April 20, 2008	Sunday	Rabi-us-Sani 13, 1429

KARACHI, April 19: The difference of more than two billion dollars in the two-way trade figures between China and Pakistan, being given by the customs of two countries, is creating a lot of confusion among businessmen who seek an explanation from the government.

There are claims that manipulators in Pakistan are indulging in under-invoicing and making wrong declarations to circumvent levy of duties and taxes even after the operation of the Free Trade Agreement.

“This is creating distortion in trade deficits,” said a member of the Pakistan-China Business Council of the Federation of Pakistan Chambers of Commerce and Industry.

“I doubt if the council ever discussed the difference in trade figures reported by the customs of two countries,” he said and did not mince words that a lot of facts and figures were being concealed, with the active connivance of the customs, under a new system, CARE.

According to Pakistan Customs, the volume of two-way trade between Pakistan and China increased to $4.10 billion in 2006-07 from $3.16 billion in 2005-06.

China tabulates trade figures on the basis of calendar year and reported $6.88 billion trade in 2007 as against $5.24 billion in 2005-06.

Some difference between trade figures of the two sources is understandable because Pakistan calculates figures from July to June and Chinese Customs tabulates figures from January to December in a year.

But a comparison of the volumes of two-way trade in 2006-07 given by Pakistan customs with that of 2007 trade figures of China shows a huge difference of $2.78 billion.

Similarly the difference between trade figures in 2005-06 with those of 2006 shows another difference of more than two billion dollars.

An analysis of the two-way trade structure shows that Pakistan Customs reported exports of $575.90 million in 2006-07 while Chinese Customs showed almost a 100 per cent increase of more than one billion dollars export to China.

This difference is much wider in imports from China reported at $3.53 billion in 2006-07 by the Pakistan Customs as against $5.78 billion by the Chinese customs in 2007.

In 2006, Chinese customs reported $4.24 billion imports into Pakistan as compared with $2.70 billion by the Pakistan customs.

Tanned leather export is one item which is being declared wrongly to evade 20 per cent export duty and the issue was raised by the leaders of leather garments industry with the government.

Tanned leather is the basic input of leather garment industry as yarn is needed for value-addition in textiles.

China is a big importer of tanned leather and a big exporter of leather garments to Europe and the US.

Chinese customs reported import of raw hides and skins from Pakistan in 2007 worth $70.78 million as against $61.79 million imports in 2006.

Pakistan customs reports leather export of $31.11 million in 2006-07 as against $29.65 million in 2005-06.

According to leather garment industry, there is a nexus of Pakistani leather importers with leather garment factories in China and stores in Italy and other European countries who are thriving on this trade for the last few years.

The Chief Collector of Customs (South) is said to have promised to discuss this issue with local leather garment exporters, but it was blamed that the promised meeting is being delayed on one pretext or the other.

Also worth mentioning is the fact related to Pakistan-China business. Many Pakistani garment operators are getting their apparels, including shirts with embroidery work, prepared in China.

These imports are being offered as local product in the market. So is the case in footwear, in which reputed and well-established companies are importing shoes from China for sale in Pakistan as a local product.

A gentleman, who represents an established footwear company and is involved in this business, is now a federal minister in the cabinet.

A study, sponsored by the World Bank through a local organisation, estimates volume of informal trade between Pakistan and China at one to three billion dollars in a year.

Another study by the Central Board of Revenue reveals the route through which the informal trade between Pakistan and China is being carried out.

After Dubai, China has become one of the most popular destinations of businessmen from Pakistan, and many traders visit as many as half a dozen times in a year.

There is also a lot of confusion on wide and unexplained difference in trade statistics of State Bank of Pakistan and those being released through the private sector arm of the Central Board of Revenue, the Pakistan Revenue Automation Limited (PRAL). The previous government announced to convert the Federal Bureau of Statistics into an independent and professional organisation, but no headway was made in almost nine years. No professional statisticians, analysts, tabulators and mathematicians were engaged to run and operate the bureau as an independent and professional body.