion and market diversification tasks, the TCPsigned neither import nor export contracts in 1998-99, as its foreign trade operations have declined.In response to questions in the context of the WTO Working Party on State-Trading, in 1997 Pakistanexplained that it does not notify the activities of these firms because they do not benefit fromexclusive trading rights.148

144 WTO document G/SCM/Q2/PAK/2, 20 March 1997.145 Ministry of Finance (2001).146 Pakistan Software Export Board (PSEB) online information.147 Trading Corporation of Pakistan (1997, 1998, and 1999).148 WTO documents G/STR/Q1/PAK/3, 1 October 1996 and G/STR/Q1/PAK/4, 31 July 1997.


(4) MEASURES AFFECTING PRODUCTION AND TRADE

(i) Taxation

105. Internal taxation in Pakistan is characterized by: a low overall tax burden (as mentioned inChapter I, tax revenues in 2000/01 amounted to only 14% of GDP); high reliance on indirect taxes,many of which are unduly complex (and therefore lack transparency); a multiplicity of taxes, oftennarrowly based as a result of numerous concessions, if not exemptions, and some involving high taxrates149; an administration with inefficient and corrupt elements; cumbersome assessmentprocedures, including long delays in the resolution of disputes; and endemic tax evasion owing to thelarge size of the "informal" economy (less than 1% of the population paid any income taxes in1999).150 In order to address these deficiencies, steps have been taken to reform Pakistan's tax system.These steps include: significant amendments to the general sales tax (GST) law in June 1996;clampdown on tax evasion; a Self-Assessment Scheme intended to broaden the income tax base; andthe imposition of an agriculture income tax on farmers with high incomes at the provincial level(section 4(i), Chapter IV(2)).151 In addition, it would appear that the provincial authorities plan to cutthe number of taxes from 29 to about 9.

106. Indirect taxes account for 71% of total tax revenue (Table III.6), which, according to theauthorities, is not a healthy sign as these taxes distort economic choices.152 Since the previous Reviewof Pakistan, the general sales tax has replaced taxes on international trade as the main indirect tax.

Table III.6Structure of direct and indirect tax revenue, 1994-2001(Per cent and US$ billion)

1994/95 1995/96 1996/97 1997/98 1998/99 1999/00a 2000/01a

Total (US$ billion) 8.4 9.1 8.3 8.2 8.4 7.8 8.1

Direct taxes 24.5 26.2 26.8 29.6 27.0 27.7 29.0

(a) Federal 23.9 25.6 26.2 29.1 26.5 27.0 28.4

(b) Provincial 0.6 0.6 0.6 0.5 0.5 0.8 0.6

Indirect taxes 75.5 73.8 73.2 70.4 73.0 72.3 71.0

(a) Central excise duty 17.2 17.0 17.3 17.7 16.0 14.3 11.7

(b) Sales tax 16.9 16.3 17.1 15.2 17.6 28.8 35.2

(c) Tax on international trade 30.1 29.1 26.5 21.0 20.1 15.7 13.7

(d) Surcharges 8.0 8.1 8.4 12.1 15.8 9.6 6.7

(e) Other taxes 3.3 3.3 3.8 4.3 3.4 3.9 3.6

a Estimates.

Source: Ministry of Finance (2001), Economic Survey 2000-2001, Appendix Table 4.3.

(a) Indirect taxation

107. Since its previous Review, Pakistan has taken steps to overhaul its traditionally complex andprice-distorting system of indirect taxes (including customs duties (section 2(ii))), which are,inter alia, a potentially serious source of inefficiency and have allegedly encouraged corruption,

149 By the year 2000 only 36,000 companies or registered firms paid the bulk of the direct taxes on

income and wealth (Ministry of Finance, 2000a).150 Financial Times, 4 April 2000, "Pakistan's tax gatherers limber up for marathon".151 Ministry of Finance (2000a).152 Ministry of Finance (2000a).


smuggling, and other types of tax evasion.153 These steps include simplifying the system, shiftingreliance away from customs duties to the GST, and raising the efficiency of the Central Board ofRevenue, the body responsible for making tax policy and collecting taxes.

108. The levy of different rates of excise duties on foreign and domestic goods seems to have beeneliminated as of June 2000.154

Sales Tax

109. During the period under review, the rate of the general sales tax (ST), which is a multi-stagevalue-added type of tax, levied on domestic and foreign goods and several services alike (at theimport, manufacturing, wholesale, and retail stages), has varied; however since December 1998 it hasremained at 15%.155 As of August 2000, a slightly higher ST rate of 16% has applied to imports offurnace oil.156 The ST is riddled with exemptions, which have varied considerable over the reviewperiod. While some of these exemptions pertain to inputs (including poultry and cattle feed,pesticides, fertilizer, cement, computer hardware/software), others apply to consumption items (suchas medicine and foodstuffs).157 Broadening the base of the ST is one of the Government's majorpolicy objectives. A zero percent rate has applied to exports, and sales tax is refunded for inputs usedin exported goods.

Central excise tax

110. With a view to rationalizing the central excise tax (CET), certain adjustments in the ratestructure were made in favour of locally produced goods in 2000; 16 import-competing items wereexempted from the tax.158 At the time of the previous Review, the CET was levied on 63 domesticallyproduced items and 15 services at ad valorem rates (ranging from 3% to 200%) or specific rates;imports of such goods were exempt from the tax.159

Other indirect taxes

111. In response to a long-standing demand by the trading community, as of July 1999, the"Octroi" (a municipal toll tax) and "Zilla" (a district tax) taxes were eliminated.160

(b) Direct taxation

112. Companies resident in Pakistan are subject to corporation tax on their world-wide income.The rates of tax are 58% for banking companies (down from 64% in 1993/94), 33% for companiesquoted on Pakistan's stock exchange (down from 42%), and 43% for other companies (down from52%). Companies other than banks are also subject to a 5% surcharge as of July 2000. Furthermore,various withholding taxes are levied at different rates depending on the type of income (dividends,interest, royalties, etc.) and whether the company (or individual) is a resident or non-resident. Inaddition, all resident companies are subject to a minimum income tax equal to 0.5% of gross receipts

153 U.S. Commercial Service (1999a).154 WTO document WT/BOP/N/51, 7 July 2000.155 ST rates of 18% (from 1 July 1996 to 27 March 1997) and 12.5% (from 28 March 1997 to

30 November 1998) have also applied (Central Board of Revenue, 1999a, p. 1165).156 Ministry of Finance, Economic Affairs, Statistics and Revenue SRO 60/(I)2000, 29 August 2000.157 Central Board of Revenue of Pakistan online information.158 Ministry of Finance (2000a).159 GATT (1995).160 Central Board of Revenue (1999b).


from the sale of goods, services or the execution of contracts, presumably to combat tax avoidanceand evasion. The gross revenue of non-residents' air transportation and shipping business is taxed at3% and 8%, respectively (unless a treaty for avoidance of double taxation provides a different rate orreciprocal exemption), and this income is not subject to any other tax including the relatedwithholding tax.161

113. However, these income and other direct taxes provide the Government with less than a thirdof its tax revenue (Table III.6). This is partly due to the Government's use of such taxes asinstruments of industrial policy, by building into them various incentives. Tax incentives are granted,inter alia, for the generation or transmission of electricity, software exports, new investments,brokerage houses, and banks.162 They include: an exemption for private-sector projects engaged inthe generation of electricity; a five-year exemption for income of computer training institutions set upbetween 1997 and 2005; the exemption from corporate tax of income from software exports, andeven of software exporters from 0.5% minimum income tax (section 3(v)); an exemption of incomefrom fruit processing, soft toys (undertakings set up as from June 2000) and solar energy equipment(five-year exemption only); a tax credit equal to 10% of investment in plant and machinery for newinvestments and investments for BMR (balancing, modernization, and replacement) made duringtwo years starting from July 2000; a one-year tax exemption commencing 1 July 2000, to facilitatecorporatization of brokerage houses; and interest on non-performing loans and credited to a suspenseaccount is not taxed on accrual basis.163 Estimates of the amounts of tax revenues forgone as a resultof these and other tax measures do not appear to be publicly available; clearly, publication of suchestimates would greatly enhance fiscal transparency in Pakistan. Furthermore, no studies have beenundertaken to evaluate the effectiveness of these incentives in relation to the tax revenue forgone; inthe absence of any convincing evidence to the contrary, experience in other countries suggests that taxincentives are seldom cost-effective.164

114. Since 2000/01, agriculture income tax has been taxed, thereby placing agriculture andnon-agricultural on a more equal footing for income taxation and thereby stimulating investment innon-agricultural sectors.165 In a move towards maintaining three taxes at federal level and eliminatingbarriers to new investment, the wealth tax was abolished in June 2001.

(c) Other types of direct tax

115. A number of other direct taxes are levied. These include: capital value taxes at rates of 1.5%on purchases of airline tickets for international travel and 3.75% to 7.5% on imported motor

161 Ernst and Young International (2001).162 Ministry of Finance (2000a).163 In the year 2000, it was estimated that this measure was to represent an annual cost of around

PRs 700 million (or US$13.5 million). This concession is to improve the profitability of banks and allow themto inject much needed capital in their balance sheets. This concession would be allowed from the assessmentyear 2001-02 and the conditions under which it would be allowed are being incorporated in the law (Ministry ofFinance (2000a)).

164 Most econometric studies show that forgone tax revenues exceed the increase in desired investment,(OECD, 1995). Furthermore, according to Shah (1995), several countries (for example, Brazil, Indonesia, andMexico), having observed that the investment induced by tax incentives falls short of the tax revenue forgone,curtailed such measures. Tax holidays are regarded as a particularly ineffective type of tax incentive comparedto tax credits (Mintz, 1990, 1992).

165 Ministry of Finance (2000a).


vehicles166; contribution to the Workers Welfare Fund at a rate of 2% on the firm's income exceedingPRs 200,000 (US$3,870); and a "once and for all" tax on corporate assets.167

(ii) Production assistance

116. Since its previous Review, in addition to considerable border protection afforded to sensitivesectors, Pakistan has continued to provide assistance to domestic producers, not just in the form of taxincentives, but also by means of several financial support measures (sections 2(ii)(j), 3(iv), 3(v),3(vii), 3(viii), 4(i), and Chapter IV(2) and (4)). The objectives of such assistance are to accommodatedomestic policy and promote export-led growth. Notwithstanding these measures, Pakistan'snotification to the WTO Committee on Subsidies and Countervailing Measures (in 1996), containsmainly wheat- and electricity-related support (Table III.7); questions have been raised in thisCommittee regarding several tax and non-tax measures that have not been notified. Total budgetaryoutlays have declined by about 11% during the past three years (Table III.8); most of these outlaysare directed at corporations and "others".

117. Pakistan has continued to provide electricity to farmers, manufacturers, and households atprices up to 51.7% (1997/98) lower than to offices (i.e. commercial activities) (Chapter IV(2)and (4)); this type of support was notified to the WTO Committees on Agriculture, and Subsidies andCountervailing Measures.168

Table III.7Subsidies notified under WTO provisions, 1993-2000

1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/2000

Agriculture (US$ million)

Wheat 118.1 111.3 208.9a 138.5a -143.42 -191.29 -257.37

Fertilizers and agricultural credit 55.7 35.0 1,047.0 1,000.0 .. .. ..

Electricity (US$ million) 1.8 37.6 10.4 15.5 22.5 22.6 12.6

1993 1994 1995 1996 1997 1998 1999

Industry (US$'000)Utility Store Corporation of Pakistan .. .. 1,243.1 38.9 .. .. ..

.. Not available.

a Not including locally produced wheat.

Source: WTO documents G/SCM/N/3/PAK, 21 October 1996 and G/AG/N/PAK/8, 20 August 2001.

118. Since 1996, the pattern of assistance in agriculture, livestock, fisheries, and forestry hasremained virtually unchanged; in addition to border measures, it has consisted of research, marketing,infrastructural support, flood protection and provision of water supply services/facilities, as well asinput subsidies (investment, credit, fertilizer), price support, public stockholding and tax incentives,including, until recently, tax exemption of agricultural income (section 4(i), and Chapter IV(2)). Inthe Uruguay Round, Pakistan did not undertake specific commitments to reduce support toagricultural producers; thus, it must abide by the general rules on domestic support and exportsubsidies of the WTO Agreement on Agriculture.169 Domestic support measures consist mainly of"Green Box" measures, which are exempt from reduction commitments. In addition, non-exempt

166 Ernst and Young International (2001).167 Central Board of Revenue online information.168 WTO documents G/SCM/N/3/PAK, 21 October 1996 and G/AG/N/PAK/6, 12 August 1999.169 Schedule LX Part IV Section I, 15 April 1994; G/AG/AGST/PAK; and WTO Agreement on

Agriculture Articles 15, 9:(4) and 7:(2):(b).


input subsidies are granted to agriculture; (these are not product specific). Since its previous Review,Pakistan has regularly notified the WTO its budgetary outlays for domestic support; thesenotifications indicate a persistently high concentration (e.g. 93.7%, 2000/01) of "Green Box" spendingon infrastructural services (e.g. irrigation, drainage, flood protection), and "negative" price support forwheat when measured against a fixed external reference price of US$175 per tonne(1986/88 average).170 In this context, in 1999 discussion took place in the context of theWTO Committee on Agriculture over Pakistan's compliance with the de minimis ceiling ofnon-exempt domestic support requirements.171

119. Support in the form of tax and financial incentives to the manufacturing sector has beenprovided with a view to, inter alia, increasing domestic value added and export potential. In additionto credit facilities for the textiles sector, particular emphasis has been placed on promotinginformation technology, bio-technology and genetic engineering, oceanography, and human resourcesdevelopment; since 1997/98 the share of science and technology in total budgetary outlays havegrown twelve-fold (Table III.8).172 Another priority area has been the small and medium-sizedenterprises (SMEs) involved in non-traditional activities (e.g. gems, jewellery, marble, fisheries),where the institutional setting (i.e. Small Business Finance Corporations and Small and MediumEnterprise Development Authority), technical assistance, and financial support are beingrevitalized.173

Table III.8Budgetary outlay for certain sectors, 1997-2001(Million US$ and share of total expenditure)

1997/98 1998/99 1999/00 2000/01

Total (US$ million) 2,085.9 2,363.3 2,249.4 2,316.0

Agriculture 0.5 0.4 0.2 0.3

Industry 0.6 0.5 0.2 0.6

Minerals 0.4 0.6 0.0 0.0

Power 4.9 4.0 2.5 2.2

Fuels 1.3 1.0 1.0 1.9

Transport and communication 6.2 3.8 2.7 3.4

Science and technology 0.2 0.2 0.4 2.4

Rural development 2.4 2.5 9.1 2.0

Environment 0.3 0.3 0.2 0.2

Regional development projects 3.7 3.6 3.5 3.9

Corporations (e.g. WAPDA, VillageElectrification)

29.7 30.8 33.3 25.3

Other 49.9 52.2 46.8 57.9

Source: Government of Pakistan Planning Commission (various years), Economic Framework and Public SectorDevelopment Programme: Annual Plan, Islamabad.

120. Price controls have affected several items; in particular, those on pharmaceutical endproducts seemingly had an adverse impact on foreign manufacturers' profitability, although thesecontrols apply equally to both domestic and foreign producers.174 At the time of the previous Review,price controls applied to automobiles (to prevent the abuse of oligopoly power of domestic producers

170 WTO documents G/AG/N/PAK/3, 28 May 1997, G/AG/N/PAK/5, 19 February 1998,G/AG/N/PAK/6, 12 August 1999, and G/AG/N/PAK/8, 20 August 2001.

171 WTO document G/AG/R/20, 22 October 1999.172 Planning Commission (2000), p. 45.173 Ministry of Finance (2000a).174 USTR (2000a).


(Chapter IV(4)), drugs and medicines (for social reasons), potassic fertilizers (in support of stateinvolvement in production of this item), and paper.175 Those on automobiles are not in force atpresent.

(iii) Competition and consumer policy

(a) Competition policy

121. Domestic legislation on competition policy (Monopolies and Restrictive Trade Practices(Control and Prevention) Ordinance) was passed in 1970 and amended most recently in 1995; certainamendments were under consideration in 1998, and a Consumer Protection Act was passed in 1995.176

Since the previous Review, business entry restrictions (i.e. industry licensing regimes, bureaucraticcontrols) favouring the creation of monopolies and oligopolies have been eliminated, thus reducingindustrial concentration.177 State-owned entities are beyond the purview of the legislation in this area.At the time of completion of this report, a new competition policy law was under consideration toaddress anti-competitive, restrictive business, and unfair trade practices; exemptions for state-ownedfirms and registration requirements for private sector companies were to be eliminated.

122. Since 1970, the Monopoly Control Authority (MCA), an independent statutory quasi-judicialbody has monitored, conducted enquiries, assessed, and made recommendations on cases of undueconcentration of economic power, unreasonable monopoly power, and unreasonably restrictive tradepractices; these forms of barriers or distortions to competition are prohibited by the law.178 Since theprevious Review, the MCA has examined dealings between associated undertakings (the granting ofloans/advances without charging mark-up/interest or other concessional treatment mainly inspinning/cotton/jute/textile firms, banks), monopoly power cases (mergers in the batteries and tobaccosectors), single-firm monopoly cases (caustic soda, liquid chlorine), restrictive agreements (chemicals,electric fluorescent tubes and bulbs), and mergers (including ex post monitoring in the cases ofchemicals, pharmaceuticals). The MCA has also carried out investigations to determine the reasonsfor price increases (in the cases of cement and sugar for example), as well as regular monitoring of theprices of 17 essential items. In 1997-98, out of the 343 cases investigated (29% less than in 1996-97),40 apparently contravened the provisions of the Monopolies and Restrictive Trade Practices (Controland Prevention) Ordinance of 1970. In 1998/99 the MCA investigated 265 cases of undueconcentration of economic power and 103 cases of unreasonable monopoly power; it also made anorder breaking up the cartel of cement manufacturers.

123. Pakistan participates in the activities of the WTO Working Group on the Interaction betweenTrade and Competition Policy, where it has expressed views on issues such as the role of competitionpolicy in promoting global welfare; the effect of anti-dumping rules and strengthened intellectualproperty regulations on competition (particularly for textiles); and flexibility in the design andadministration of competition law and policy.179 At regional level, it has proposed the inclusion ofcompetition policy in the SAARC negotiations to enhance economic cooperation and encourage tradeliberalization in the region.180

175 GATT (1995).176 Monopoly Control Authority (1997) and (1998).177 U.S. Commercial Service (1999a).178 Monopoly Control Authority (1997) and (1998).179 WTO documents WT/WGTCP/M/5, 25 September 1998; WT/WGTCP/M/6, 16 November 1998.180 Monopoly Control Authority (1997) and (1998).


(b) Consumer policy

124. Following the passing of the 1995 Consumer Protection Act, model (enforcement) legislationwas prepared and sent to provincial governments for adoption and implementation.

(iv) Intellectual property rights

125. Since its previous Trade Policy Review, Pakistan has become increasingly aware of thecritical linkage between improved protection of intellectual property rights (IPRs) and investment.181

It has also recognized the need for improvements in this area as well as its importance to thedevelopment of its nascent information technology (IT) industry (Chapter IV (4)), and for consumerprotection.

International treaties

126. Despite its longstanding participation in the World Intellectual PropertyOrganization (WIPO), Pakistan seems to have relatively few international commitments in this area asit has been party to only one of the 21 treaties administered by WIPO and the Universal copyrightConvention.182 Pakistan has decided to join the Paris Convention for the Protection of IndustrialProperty. Therefore, Pakistan's acceptance of the WTO Agreement on Trade-Related Aspects ofIntellectual Property Rights (TRIPS) constitutes a major step in the expansion of Pakistan'scommitments in this area.

WTO commitments

127. Since 2000/01, legislation on patents, trade marks, lay-out designs of integrated circuits, andcopyrights has been passed so as to ensure compliance with TRIPS commitments. It also seems thatthe authorities have been revising the IPR legislation in accordance with the TRIMs Agreement.183

Pakistan has participated actively in the work of the WTO Council for Trade-Related Aspects ofIntellectual Property Rights by, inter alia, making submissions or expressing views on several matters(e.g. review and negotiation of specific TRIPS provisions including geographical indications, thescope and modalities for non-violation complaints)184; its implementing legislation was to bereviewed by this Council in November 2001.185

Enforcement action

128. Despite regulatory initiatives and steps to strengthen enforcement (including raids onpirated-video rental shops and computer software outlets), intellectual property piracy remainswidespread. This has led to criticism over ineffective law enforcement (particularly copyrights),including a slow moving judiciary with a tendency toward non-deterrent penalties.186 At the time of

181 GATT (1995), Vol. II, p. 63; Ministry of Science and Technology (2000); and USTR (2000a).182 Pakistan is a party to the Convention Establishing the World Intellectual Property Organization (as

of 1977), the Berne Convention for the Protection of Literary and Artistic Works (as of 1948), and the UniversalCopyright Convention (as of 1954, although it has not acceded to its 1971 Paris Revision).

183 U.S. Commercial Service (1999a).184 WTO documents IP/C/W/141, 29 April 1999, WT/GC/W/208, 17 June 1999, WT/GC/W/354,

11 October 1999, WT/GC/W/355, 11 October 1999, and IP/C/M/26, 24 May 2000.185 WTO document JOB(00)/4860 Council for TRIPS, 8 August 2000.186 Notwithstanding these efforts, Pakistan's status under "Special 301" of the amended 1974 (1988)

Trade Act has remained on the "watch list" since 1989 (USTR, 2000b and 2000a); and U.S. CommercialService (1999a).


completion of this report, the authorities indicated that IPRs rules on border measures had been drawnup and are to be implemented by the Central Board of Revenue.

Regional and bilateral cooperation

129. A bilateral Treaty of Friendship, Commerce, and Navigation with the United States hasguaranteed national treatment for patent, trade mark, and other forms of industrial property rights toU.S. right-holders. Efforts to negotiate a comprehensive bilateral intellectual property rightsagreement, proposed by the United States, stalled in 1995.187

(a) Industrial property

Patents and designs

130. Under the Patent Ordinance 2000 and Industrial Designs Ordinance 2000, patent protectionhas been set at 20 years; protection of registered industrial designs is set at ten years with thepossibility of two additional ten-year extensions. Patent protection covers both the process and theproduct except for pharmaceuticals and agri-chemicals, for which only process patent is provided.However, a mailbox provision has been made to receive patent applications for pharmaceuticals andagri-chemicals as from 1 January 2005; such patent applicants are to have exclusive marketing rightsprovided that they have similar rights (i.e. patent, marketing) in the market of another WTO Memberand marketing approval in Pakistan. At the time of completion of this Report, rules were beingframed to implement the Patent Ordinance 2000, Industrial Designs Ordinance 2000, and the Lay-outDesign of Integrated Circuits Ordinance 2000.

131. Compulsory licences may now be granted in cases of public interest (i.e. national security,nutrition, health, development of vital sectors) and anti-competitive or insufficient patent exploitation,as well as in cases where an invention claimed in a later patent (involving an important technologicaladvance of considerable economic importance) cannot be exploited without infringing an earlierpatent.188 Equal rights are provided to foreigners and nationals including the exclusive right to make,sell, and use the invention as well as authorizing others to do so. Pakistan has entered intoarrangements giving priority to patents, and reciprocity, with several Commonwealth countries,including the United Kingdom.189 Priority may be claimed provided the patent application is filedwithin 12 months from filing in a convention country; all WTO Members are convention countries.

132. Registration/granting of patents and designs are administered by the Patents Office of theMinistry of Industries and Production. The patent owner, and his exclusive the licensee, may file asuit to enforce these rights which are generally heard in the Court of the District Judge with thepossibility of appeals to both the High and Supreme Courts.190 As patent infringement is not acriminal offence in Pakistan, remedies include injunctions (permanent and interlocutory), damages,and costs, but do not extend to imprisonment; there is no plan to provide criminal penalties asstipulated under TRIPS Article 61.

187 U.S. Commercial Service (1999a).188 Reverdin & Manda (2000), p. 4232, (Sections 23 and 32 of the 1911 Patents and Designs Act 1911).189 Reverdin & Manda (2000), p. 4232.190 The procedures for patent infringement are governed by the Civil Procedure Code, 1908. The

licensee can be joined in the proceedings as co-plaintiff (Meller, 1999). U.S. Commercial Service (1999a).


Trade marks

133. Under the Trademark Ordinance 2001, protection is afforded for seven years from the date ofapplication and may be renewed for an additional period of ten years. Protection covers devices,brands, headings, labels, tickets, names, signatures, words, letters, and numerals, provided that theyare used in relation to goods. Under the new legislation, trade mark protection for services is in force.Trade marks may expire if not used; any third party may request their cancellation after a period offive years and one month of non-use.191 Registration is handled by the Trade Mark Registry of theMinistry of Commerce. At present, the normal period of the registration process is two to two and ahalf years. Reportedly, there have been instances of trade mark infringement involving a range ofproducts, from toys to industrial machinery, as well as allegations that Pakistan's drug labelling rulesmay violate the provisions of the TRIPS Agreement on trade marks.192

134. Geographical indications are protected under the Trademark Ordinance 2001.

Trade secrets

135. Trade secrets are protected under common law and the Trademark Ordinance 2001(Section 67).

(b) Copyright and related rights

136. Pakistan's copyright legislation was last amended in 2000; the authorities indicated thatcopyright legislation now complies with TRIPS requirements.193 It protects artistic, literary,cinematographic and recorded works; audiovisual, phonograms, performance and broadcasts; rentalrights for computers and sound recording, extending also to foreign works. Copyrights for anyliterary, dramatic, musical, or artistic work published within the lifetime of the author subsists for aperiod of 50 years; in case of posthumous work, copyrights subsist for 50 years following firstpublication.194 At present, domestic provisions lack restrictions on reproduction and compulsorylicences, and a "clear point of attachment" for foreign sound recordings.195 The present legislationprovides for criminal penalties of up to three years imprisonment and fines of up to US$1,800 (currentexchange rate), but it does not expressly allow for civil ex parte search orders against end-userpiracy196; ex parte search order is at the discretion of the court.

137. Efforts are being made to improve the regulatory framework and make it TRIPS consistent,including amendments to the Motion Picture Ordinance.197 Furthermore, the authorities have beenworking to supplement existing software protection with a new Ordinance for Protection of Software,aimed at piracy protection for software developed in Pakistan or part of which is developed inPakistan.198

191 Reverdin & Manda (2000), pp. 4235-4236.192 These drug labelling rules were introduced in August 1994 and have been argued to incorrectly

imply total interchangeability among products by diluting quality and safety differences (USTR, 2000a).193 U.S. Commercial Service (1999a), "Copyright Ordinance 1962 or Ordinance XXXIV of 1962".194 International Intellectual Property Alliance (2000).195 Other areas deemed TRIPS incompatible include overly broad exceptions to copyright and a lack of

full retroactive protection for works (International Intellectual Property Alliance, 2000).196 International Intellectual Property Alliance (2000).197 International Intellectual Property Alliance (2000).198 Pakistan Software Export Board online information, "Draft Protection for Software

Ordinance, 2000" [Online]. Available at: http://www.pseb.org/ dswlaw.htm [4 October 2000].


138. Piracy rates for computer software, motion pictures on video, sound recordings, textiledesigns, and books (especially computer, business, and medical texts) seem to be of particularconcern. For example, five known compact-disc production plants (of which two are properlyregistered) are believed to threaten seriously the domestic legitimate market and convert the domesticenforcement problem into an international export-piracy issue.199 Tens of thousands of video outletsin Pakistan deal almost exclusively and openly in home- and foreign-produced pirated products.According to a recent study by Business Software Alliance, Pakistan registered the world's11th highest piracy rate (share of pirated retail sales to total software sales), although this raterepresented a decline, from 95% (1994) to 83% (1999).200 However, in 1999, retail revenue frompirated software was 73.4% higher than in 1994.

139. Steps are being taken to strengthen enforcement, with a particular focus on combattingmotion picture and software piracy, but their efficiency is affected by alleged difficulties of thejudicial system.201 Special anti-piracy police task forces have been set up in Pakistan's three majorcities of Karachi, Lahore, and Islamabad.202 Regarding motion picture piracy, in 1999 raids on518 video outlets were conducted, resulting in the seizure of 24,527 pirated video cassettes,7,285 pirate VCDs and 96 VCRs.203 Consequently, an increasing number of video outlets are takingsteps to offer legitimate products with the level of video piracy dropping over the years from100% (1995) to approximately 60% (1999).204 Raids conducted on a large number of computersoftware outlets have often resulted in the arrest of the computer shop personnel.205 Enforcementefforts do not appear to have been extended to the music market, where overall piracy rates areestimated at 90% with the piracy of international and Indian repertoire standing at virtually 100%.206

(v) Other measures

140. Pakistan is facing numerous problems of environmental pollution and degradation of naturalresources (e.g. industrial and vehicle air pollution, deforestation, desertification, waterlogging, andsalinity).207 By 1998/99 only 20%-25% of solid waste was collected and disposed; only 3% ofindustrial waste is treated while the rest is discharged into rivers, lakes; sea- and water-borne diseasesaccounted for 20%-30% of all hospital cases.

141. Pakistan subscribes to most major environment-related agreements, and measures were takento fulfil commitments in this context.208 The Pakistan Environmental Protection Council (PEPC) and

199 International Intellectual Property Alliance (2000).200 The Business Software Alliance represents leading US software and computer technology

companies (e.g. Compaq, Digital, IBM, Intel, Apple, Microsoft, Novell, Lotus). Business SoftwareAlliance (2000).

201 Reportedly, cases brought to court are seriously backlogged due to delays caused by inefficientprocedures, the significant documentation needed to support prosecutions, and the regular non-availability ofjudges, witnesses or defendants. In 1998, out of 429 cases brought to the courts only 84 were decided(International Intellectual Property Alliance, 2000).

202 USTR (2000a).203 International Intellectual Property Alliance (2000).204 International Intellectual Property Alliance (2000).205 In 1998 and 1999, the police conducted more than 30 raids on resellers of business software in

Karachi, Peshawar, Lahore, Islamabad, Rawalpindi, and Quetta (International Intellectual PropertyAlliance, 2000), p. 335.

206 International Intellectual Property Alliance (2000).207 Planning Commission (1998), pp. 51-53; and Planning Commission (2000), pp. 55-58.208 These include the Convention on International Trade in Endangered Species of Wild Fauna and

Flora (ratified on 20 April 1976), the Convention on the Conservation of Migratory Species of Wild Animals(1 December 1987), the Vienna Convention for the Protection of the Ozone Layer (18 December 1992), the


the Pakistan Environmental Protection Agency (PEPA) are responsible for formulation of nationalenvironmental policies and programmes.209 The PEPA is responsible for the development andimplementation of environmental standards and for monitoring compliance with those standards210,while the PEPC approves the National Environmental Quality Standards (NEQS).211 NEQS formunicipal and liquid industrial effluent and industrial gaseous emissions, motor vehicle exhaust, andnoise have been in force since August 1993.212 Further efforts were made by, inter alia, passing the1997 Environmental Protection Act, strengthening the institutional setting, raising public awarenessand reafforestation projects (supported by the World Bank and the Global Environment Facility TrustFund (GEF)).213 By mid 2000 the Pakistan Environmental Protection Council had exploredmethodologies for the implementation of environmental legislation, a longstanding problem214; theinstitutional structure was reinforced. Under the 1997 Environmental Protection Act, it has becomemandatory for private and public project proponents to submit their plans for Initial EnvironmentalExamination or Environmental Impact Assessment reports for clearance by the authorities. Pakistanhas participated in the work of the WTO Committee on Trade and Environment where it expressed itsviews on matters such as environmental standards, eco-labelling, and "win-win" situations.215

142. In the context of efforts to eliminate child labour, between 1999 and 2001 an annual amountof US$300,000 is being provided to the Carpet Manufacturers Association to carry out a programmeto curb child labour and bonded labour in collaboration with the International Labour Office.216

Similar projects are under way in other export sectors such as soccer balls and surgical instruments.The Ministry of Labour has formulated an action plan for the elimination of child labour fromhazardous and other occupations. The Child Care Foundation was also provided with a core fund ofPRs 20 million (about US$387,000) to initiate a programme for rehabilitation of child workers.

Montreal Protocol on Substances that Deplete the Ozone Layer (18 December 1992), the Basel Convention onthe Control of Transboundary Movement of Hazardous Wastes and their Disposal (26 July 1994), theConvention on Biological Diversity (26 July 1994), and the United Nations Framework Convention on ClimateChange (1 June 1994) as well as the New International Conventions and Protocol in the field of Environmentand Development under process (Prior Informed Consent Procedures for certain Hazardous Chemical andPesticides in International Trade, Persistent Organic Pollutants, Protocol on Biosafety). Ministry ofEnvironment online information. Available at: http://www.environment.gov.pk/ [25 July, 2000]).

209 Ministry of Environment online information.210 U.S. Commercial Service (1999a).211 Ministry of Environment online information.212 Board of Investment online information. Available at: http://www.pakboi.gov.pk/ [20 July 2000].213 Planning Commission (1998), pp. 51-53; and Planning Commission (2000), pp. 55-58.214 Specific areas of concern prior to 1998 included the inability of provincial environmental protection

agencies to design cost-effective strategies for the enforcement of National Environmental Quality Standardsand the absence of a pollution control system at the national level (International Monetary Fund onlineinformation. Available at: http://www.imf.org/external/np/pfp/pakistan/index.htm [1 August 2000]).

215 WTO documents WT/CTE/M/11, 22 August 1996, WT/CTE/M/14, 25 June 1997, andWT/CTE/M/17, 9 April 1998.

216 Central Board of Revenue (1999b).

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