Customs reforms in the works

Updated Jun 07 2020

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New rules will bind Pakistan Customs to give an advance ruling at the request of a person, who intends to import or export goods. — Reuters/File
New rules will bind Pakistan Customs to give an advance ruling at the request of a person, who intends to import or export goods. — Reuters/File

ISLAMABAD: The government has decided to introduce two major reforms to the Pakistan Customs in the budget for next fiscal year for cross-border movement of goods under the Trade Facilitation Agreement (TFA), Dawn has learnt from knowledgeable sources.

The reforms are in line with the World Trade Organisation (WTO) procedures. The WTO launched the TFA in 2013 to ease border trade across the world and the agreement was ratified by Pakistan in October 2015.

The TFA came into effect on Feb 22, 2017, after ratification from two-thirds members (110) of the organisation.

As part of its commitment to agreement, the government will introduce new rules in the budget for advance rulings. The deadline set for its implementation is Sept 30.

These will bind the Pakistan Customs to give an advance ruling at the request of a person, who intends to import or export goods. The advance ruling covers determination of classification, origin or value of goods or applicability of a particular relief or exemption on goods prior to its import or export.

Value and applicable duty exemptions to be declared prior to import or export of consignment

The ruling under the TFA will help release and clearance of goods and shall be valid for a specific period depending on the nature of imports or exports ranges between three to 12 months.

The second major reform is to implement Authorised Economic Operator (AEO) programme before September. The AEO programme aims to facilitate secure trade supply chains through simplified procedures.

The WTO member countries have committed to these reforms in three categories: A, B and C. Pakistan implemented the reforms under A category after the TFA was ratified.

The proposed commitment for reforms in the upcoming budget are mostly related to the B (transition period) and C (upon receiving assistance and support for capacity building) categories.

Pakistan has already committed to implement 11 measures under the C category of the TFA. Of these, the government has notified nine measures. The remaining two were partially notified.

Pakistan has requested assistance and support for capacity building for a total number of 11 measures. However, the donor arrangement for the technical support to the Federal Board of Revenue (FBR) has not been notified.

Under the C category commitments, Pakistan has also notified to implement three measures: making all information available on internet, expedited shipments and average release times before September. The indicative deadline for another reform implementation – risk management – is June 30.

The FBR is yet to clarify whether it will comply with these reforms before the deadline or not.

An official note from the Ministry of Commerce said that the Organisation for Economic Cooperation and Development has said the TFA implementation would reduce trade costs by 14.5 per cent. Developing countries like Pakistan will also be able to diversify their exports and enter new markets.

The TFA will also help countries attract more foreign direct investment, increase customs revenues and curb corruption through transparency.

Beyond these quantifiable economic benefits, the agreement will also improve systems and customs procedures.

The TFA contains provisions to expedite movement, release and clearance of goods. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and compliance issues.

Published in Dawn, June 7th, 2020