The federal cabinet will abolish Regulatory Duties (RDs) on 12 items of fruits, dry fruits and vegetables and top beneficiary will be Afghanistan and to honour a commitment made by Prime Minister, Shahid Khaqan Abbasi during his recent visit to Kabul. The Economic Coordination Committee (ECC) of the Cabinet in its meeting on May 11, 2018 accorded approval to the proposal of Commerce Division, subject to approval of federal cabinet.
Prime Minister during a recent visit to Kabul announced lifting of Regulatory Duty on import of fresh fruits, vegetables, dry fruits and animal/ hides skin from Afghanistan to improve bilateral relations between the two countries.
Commerce Division prepared the summary by toning down its earlier stance that no concession will be given to Afghanistan until the latter starts talks at the level of Afghanistan-Pakistan Transit Trade Coordination Authority (APTTCA) which was cancelled by Afghanistan.
Article 1 of GATT outlines the concept of Most-Favoured Nation (MFN) treatment and states that trade concessions granted ( or trade restrictions imposed) to one WTO member are applied immediately and without conditions to all other members. Previously, Pakistan had given unilateral trade concessions to Afghanistan because the latter was not a WTO member. Afghanistan's accession to the WTO on July 29, 2016, makes it not possible for Pakistan to offer/extend such unilateral concessional regime.
Pakistan has also expressed willingness to allow import of existing 20,000 MT of cotton stored in southern region of Afghanistan in sealed containers after fulfilling SPS (Sanitary and Phytosanitary) requirements, as one time relaxation.
On May 10, 2018, Prime Minister had directed FBR to present the matter in the next ECC meeting of the ECC for its consideration. The copy of Prime Minister's instruction was also sent to Secretary Commerce.
On the directions of the Prime Minister, Ministry of Commerce invited a delegation comprising of officials from Afghanistan Ministries of Commerce and Industries, Finance, Agriculture and Livestock. The delegation visited Pakistan from May 7-10, 2018.
An insider told this scribe, Afghan delegation was headed by Kamila Sidiqi, who previously refused to hold APTTCA meeting until Pakistan agrees to include India in the Authority. During discussion at the Commerce Ministry, she again tried to insist on Indian inclusion in APTTCA but Secretary Commerce made it clear that since the meeting was organised on an agreed agenda, there was no question of deviating from the agenda
The inter-ministerial bilateral meeting between Pakistan and Afghanistan was held on May 8, 2018 at the Ministry of Commerce, followed by technical sessions. During the meeting, the Afghanistan side mentioned the following three tariff lines with request for removal of Regulatory Duties: (i) grapes (fresh)- 40 percent;(ii) apples (fresh) - 40 per cent; and (iii) pomegranates - 20 per cent.
Subsequently, on the second day after the meeting, Afghan side provided on additional list of 37 tariff lines. Ministry of Commerce agreed to propose removal of regulatory duties on major items of Afghanistan exports to Pakistan (fresh fruits, vegetables and dry fruits), as announced by the Prime Minister in Kabul. It was clarified that no Regulatory Duties were imposed on animal hides and skins.
In order to implement decision of the Prime Minister, Regulatory Duties on the following 12 major tariff lines (among top 50 items of import from Afghanistan) were proposed to be lifted for all the countries which will have revenue impact of $ 41 million per annum.
All the major export items of Afghanistan - fruits, vegetables, dry fruits - affected by Regulatory Duties are covered under such concession ie grapes(fresh) , apples (fresh), apricots, watermelons and melons, fresh, other than watermelons are facing 40 per cent Regulatory Duty. The Afghanistan's share in these items is 99 per cent (grapes), 74 per cent (apples), 100 per cent (apricots), 100 per cent (watermelon) and 100 per cent ( melons, fresh, other than watermelons ).
The RD on pomegranates, grapes (dried), other nuts and figs is 20 per cent whereas the market shares of Afghanistan in pomegranates is 97 per cent; grapes (dried) 85 per cent, other nuts 100 per cent and figs 96 per cent. The cucumbers and gherkins fresh or child which is facing 30 per RD has 100 per cent share in Pakistani market, apricots dried (50 per cent RD) 100 per cent share and prunes dried (50 per cent RD) 72 per cent share.
The financial impact of abolition of RD on grasps (fresh) is estimated to be $ 22.6 million, apples fresh, $ 6.75 million, pomegranates, $2.5 million, apricots, $ 3.82 million, watermelons, $ 1.59 million, cucumbers and gherkins fresh or chilled, $ 1.79 million, grapes( dried) $ 0.53 million, apricots( dried ) $ 0.68 million, melons, fresh, other than watermelons $ 0.29 million, other nuts $ 0.06 million tons, prunes (dried ) $ 0.23 million and figs $ 0.06 million.
"The remaining 25 items out of proposed 37 items belong to mining sector, cotton or those not imported from Afghanistan in substantial quantities such as potatoes and tomatoes. These may be considered in future bilateral discussion on Preferential Trade Agreement (PTA). The sources said, Pakistan has also agreed to accept Afghan quarantine certificates of fruits and vegetables.
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