Textile and Apparel Policy stands approved by Cabinet: MoC

ISLAMABAD: The Ministry of Commerce (MoC) said on Wednesday that issue of gas prices for the textile and apparel sectors, assumed in the Textile and Apparel Policy 2020-25 including Captive Power Plants (CPPs) are yet to be resolved.

This was revealed by Secretary Commerce, Sualeh Ahmad Faruqui during a meeting of Senate Standing Committee on Commerce when Deputy Chairman Senate, Mirza Muhammad Afridi stated that he has received information that Commerce Ministry has withdrawn Textile and Apparel Policy from the Cabinet.

The meeting was presided over by Senator Zeeshan Khanzada.

Secretary Commerce replied that the policy stands approved by the Cabinet but the issues related to tariffs of electricity, gas and CPPs are unresolved.

“We have taken up the issue with the Ministry of Energy to change the language of the decisions. The draft of language is near finalization and the issue will be settled,” said Secretary Commerce.

Sualeh Ahmed argued that Ministry of Energy had agreed on a price of RLNG at $9 per MMBTU for Textile and Apparel sector but due to frequent fluctuations in LNG prices at the international level, this has become an issue, and the other issue is CPPs. He further contended that only two lines are to be adjusted in the already taken decision, after which this issue would be sorted out.

However, official documents reveal that on December 16, 2021, the ECC discussed the revised draft of Textile and Apparel Policy 2020-25 and approved it with the following amendments: (i) electricity and RLNG rates, indicated for fiscal year 2021-22, will be substituted, with regionally competitive energy rates;(ii) the regionally competitive RLNG rates will be applicable on processing industry;(iii) for the captive and the cogeneration units, a separate policy will be formulated by the Ministry of Energy, in consultation with the Ministry of Commerce, which will cover the benefits; and (iv) comments of the Finance Division shall be made part of the proposed Textile and Apparel Policy 2020-25.

The sources said, the Federal Cabinet, on December 21, 2021 also ratified the decision.

The Technical Advisory Committee (now dissolved) headed by Shaukat Tarin approved that an exercise will be conducted jointly with the Ministry of Energy (Power and Petroleum Divisions) during pre-budget consultative sessions annually to review the energy tariffs. In case of abnormal fluctuations in regional energy prices, the approved rates may be revised on an average of energy prices for industrial consumers for the regional competitors (Vietnam, Bangladesh, etc.) and announced in federal budget along-with budgetary allocations by Finance Division as actually required by the Ministry of Energy so that energy regime would remain fully funded throughout the policy years.

The sources said the decision of ECC was rejected by All Pakistan Textile Mills Association, after which Commerce Division wrote a letter for withdrawal of the Policy. However, since the Cabinet already ratified the decision of ECC, Commerce Ministry had no choice but to accept it.

During the Senate Standing Committee meeting, Secretary Commerce proposed that Ministry of Energy should be invited in any forthcoming meeting to take up this issue, when Deputy Chairman Senate expressed his dismay on the speculations regarding withdrawal of policy from Cabinet.

Giving briefing on GSP-plus with the European Union (EU), Commerce Advisor, Abdul Razak Dawood said that it would be very unfortunate if Pakistan losses GSP-plus status.

He maintained that the EU wants a compliance mechanism in place which includes increased transparency and involvement of civil society, rapid response mechanism for urgent withdrawal of preferences procedure for systematic violations and expansion for monitoring cycle from 2 to 3 years. This scheme also provides for transitional arrangements for current GSP-plus beneficiaries, who will have to fulfil the new requirements.

The committee was informed that 66pc of tariff lines from Pakistan benefit from tariffs (Duty free access), covering top 10 products sectors of exports to the EU –all except cereals like rice. The remaining 24 percent enjoy MFN tariffs. The scheme includes concession to Pakistan with no reciprocal concession to EU.

The committee was informed Pakistan’s total trade with the EU has increased by 27percent from $ 10.640billion in 2013-2014 to $ 13.531billion in 2020-21. Pakistani exports to EU have increased by 47 percent from $ 6.095 billion in 2013 -14 to $ 8.943 billion in 2020-21. However, Pakistani imports from the EU have increased by 1 percent from $ 4.545billion in 2013 -14 to $ 4.588 billion in 2020-21. The trade balance has increased in favour of Pakistan from $ 1.550 billion in 2013 -14to $ 4.355billion in 2020-21.

The Standing Committee established the conducting of meetings with Ministry of Commerce on the tariff compositions. The Secretary, Ministry of Commerce informed the committee that the tariff compositions for the financial year 2022-2023 will be finalized before 31st March, 2022.

Senator Zeeshan Khanzada said that the tariff composition comes under the ambit of the Ministry of Commerce; the Federal Board of Revenue should not bypass the Ministry of Commerce while determining the tariff rates as observed in the money bill 2021.

The committee also recommended that the powers to determine the tariff composition should be shifted to the Ministry of Commerce.

Deputy Chairman Muhammad Mirza Afridi inquired about the mechanisms through which the tariff is determined. The Secretary Ministry of Commerce informed the committee that the tariff compositions are determined in consultation with the National Tariff Commission (NTC) and Trade Economist Team. The Chairman Committee also gave directives to seek information on the Textile Policy Review in the next meeting.

Commerce Advisor, Dawood remarked that following a meeting of Pakistan’s trade and Investment officer in Mexico with Director General, SENASICA, the latter proposed that Pakistan may extend a new joint invitation to SENASIZA and OIRSA for a visit of expert delegation to Pakistan. Ministry of Commerce has requested the Ministry of National Food Security and Research, and the Department of Plant Protection to work on this proposal at the earliest to enable swift resolution of the matter as Pakistan can earn $ 600 million through exports to Mexico.

President Quetta Chamber of Commerce and Industry raised the issues related to obstacles in barter trade with Iran, saying that Iran is discriminating against Pakistan. He also raised the issue of massive smuggling from Iran including hundreds of trucks of apples.

Copyright Business Recorder, 2022