ISLAMABAD, April 5: Pakistan has decided to give tariff protection to local automobile industry rather to seek further waiver for the continuation of deletion programme under the agreement for trade related investment measures (TRIMs). Official sources told Dawn on Tuesday that the Engineering Development Board, Customs Department along with vendors and auto assemblers have worked out a comprehensive tariff regime to be applicable on import of parts and accessories for the automobiles.
These tariffs will be finalized following an extensive deliberations with all stakeholders, which would be announced in the budget of 2005-06, added the officials.
Meanwhile, the WTO Council for Trade in Goods (CTG) had deferred on March 11 Pakistan’s application at the request of Islamabad seeking extension in the continuation of deletion programme for local automobile sector.
Pakistan was the only country in the world seeking protection for local automobile sector with deletion programme, which enable it to lay down the condition of local content requirement.
Following the implementation of the proposed tariff regime for the auto sector from the next fiscal year, the officials said that the auto industry would be free to source its components where it was find it economical and that manufacturers should not be forced to buy from any specific sources.
Elaborating the proposed tariff regime for automobile industry, the officials said that a high tariff protection would be extended particularly to vendor industry, engaged in the production of parts, accessories for automobiles.
These officials said it was also under consideration to keep uniform rates for the parts and accessories at import stage to discourage their imports particularly from China and Korea.
According to the official, it was also under consideration that those parts and accessories, which were not manufactured locally would be subjected to lowest tariff in the range of 15-20 per cent in order to reduce the cost of the cars.
The officials said that it was unlikely to raise the tariff on import of cars from the existing maximum ceiling following the discontinuation of deletion programme. They said that a proposal was under consideration to further reduce the customs tariff on import of cars during the up-coming budget.
According to the WTO agreement on TRIMs which entered into force on January 1, 1995, all WTO members were required to phase out trade distorting measures such as deletion programmes. Developing countries were given an extra five years to do so.
Since deletion programme is considered important by auto industry and downstream vendor industry to develop local capacity of auto parts, at the expiry of five years grace period, Pakistan sought seven years further extension. After considerable efforts, they were allowed two years and then another two years’ extension was allowed subject to the condition that Pakistan would not ask for further extension.
This means that by the end of this year 2003, the deletion programme will have to be phased out by the Pakistani government in compliance to the WTO agreement.
