Pakistan’s

Pakistan’s Market
Market Access
Access
Initiative
Initiative

Challenges
Challenges and
and Opportunities
Opportunities
By
By
Ms.
Ms. Humaira
Humaira Zia
Zia Mufti
Mufti
Ministry
Ministry of
of Commerce
Commerce
28 th August
28th August 2005
2005

1
 Policy Focus
Domestic
Domestic Dimension
Dimension
 Strengthen
Strengthen the
the Production
Production Bases
Bases
 Improve
Improve Quality
Quality
 Ensure
Ensure Compliance
Compliance
 Enhance
Enhance Design
Design Capabilities
Capabilities
 Develop
Develop Human
Human Resource
Resource with
with reference
reference
to
to Technical
Technical Skills
Skills
 Provide
Provide volumes
volumes for
for achieving
achieving Economies
Economies
of
of Scale.
Scale.
Cont’d..2 2
Cont’d….Policy Focus
Foreign
Foreign Dimension
Dimension
 Expand
Expand Market
Market Access
Access Abroad
Abroad
 Improve
Improve Country’s
Country’s Business
Business Image
Image Abroad
Abroad
 Showcase
Showcase Pakistan’s
Pakistan’s strengths
strengths to
to foreign
foreign
buyers
buyers
 Launch
Launch new
new Trade
Trade Diplomacy
Diplomacy
 Trade
Trade not
not Aid
Aid Approach.
Approach.
 Envoys’
Envoys’ Conferences
Conferences
 Warehousing:
Warehousing: New
New and
and existing
existing markets
markets
 Expo
Expo Pakistan:
Pakistan: Annual
Annual Mega
Mega Exhibition
Exhibition
3 3
Macro
Macro Economic
Economic Reform
Reform
 Trade
Trade Policy
Policy
 Tariff
Tariff Policy
Policy
 Investment
Investment Policy
Policy
 Fiscal
Fiscal Policy
Policy
 Monetary
Monetary Policy
Policy

4 4
 Trade
Trade Policy
Policy Reform
Reform

S.no. Category Status

1 Import/Export Regimes Liberalized
2 CCI & E Department Abolished
3 Import licensing Abolished
4 License fee @ 6% Abolished
5 Import/Export Registration Abolished

5 5
 Tariff
Tariff Reforms
Reforms
 Top rate brought down to 25%
 Number of slabs reduced from 42 in 1985
to 16 in 1995, 7 in 1999 and 5 in 2005.
 Discriminatory SRO Regime eliminated
 Level playing field provided by
tariffication of concessional duties.
 SMEs’ access to low tariff raw materials
enhanced.

Cont’d..
6 6
Contd….Tariff Reforms

 Duties
Duties on
on hundreds
hundreds ofof tariff
tariff lines
lines
comprising
comprising industrial
industrial inputs
inputs i.e.
i.e. Raw
Raw
Materials
Materials and
and Capital
Capital Goods
Goods gradually
gradually
reduced
reduced to
to 0-5%
0-5%
 Para-tariffs
Para-tariffs abolished
abolished i.e.
i.e. Iqra,
Iqra, Import
Import
Surcharge,
Surcharge, Regulatory
Regulatory Duties,
Duties, Flood
Flood
Relief
Relief Surcharge,
Surcharge, etc.
etc.
 Tariff
Tariff discrimination
discrimination between
between
Commercial
Commercial and
and Industrial
Industrial imports
imports
eliminated
eliminated

7 7
 Tariff
Tariff Reforms
Reforms
Top Rate Reductions
Year Top Rate
1985 120%
1990 90%
1994 65%
1997 45%
1999 35%
2000 30%
2001 25%

Source: Central Board of Revenue 8 8

 Investment
Investment Policy
Policy Reforms
Reforms
 All
All economic
economic sectors
sectors open
open to
to Foreign
Foreign Direct
Direct
Investment—Industrial,
Investment—Industrial, Agricultural
Agricultural and
and Services.
Services.
 Equal
Equal treatment
treatment to
to local
local and
and foreign
foreign investors.
investors.
 100
100 %% foreign
foreign equity
equity allowed
allowed
 No
No Government
Government sanction
sanction required.
required.
 Remittance
Remittance ofof Royalty,
Royalty, Technical
Technical && Franchise
Franchise
Fee,
Fee, Capital,
Capital, Profits,
Profits, Dividends
Dividends allowed.
allowed.
 Foreign
Foreign investment
investment fully
fully protected
protected through
through
Foreign
Foreign Private
Private Investment
Investment (Promotion
(Promotion &&
Protection)
Protection) Act
Act 1976,
1976, Protection
Protection of
of Economic
Economic
Reforms
Reforms Act
Act 1992
1992 and
and Foreign
Foreign Currency
Currency Accounts
Accounts
(Protection)
(Protection) Ordinance,
Ordinance, 2001
2001

9 9
 Fiscal
Fiscal Policy
Policy Reforms
Reforms
 High
High growth
growth rate
rate achieved
achieved –– over
over 7%
7% expected
expected
this
this financial
financial year.
year.
 Deficit
Deficit reduction
reduction (4%
(4% ofof GDP)
GDP)
 Debt
Debt reduced.
reduced.
 Major
Major reduction
reduction in
in Debt
Debt Service
Service Charge.
Charge.
 Improved
Improved revenue
revenue collection
collection –– Sales
Sales Tax,
Tax,
Custom
Custom Duty,
Duty, Income
Income Tax.Tax.
 Wealth
Wealth Tax
Tax abolished.
abolished.
 Central
Central Excises
Excises being
being phased
phased out.
out.
 Substantial
Substantial increase
increase in in reserves-
reserves-
over
over $12.8
$12.8 Billion
Billion
 PSDP
PSDP doubled
doubled
 Social
Social Sector
Sector expenditure
expenditure substantially
substantially
increased
increased 10 10
 Monetary
Monetary Policy
Policy Reforms
Reforms
 State
State Bank
Bank Autonomy
Autonomy
 Banking
Banking and
and Capital
Capital market
market
Reforms.
Reforms.
 Cost
Cost of
of Capital
Capital reduced
reduced
 Exchange
Exchange rate
rate stabilized
stabilized
 Substantial
Substantial improvement
improvement in
in liquidity
liquidity

11 11
 Major Trade Policy Initiatives
 Establishment of Technology Up-gradation
Fund
 Launching Enterprise Capacity Building Scheme
 Improving Country’s Business Image
 Freight Subsidy—Inland and Offshore
 Establishment of Zones for Agri-Products
and Fisheries
 Establishment of Special Export Zones
 Establishment of Garment Cities
 Rehabilitation of Industrial Estates
 Establishment of Combined Effluent
Treatment Plants Cont’d..
12 12
Contd….Major Trade Policy Initiatives
 Facilitation of Garment Exports through
Textile Garment Package
 Incentivizing export of Horticulture Products
 Encouraging Women Entrepreneurs
 Opening Land Route Trade with Afghanistan
 Strengthening Trade Diplomacy
 Attracting Buyer Driven FDI for Export
Sourcing from Pakistan
 Zero-Rating of Sales for Textile Chain
 Support for Quality Assurance and Lab
Accreditation
 Strengthening of SMEs Industrial Clusters
 Relocation of Industries to Pakistan 13 13
 Two
Two Pillars
Pillars of
of Export
Export Strategy
Strategy

 Drive
Drive Volume
Volume and
and Value
Value of
of Exports
Exports
 Create
Create enabling
enabling environment
environment for
for the
the
above
above to
to succeed
succeed

14 14
Strategy to Drive Volume and Value
(Pillar –I)
 Enhancing
Enhancing world
world market
market share
share of
of Core
Core
Product
Product Categories
Categories in
in top
top 10
10 Markets
Markets
 Pursuing
Pursuing Value
Value Addition
Addition through
through capacity
capacity
building
building and
and capability
capability enhancement
enhancement of
of
exporters
exporters
 Export
Export Product
Product Diversification
Diversification
 Geographic
Geographic Diversification
Diversification
 Translating
Translating traditional
traditional ties
ties with
with Countries
Countries
into
into commercial
commercial opportunities
opportunities
 Leveraging
Leveraging International
International Trade
Trade Blocs
Blocs //
Agreements
Agreements for
for enhanced
enhanced Market
Market Access
Access15
15
 Strategy
Strategy for
for Creating
Creating an an Enabling
Enabling
Environment
Environment (Pillar-II)
(Pillar-II)
 Reducing
Reducing cost
cost ofof doing
doing business
business
 Improving
Improving industrial
industrial & & commercial
commercial
infrastructure
infrastructure
 Tariff
Tariff rationalization,
rationalization, decontrol
decontrol &&
liberalisation
liberalisation ofof investment
investment
 Quality
Quality & & Standards
Standards management
management to to reinforce
reinforce
confidence
confidence in in ‘Made
‘Made inin Pakistan’
Pakistan’
 Social,
Social, environmental
environmental & & security
security compliance
compliance
 Business
Business image
image building
building of
of Pakistan
Pakistan
 Export
Export related
related skills
skills development
development
 Protection
Protection of of Intellectual
Intellectual Property
Property Rights
Rights
 Developing
Developing SMESME sector
sector asas vendors
vendors & & exporters
exporters
16 16
 Challenges
 Rapidly
Rapidly growing
growing imports
imports
 Exports
Exports as
as key
key for
for economic
economic turnaround
turnaround
 Infrastructure
Infrastructure deficiencies
deficiencies
 Shortage
Shortage of
of skilled
skilled manpower
manpower
 Conformity
Conformity to
to quality
quality and
and standards
standards
 Maintaining
Maintaining fiscal
fiscal stability
stability

17 17
Required Infrastructure
 Physical
Physical Infrastructure
Infrastructure
 Financial
Financial Infrastructure
Infrastructure
 Legal
Legal Infrastructure
Infrastructure
 Intellectual
Intellectual Infrastructure
Infrastructure
 Technological
Technological Infrastructure
Infrastructure
 Social
Social Infrastructure
Infrastructure
18 18
 Institutional
Institutional Strengthening
Strengthening
 Export
Export Promotion
Promotion Bureau
Bureau (EPB)
(EPB)
 Foreign
Foreign Trade
Trade Institute
Institute of
of Pakistan
Pakistan
(FTIP)
(FTIP)
 National
National Tariff
Tariff Commission
Commission (NTC)
(NTC)
 Pakistan
Pakistan Standards
Standards and
and Quality
Quality Control
Control
Authority
Authority (PSQCA)
(PSQCA)
 Pakistan
Pakistan National
National Accreditation
Accreditation Council
Council
(PNAC)
(PNAC)
 Pakistan
Pakistan Intellectual
Intellectual Property
Property Rights
Rights
Organization
Organization (PIPRO)
(PIPRO)
19 19
 Pakistan
The
The economy
economy picked
picked upup further
further inin
FY2005,
FY2005, with
with GDP
GDP growth
growth coming
coming inin at
at
over
over 8.4%
8.4% for
for the
the first
first time
time in
in 88 years.
years.
With
With sound
sound macroeconomic
macroeconomic fundamentals
fundamentals
achieved
achieved and
and key
key sectors
sectors strengthened
strengthened by by
reforms
reforms implemented
implemented in in the
the 4-5
4-5 years,
years,
the
the economy
economy isis well
well positioned
positioned toto sustain
sustain
7%
7% or
or more
more growth
growth in in the
the medium
medium term.
term.

ADB’s Asian Development Outlook – 2005 20 20

Market Access Initiatives

 Bilateral
Bilateral
 Regional
Regional

21
ECOTA REGIONAL
(Economic Cooperation Organization Trade Agreement)
 ECO member countries are:
 Pakistan, Iran, Afghanistan, Turkey,
Azerbaijan, Kazakhstan, Tajikistan,
Turkmenistan, Kyrgyzstan and Uzbekistan.
 Agreement was signed - July 2003.
 Initial Agreement = reduction of maximum
tariff slab to 15% within 8 years.
 On a fast track initiative, reduction of tariff
to 10% on all traded items in 5 years.
 3rd Ministerial meeting of ECO states was
held in July, 2005.

22
 SAFTA
(South Asian Free Trade Area)

 SAFTA was signed on 6 January 2004 at

Islamabad.
 The Agreement shall come into force on 1st
January 2006.
 Tariff Reduction to 0-5%: vulnerable
sectors protected through Sensitive List
 Non-Least Developed Countries (Non-LDCs)
 India – Pakistan - 7 years (2013)
 Sri Lanka – 8 years (2014)
Cont’d..
23 23
Contd….SAFTA

 LDCs (Bangladesh, Bhutan, Nepal,

Maldives)-(2016)
 Pakistan, India, Sri Lanka for LDCs–3
years (2009)
 Current Negotiations:
 Sensitive lists; rules of origin;
technical assistance and revenue loss
compensation mechanism for the
LDCs

24 24
 Preferential Trading Arrangement (PTA) with D-8
(Bangladesh, Egypt, Indonesia, Iran,
Malaysia, Nigeria, Pakistan, and Turkey)
 Two meetings held
 Next meeting due
 Trade Preferential System (TPS) with OIC
 Negotiations initiated
 Slow progress due to divergent views in a large
membership of OIC
 Gulf Cooperation Council (GCC)
 Agreement signed in August 2004 envisaging
establishment of Free Trade Area with Pakistan
 Pakistan has requested G.C.C. for initiation of
negotiation. First round is expected in September,
2005
25
 BILATERAL
Sri Lanka
 The FTA with Sri Lanka was signed in June
2002.
 Operational since 12 June, 2005.

Pakistan Sri Lanka

(No. of (No. of
items) items)
Immediate concession list (ICL) 206 102
No concession list (NCL) 540 697
 Tariff on items (other than NCL) will be
eliminated:
Pakistan - 3 years
Sri Lanka – 5 years Cont’d..
26
China
China
 PTA
PTA signed
signed with
with China
China in
in November
November 2003
2003 is
is
operational
operational since
since 1st
1st January
January 2004.
2004.
 In
In December
December 2004
2004 during
during the
the official
official visit
visit of
of
the
the Prime
Prime Minister
Minister to
to China
China it
it was
was announced
announced
to
to initiate
initiate extension
extension of
of PTA,
PTA, Joint
Joint Feasibility
Feasibility
Study
Study onon FTA
FTA and
and to
to negotiate
negotiate an
an Early
Early
Harvest
Harvest Programme.
Programme.
 Following
Following achievements
achievements made
made during
during visit
visit of
of
the
the Chinese
Chinese Premier
Premier On
On 5th
5th April
April 2005:-
2005:-
 Completion
Completion of
of Joint
Joint Study
Study and
and
commencement
commencement ofof FTA
FTA negotiations;
negotiations; and
and
 Early
Early Harvest
Harvest Programme
Programme was
was finalized.
finalized.
Cont’d.. 27
Contd….China

Pakistan’s Products
 Bed-linen, table linen & other home
textiles, towels, cotton & blended
fabrics, synthetic yarn, synthetic fabrics,
mangoes, oranges, dates, tarpaulin and
marble articles like tiles, surgical goods,
sports goods & cutlery etc., dyes, guar
gum, industrial alcohol and medicines, etc.

China’s Products
 Some organic chemicals & machinery for
textile, leather production, etc.

28
Iran
 PTA signed in March 2004
 Tariff reduction (average)
 Pakistan 338 items 18%
 Iran 309 items 18%
 It is expected that the Agreement will be
operational at an early date.
Turkey
 The Framework Agreement on PTA was
signed on 19th January 2004.
 First round of Technical Negotiation was held
from 25 – 27 May 2004 in Islamabad. Draft
text of PTA and wish lists were exchanged.
 Negotiations ongoing-- Pakistan is requesting
Turkey to expand its offer list. 29
 ASEAN COUNTRIES
Indonesia
 Joint statement on Comprehensive Economic
Partnership (CEPT) was signed on 21st
August, 2003. First Meetings on CEPT was
held in Islamabad on 25-26th Oct, 2004.
 Both sides have agreed to initiate
negotiations on establishing CEPT which would
lead to FTA.
 The CEPT will include:
i) Areas of Economic Cooperation;
ii) FTA; and
iii) Liberalization of trade in goods,
services and investment.
30
Singapore
 First meeting of Joint Study Group held
at Islamabad in February, 2005.
 Decided to negotiate FTA in the next
meeting.
Malaysia
 During the visit of the Prime Minister of
Malaysia to Pakistan on 15-18 February,
2005, it was decided to negotiate
bilateral FTA.
 3 meeting of the TNC have been held so
far.
31
Laos DPR
 Cabinet has approved to initiate
negotiations with Laos.
 Date of the meeting is being fixed
through diplomatic channels.

ASEAN + 1
 High level visits from Pakistan to ASEAN
countries

32
 SOUTH ASIA
Bangladesh
 First round of negotiations were held in
Dhaka in November 2003. Finalization
of negotiation is expected by the end of
this year

Nepal
 Cabinet has approved negotiations with
Nepal.
 Date of the first meeting being fixed
through diplomatic channels.
33
USA
 Pakistan
Pakistan signed
signed aa Trade
Trade and
and Investment
Investment
Framework
Framework Agreement
Agreement (TIFA)
(TIFA) with
with USA
USA in
in June
June
2003.
2003.
 The
The First
First round
round of
of TIFA
TIFA Talks
Talks was
was held
held on
on 28-
28-
30th
30th September,
September, 2004
2004 at
at Washington.
Washington.
 Bilateral
Bilateral Investment
Investment Treaty
Treaty negotiations
negotiations initiated:
initiated:

 Draft
Draft BIT
BIT discussed
discussed at
at London
London
(7th
(7th -11th
-11th Feb,
Feb, 2005)
2005)

 Second
Second Round
Round due
due in
in Islamabad
Islamabad
(2005)
(2005)
 U.S
U.S was
was requested
requested to
to start
start FTA
FTA negotiations.
negotiations.

34
 Africa
 Ministry of Commerce is evaluating proposal
for initiating PTA with South Africa and
Al-Maghreb countries (Tunisia, Algeria and
Morocco).

Thailand - Japan
 Pakistan is desirous to have a PTA /FTA
with Thailand, Japan.

Bangkok Agreement
 Pakistan keen to join Bangkok Agreement.
(Bangladesh, China, India, South Korea, Laos and
35 Sri Lanka) Cont’d.. 35
 MERCOSUR
 Member countries: Argentina, Brazil,
Uruguay, Paraguay
 During the visit of the President to South
America initial proposal for FTA was
made.
 FTA negotiations initiated.

European Union
 Trade diplomacy to secure GSP
concessions.
36 36
Thank You