REMOVAL of bureaucratic snags and simplification of regulatory framework to serve the dual purpose of trade promotion and transparency was a major constituent of wide ranging economic reform process initiated by President Musharraf’s government when it assumed power in 1999.

Under the declared policy, guidelines measures were taken to rationalize the tariff regime as well. The thrust of the policy was to move towards a more uniform tariff structure by reducing the number of tariff slabs and by trashing duplicating statutory regulatory orders (SROs) introduced to suit the changing situations.

Besides, the country being a WTO member is committed principally to lower the number of tariff bindings and clipping the discretionary power available to state authorities under Statutes, Regulations and Orders which reduced transparency.

In fact way back in the mid-nineties, the representative of Pakistan stated before the trade policy review body (TPRB) of the WTO “that the country’s trade policy was fairly transparent, with key instruments published in the Official Gazette. Businesses were familiar with the SRO system; no official discretion was involved. The number of SROs, tariff exemptions and concessions were being steadily reduced.”

Experts on trade, tariff and WTO affairs, however, feel that the government has lost momentum that it picked up initially when several exercises were carried out in the commerce ministry to suggest ways and means to streamline the regulatory framework of trade in the country. As a result, the first few trade policies announced by the current quasi-democratic government showed clear signs of movement towards a better, transparent and uniform tariff structure.

These trade experts, speaking on the condition of anonymity said that, for the last two years the pace of movement towards declared liberal, simple and transparent trade regulations has slowed down if not actually reversed. The announcement of new SROs every other day leaves one wondering about the state of affairs at the highest echelons of power. Someone may ask what is there in the SROs to make such an issue out of it?

Chaudhry Mohammad Saeed, FPCCI president, sees SROs as a necessary evil. “We are passing through a transition phase where the whole world is in a flux. Globalization has drawn countries closer where any change in a policy of one country impacts not only its trading partners but others in the community as well. To correspond to this ever changing situation the government cannot but has to resort to SROs to fashion its response to a new situation arising out of a change in the world trading environment” he reasoned.

He, however, felt that any policy alteration implemented through SRO should at least be valid for a year. This, he said is important so that the government’s neutrality may not challenged.

The argument is convincing as Pakistan cannot afford not to respond to say if there is some change in the textile policy of EU or US. As restriction on Chinese textiles in US created more space of other textile exporter they altered their tariff structures to further facilitate their respective textile exporters to move into space vacated by Chinese in the US market. There are many other examples that can be quoted when swift response to emerging trading scenario necessitated immediate measures that were introduced by promulgating SROs.

The thrust of the policy, the FPCCI president agreed should, however be to minimise the number of SROs. Why?

Sometimes these are used to promote individuals at the cost of the public interests. In such cases, policies are manipulated by overnight changes in import duty structures by issuing SROs.

In the past, there were instances when issuance of certain SROs led to serious controversies and scandals. Some of such SROs were linked with car imports, steel imports, boilers imports, etc. Such SROs are alleged to be designed to favour single industry at the cost of others, at times even a single firm.

It must, however, be noted that while the Central Board of Revenue (CBR) is widely perceived as a source of these manipulations, it is primarily the rulers and their interest groups who conceptualize these manipulations and use the bureaucracy as implementing authority. This, however, does not absolve the bureaucracy of its responsibility.

Prime Minister Shaukat Aziz in his budget speech in 2003, as a finance minister hinted at his government efforts to reduce the number of SROs. He mentioned while commenting on the reforms that the number of SROs have been reduced to 56 from 120. In the last two budget speeches, however, there was no update on that count. The unconfirmed figure that was quoted in a news report was that there are about 250 special concessionary SROs in operation.

There is another angle to concessionary SROs besides what it translates into for business class and its different sectors. In effect, it is tax payers’ money that is used for granting concessions. Shouldn’t public be taken into confidence when such concessions are made. It, certainly is impractical to hold a referendum over each and every measure that ministry takes. May be, it would help in clear the impression of partial behaviour of the government towards the propertied classes if the upper limit is fixed for such funds.

It would be appropriate if the government revive its drive to remould the current system into simple, efficient and transparent tariff structure. The number of SROs should be further reduced. In particular the number of items subject to dual tariff rates should be gradually reduced so as to eliminate anomalies.