'Tariff protection to industry promotes inefficiencies'

Reliance on tariffs for protection to industry was considered to make industry to rely heavily on tariff protection and promoting inefficiencies. The issue was highlighted during the visit of Dr Manzoor Ahmed, ex-ambassador of Pakistan to WTO to Engineering Development Board (EDB) where a detailed presentation regarding EDB functions was made by EDB Chief Executive Officer Aitazaz A. Niazi last month.
According to details published in the latest issue of 'Industrial Bulletin', an in-house journal of EDB Pakistan had lower tariffs as compared to India during the late nineties and start of the twentieth century. After that period, India started lowering tariffs significantly whereas import tariffs in Pakistan were either kept constant or increased in some areas.
The need to reduce reliance on tariffs for protection to the industry was stressed upon as this was considered to make the industry to rely on tariff protection and promoting inefficiencies. The need to develop standards and testing laboratories was considered an important instrument in making the local industry not only competing with imports but also increasing its exports.
Tariffs have been minimised in most of the countries around the world. Examples of various countries which have benefited from the enhancement of trade volumes as a result of minimising tariff rates were quoted as under: Turkey in the beginning was reluctant to sign Customs Union agreement with European Union and lowering of tariffs. But time has proven that it ended up in substantial growth of the industrial sector and the enhancement of exports from 11 billion dollars to 61 billion dollars in 2010-11.
Similarly, exports of Mexico quadrupled from dollars 60 billion to dollars 280 billion after its joining the Nafta. On the trade side, enhancing of regional trade was stressed upon as presently Pakistan is relying heavily on few international markets like USA, Europe and Afghanistan for its exports. Pakistan should consider diversifying its trade by targeting more international markets like Asean countries, Africa and Central Asian Republics. Dr Manzoor Ahmed was of the view that giving MFN status to India would open up new markets for Pakistani products although it might affect some of the industries in the beginning.