The surge in under-invoiced imports of footwear from China has closed down thousands of units of shoe-making cottage industry and the national tariff commission (NTC) has initiated an investigation under the safeguard measures ordinance 2002 for emergency action to save domestic industry from irreparable loss.
Members of Pakistan Footwear Manufacturers Association (PFMA) told Business Recorder here on Saturday that private parties have imported millions of under-invoiced footwear from Chinese city of Guan Gzhou, adjacent to Hong Kong, and Karachi, Lahore, Rawalpindi, Islamabad, Peshawar, Quetta and other big cities are flooded with this cheap stuff.
They said at present footwear is subject to 25 percent customs duty on its import. They pointed out that price of a $4 shoe is mentioned as $1 in the import invoice to avoid payment of customs duty, which makes these shoes much cheaper than the locally-manufactured shoes.
One big manufacturer of footwear, whose concern has 20 percent share of the domestic market, told this scribe that thousands of shoe-making cottage industrial units and vendors, who used to supply their products to 25 main footwear manufacturers, have been closed down as their products could not compete with this cheap, though substandard quality footwear.
They said production and sale of the local industry has fallen by 20 percent in just two years leaving thousands of workers jobless and loss of millions of rupees to the national exchequer.
In 2001, total production of domestic industry was 49,236,000 pairs, which decreased to 47,170,000 in three years, although, consumption increased from 50,040,633 to 57,316,683 pairs.
Prime Minister Shaukat Aziz told a news conference at the parliament house earlier this week that "under-invoicing of imported goods is a big problem for our economy and we will have to take remedial measures to save our domestic industry".
The PFMA has filed an application with the NTC informing that footwear, classified under Pakistan Customs Tariff headings 6401.1000 to 6405.9090, has been imported into Pakistan in such (hugely) increased quantities, that it has caused and is causing serious injury to domestic producers.
The PFMA said that Pakistan has an old established footwear industry with some of the units dating back to pre-1947 period. At present, footwear is subject to 25 percent customs duty on its imports. Imports and domestic production of footwear over the past few years have been as follows:
As may be seen from the above data, the consumption of footwear in Pakistan has substantially increased from 50 million pairs to 57 million pairs during the last four years.
The NTC press release said here on Saturday that consequent upon receipt of the application, the commission initiated an investigation on June 17, 2005 into alleged sudden surge in imports of footwear into Pakistan under the Safeguard Measures Ordinance, 2002.
It said that Pakistan, being a founding member of WTO, was committed to implement various WTO agreements through domestic legislation as appropriate. The ordinance was promulgated to give effect in Pakistan to the WTO agreement on safeguards, which provided for emergency action against a sudden and unforeseen surge in imports that is seriously injuring Pakistan's industry.
The ordinance and the Safeguard Measures Rules, 2003, lay down a due process and a schedule of investigation, recommendations based thereon, and for consequent action by the federal government.
The commission shall determine during investigation whether there has been sudden surge in imports due to unforeseen developments and the WTO obligations assumed by Pakistan.
The commission will also determine that it is due to such surge in imports that the domestic industry producing footwear is being seriously injured.
A copy of notice of initiation has been sent to the federal government in order to notify the WTO Committee immediately on Safeguards of such initiation.
The press release said the commission might also seek data or information from any or all of the interested parties and other sources identified in Section 13 of the Ordinance.
Where data/information requested by the commission under the ordinance has not been made available by any interested party, Section 17 of the ordinance authorises the commission to use best information that may be available. The commission would initially make a provisional determination, whether or not there are critical circumstances, namely, that delay in taking action would cause damage, which would be difficult to repair and there is clear evidence of serious injury.
The federal government may impose a provisional safeguard duty where the recommendations of the commission so justify.
The press release said once the commission makes an affirmative final determination in this investigation it shall prepare a report containing an analysis of the information obtained in the investigation and setting forth its findings and reasoned conclusions on all pertinent issues.
Such a report also contains the commission's recommendations regarding the form, level and duration of the definitive safeguard measure.
This report shall be submitted to the federal government for its consideration to impose definitive safeguard measures and the federal government shall take such decision within 30 days of the receipt of the report.
The press release concluded that any imposition of safeguard measure, whether provisional or final, shall be notified by the federal government to the WTO Committee on Safeguards.
Also, if at any point the investigation is terminated without the application of definitive safeguard measure, the federal government shall immediately notify the committee.
Comments
Comments are closed.