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Dar approves cross-border trade reforms

Updated April 07, 2017


ISLAMABAD: Finance Minister Ishaq Dar has approved reforms in the Customs Department to facilitate cross-border trade under the Trade Facilitation Agreement (TFA).

The reforms will be carried out in six to 24 months, a source told Dawn on Thursday. Earlier, the Federal Board of Revenue (FBR) had committed to carrying out customs reforms in three to five years.

“We have sent the revised reforms commitment to the Ministry of Commerce,” the official said, adding that the authorities concerned will further discuss the reforms with stakeholders before notifying them.

The TFA was launched in 2013 as a global agenda to ease border trade. Pakistan ratified the TFA in October 2015. The agreement came into effect on February 22 after its ratification from 110 members of the WTO.

As part of the agreement, member-countries committed reforms to the WTO in A, B and C categories. All reforms that Pakistan committed in the A category have already been implemented after the ratification of the agreement. The proposed revised commitment is mostly related to the customs and will be placed under B and C categories.

On March 15, Commerce Minister Khurram Dastgir Khan announced reforms commitments after receiving the same from the FBR.

According to a source, bureaucrats were resisting reforms as the FBR was earlier reluctant to ratify the TFA. However, the agreement was ratified after the intervention of the prime minister’s secretariat, the source added. Similarly, the FBR in consultation with the Ministry of Commerce was making conservative commitments in B and C categories, which were overruled by the finance minister, the source said.

“The revised commitment for reforms will give a positive message to the local and international business community,” the source said, adding that countries lock their reforms and voluntarily commit to change by making international multilateral commitments.

The FBR has committed that in six months it will establish a help desk to provide trade-related information and ensure the segregation of customs duties, taxes, fees and charges.

Moreover, the FBR will put in place a system to accept paper or electronic copies of supporting documents required for import, export or transit formalities. Earlier, these reforms were to be carried out in five years.

The reforms that will be implemented in one year include the standardisation and upgrade of existing procedures and setting up of software for electronic payments. Earlier, the country was to put in place the electronic payment system in five years.

The period for the implementation of reforms in other areas was reduced to two years from three and five years. These are related to risk management, post-clearance audit and trade facilitation for authorised operators. The only reforms that will be carried out in five years are related to the establishment of a single window for trade.

OECD studies suggest that the implementation of the TFA will reduce trade costs by 14.5 per cent. It will help developing countries like Pakistan diversify their exports and enter new markets.

Published in Dawn, April 7th, 2017