Ministry of Industries forwards reservations of industrial sectors over Negative List of items for trade with India to Ministry of Commerce

ISLAMABAD: The Ministry of Industries (MoI) has forwarded the reservations of different industrial sectors over the “Negative list of items for trade with India” to the Ministry of Commerce (MoC), and other concerned ministries. The industries in Pakistan want to include more items in the negative list of tradable items for a certain period so that they can take necessary measures to upgrade their industry to compete with the Indian products.

The MoI is fully cognizant of the multiple benefits implicit in liberalization of trade however in order for such measures to succeed from the point of view of promoting the growth of Pakistan’s, complimentary measure in terms of assured supply of energy and mark up at par with regional neighbours is a sine qua non. The industry needs a level playing field and consistency in all policies to gain multiplier gains from trade openings.

It is felt by the industry that while this liberalization is welcome but will be only beneficial for both sides if undertaken in a structured manner providing space to our upcoming industry most of all in the back drop of unprecedented energy crunch and other industry hostile environment like two floods in as many years, law and order and one of the highest interest rates in the region. The rising unemployment rate also cannot be ignored.

The Ministry of Industries has used the these parameters while preparing the Negative List, Industrial Sector Remarks/Input, Production data analysis, Pakistan’s Imports from World, Pakistan’s Exports to World, Indian Exports to World.

TLs already in Positive List (PL) but requested by Industry to be placed in Negative List have not been analyzed as per principle decision of MOC, the TLs that are included in SAFTA Sensitive List have been recommended for the Negative List for the very sensitive/emerging sectors, the items having 5% tariff have generally not been included as the industry has requested to allow raw material to be imported from India to cut down on input costs.

The proposed negative list is the bare minimum and absolutely necessary to mitigate to some extent the effects of a sudden transition that doubtless entail huge economic implications for the industry. The SAFTA impact should also be factored in to comprehend the actual economic impact. The Ministry recommends the following structured Phase-out Plan: The Negative List should be phased out over a period of 05 years having a staggered approach, the phasing out should start after a period of 03 years, the phasing out should be in consonance with the sensitivity levels of the TLs in order of least to highly sensitive.

A year wise percentage reduction plan may be followed starting with 25% in the 3rd and 4th year each, and the remaining 50% in the 5th year, the phasing out should be linked to proportionate measures by India towards reduction of NTBs etc. In case India fails to remove the trade barriers as committed for a given duration, phasing out should not be allowed for that year/period.

Phasing out at each level will be carried out after in-depth consultation with the Ministry of Industries and other stakeholders, the phasing out in each year is not to be automatically allowed but should be weighed against similar commensurate measures by India.

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