ISLAMABAD: The government has removed Additional Customs Duties (ACDs) of 2 percent from June 10 to 20, 2022 on import of palm oil for shipments originating from all sources except Indonesia, sources close to Secretary Commerce told Business Recorder.

Sharing the details, sources, on May 28, 2022, Ministry of Commerce informed the Economic Coordination Committee (ECC) of the Cabinet that the National Tariff Policy 2019-24 (NTP) stipulates that all proposals for levy, amendment or removal of tariffs shall be examined at the Tariff Policy Commission (NTC) and after approval by the Tariff Policy Board (TPB), shall be submitted to the Cabinet or Parliament, as the case may be, for consideration.

The ECC was informed that Government of Indonesia had unilaterally decided to impose ban on the export of palm oil since April 28, 2022, which had created supply uncertainties. The ECC was further apprised that Pakistan was dependent on the import of palm oil from Indonesia and was importing over 85 percent of its palm oil from there. While the Government of Indonesia had lifted ban on export of palm oil from May 23, 2022 but at the same time it imposed conditions that the exporters would need to ensure 33 percent supply to the domestic market and to obtain an export permit.

According to the Commerce Ministry, this condition resulted in delays in shipment of palm oil from Indonesia.

The sources said Malaysia was another option which was also exporting palm oil but prices were relatively higher. The ECC was further informed that concessionary tariff for palm oil was being applied to Indonesia and Malaysia under their respective Free Trade Agreement (FTA)/Preferential Trade Agreement (PTA).

2pc additional duties on palm oil import to go

Ministry of Commerce apprised that the business community had approached it with proposal to mitigate the current situation and ensure sufficient stocks of edible palm oil by extending certain duty advantage to import of palm oil from Malaysia under FTA. Ministry of Industries & Production had also proposed grant of concessionary tariff relief to facilitate import of palm oil from sources other than Indonesia on immediate basis.

The issue of rising prices of edible oil in Pakistan and disruptions in the supply line were also being discussed in the meetings of the PM Task Force on supply of palm oil.

Ministry of Commerce proposed to remove the two percent ACDs on import of palm oil (including crude palm oil, palm stearin, RDB palm oil and RDB palm olein) for shipments originating from all sources other than Indonesia that reach Pakistan by June 20, 2022, in order to encourage importers to bring palm oil into Pakistan at the earliest.

Ministry of Commerce observed that such discriminatory interventions against the principles of equal treatment were not in conformity with WTO Rules, but the unilateral export ban imposed by Indonesia was in violation of WTO rules and may result in shortage of palm oil mid-June 2022 if import from alternate sources was not made on immediate basis.

In view of this force majeure situation, Commerce Ministry proposed a temporary tariff relief measure to mitigate the cost differential of importing palm oil from sources other than Indonesia.

After detailed discussion, ECC approved the proposal of Commerce Ministry which has been ratified by the Cabinet on May 31, 2022.

Copyright Business Recorder, 2022