Pakistan has announced 5 percent tariff reduction, for the fourth time, in the customs duty on import of 4,863 items from Saarc member countries under South Asia Free Trade Area (Safta) agreement from January 1, 2008. The Federal Board of Revenue on Tuesday issued SRO 1260 (I)/2007 for further reduction in customs duty on the items imported under Safta.
In the fourth phase, Pakistan has further slashed customs duty on the import of 4,863 items to enhance trade in the Saarc region. India being Non-Least Developed Country (NLDC) would not benefit from this tariff reduction whereas trade between Pakistan and India would continue to be governed by Positive List of Import Policy Order 2007. Pakistan has already provided tariff concession to India on import of 1802 items included in the positive list.
Pakistan, India and Sri-Lanka being Non-Least Development Saarc countries have completed first phase of tariff reduction for Bangladesh, Bhutan, Nepal, Maldives being Least Developed Countries (LDCs) in 2007. Under this phase, NLDC countries have reduced for their tariffs LDCs upto 20 percent, which were 25 percent at the start of the Trade Liberalisation Programme.
The tariff reduction by Non-LDCs for LDCs would be completed in two phases: Phase-I (2006-08), under which existing tariff rates above 20 percent will be reduced to 20 percent within two years and tariff below 20 percent will be reduced on margin of preference basis of 10 percent per year. Phase-II ranges between 2008 and 2013, which requires that tariff is to be reduced to 0-5 percent within 5 years for LDCs.
Pakistan had implemented first tariff reduction on 4872 items on July 1, 2006 to launch Trade Liberalisation Program (TLP) under the Safta agreement. Sources said that the Sri-Lanka, being Non-Least Developed Country, and Bangladesh, Bhutan, Nepal and Maldives being Least Developed Countries (LDCs), would benefit from the tariff reduction announced on 4863 items.
The fourth tariff reduction on 4872 items would remain valid up to June 30, 2008 and fifth reduction to be made applicable from July 1, 2008. Sources said that the rates of customs duty would be brought to zero by the end of this Trade Liberalisation Program.
For the Least Developed Countries (LDCs) Bangladesh, Bhutan, Nepal and Maldives, the rate of the tariff would come down to 5 percent in the three years period excluding the N-LDC countries items specified in the ''sensitive list''. In case of N-LDCs, the rate of customs duty would be 0-5 percent in the next seven years. By 2013, the duty structure for NLDCs would be 0-5 percent at the end of TLP.
Under the notification, the minimum and maximum customs duty applicable on the import of certain items from the Least Developed Countries (LDCs) ie Bangladesh, Bhutan, Maldives or Nepal would be 5percent, 6 percent, 7.5 percent and 10.5 percent. However, the customs duty rates for imports into Pakistan from India and Sri-Lanka have come down from maximum to 20 percent, 12 percent, 11.5 percent, 8 percent, 5.6 percent and minimum 5 percent during the last phase.