ISLAMABAD, May 5: After elimination of negative list for trade with India by the end of 2012, the local industry would continue to enjoy protection through the sensitive list being maintained under the South Asia Free Trade Agreement (Safta), the commerce ministry has informed the auto sector.
The reply was forwarded to the auto manufacturers regarding their concerns over future of auto assemblers, manufacturers and vendors after free trade with India.
The commerce ministry stated that the sensitive list was being maintained by Pakistan to ensure protection to key industries, including auto, textile, leather, surgical and other export oriented sectors after the negative list would be abolished.
“The idea is to ensure that imports in these sectors do not harm local industry,” said an official of the ministry of industries, adding that goods imported under the sensitive list maintained under Safta would be liable to normal import tariffs, which would eventually make these goods costly.
An official of the commerce ministry said that both India and Pakistan were moving ahead towards trade liberalisation in the region but it has to be balanced.
“The main issue with trade in the region has been that entire commerce activity had been restricted only to protect five to six sectors while the other side was that free trade might even hit key sectors of economy,” the official said, adding sensitive list had been devised in consensus with the stake-holders and by the Saarc member countries.
However, as agreed with India and other South Asian countries, Pakistan would reduce the sensitive list by 233 items as a result the total number of items in the list would be 936.
The FBR will notify the reduction in sensitive list in the next few days,” the official said, adding “these items have been selected for reduction in the list after consensus and will not have any negative impact on local industry.”
However, at the same time a reduction of around 30 per cent is expected in the sensitive list being maintained by India in line with the Trade Liberalisation Programme under Safta.
But any further reduction is unlikely in the coming years, as other Safta members, including Bangladesh, have expressed their reservations over further reduction in the sensitive list.
“This has blocked process of any further reduction in sensitive lists and eventually it would help local key sectors – who would have a chance to adjust with the changing environment in the region,” said an official of the ministry of industries.
He said that the Free Trade Agreement (FTA) with China has not placed any negative impact on Pakistani industry and trade liberalisation with India would also not have any major threat to the industry in country.
The official said that prior to abolishing the negative list, the Federal Cabinet would meet in December to review the existing bilateral trade and would take key decisions keeping in view the reciprocal arrangements for removal of non-tariff barriers (NTB).
He said that Pakistan’s exports through land route witnessed an increase of three-fold and currently 200 Pakistani trucks carrying export items reach the border compared tomere 45-50 per day few years back. Similarly imports from India have also increased.
“If we say that there were NTBs in India, the fact is that we have been doing it in other forms and we will continue to do it in future if exports are not eased by India,” the official said, adding, “the commerce ministry has not received any complaint in seven months from any exporter about problems at the Indian border.”
He said that trade liberalisation regime would be beneficial for Pakistani consumers too as many goods being imported through Dubai or Afghanistan would land directly in the country.
However, to tap the potentials available in Indian markets, the private sector too has to gear up for the upcoming challenge.
“We are already working with the commerce ministry, Engineering Development Board to have a realistic idea of market and the demands in India,” said Malik Sohail, chairman, diplomatic affairs committee of the FPCCI.
“Contrary to our earlier estimates, there is a huge demand for certain non-traditional items, including iron ore, marble, gypsum and even many kinds of chemicals there.”He said that potentials for Pakistani exports to India are good and more options are coming up as things improve.