Protection for local industry: MoI&P suggests adoption of import-restricting measures

The Ministry of Industries and Production (MoI&P), in order to protect local industry, has suggested adoption of import-restricting measures which do not violate World Trade Organisation''s (WTO) strictures.
The draft industrial policy suggests that given limited policy space in tariff measures, the government should effectively use non-tariff measures to its advantage in line with the WTO agreement. In this regard, the government should more effectively use border control measures such as sanitary and phytosanitary (SPS) measures, quality standards such as technical barriers to trade (TBT), quantity and quality measures such as preshipment inspection, temporary measures to slow imports or to impose import restrictions that safeguard local industry as well as balance of payment measures to protect local industry.
According to the draft of Industrial Policy 2010, trade policy reforms in 1990s and 2000s were in line with the WTO and reversed protectionist, inward-oriented import substitution policies of the previous decade.
Since 1996, substantial trade liberalisation and tariffication has been realised through tariff cuts, tariff rationalisation, removal of quota regimes and import surcharges. Pakistan has also signed regional trade agreements with neighbouring countries.
Keeping in view the limited policy space available to the government the following proposals have been put forward.
i) Trade policy is an instrument of industrial policy. Therefore, it should be drafted in conjunction with industrial policy, and not independently. MoI&P has proposed that the Ministry of Commerce in future should frame its trade policy in accordance with the broader objectives of the industrial policy.
ii) To protect the value-added industry, the government must rationalise tariffs according to the following escalating schedule: (1) raw material: 0-5 percent; (2) intermediate goods 5 -10 percent and (3) final goods 15 percent maximum bound tariff.
The industrial policy is expected to be tabled before the Cabinet after formal approval by Prime Minister Yousaf Raza Gilani.