Pakistan Association of Automotive Parts Accessories Manufacturers (Paapam) has asked the government to fulfil its promise of phasing out negative list for trade with India only after removal of Non Tariff Barriers (NTBs). Islamabad had made a commitment to the local industry that if India fails to remove trade barriers, negative list will not be abolished, said Munir Bana, Chairman, Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) in a statement on Thursday.
He urged the government to review its decision of granting MFN status to India, as opening of trade will inundate our smaller and fragile markets, ruining an industry which is already hit by our inconsistent policies as well as energy crisis. Paapam chairman suggested that negative list should not be abolished and all 65 items of auto parts should also remain in Pakistan's Sensitive List for trade with India. Moreover, sensitive list needs to be maintained for at least next 10 years, before we can consider any reduction in tariff lines, he added.
He said that ending of negative list, before providing level playing field to the Pakistani auto parts manufacturers, will cause grievous harm to the local industry, which is hit by declining volumes, devaluation of rupee, electricity load shedding, gas shortages and skyrocketing inflation. There is no clarity on the issue of phasing out of negative list. The Pakistan Cabinet had clearly decided that negative list will not be phased out by December 31, 2012, unless India removes all NTBs to our satisfaction, he said.
PAAPAM Vice Chairman, Usman Malik, said that Pakistan's auto industry is not prepared for phasing out of negative list, as government has still not implemented capacity building measures in their respective departments, for gearing up to the onslaught of Indian products. He said the Ministry of Industries had also admitted that Pakistan's domestic industry was in a gross comparative disadvantage position in terms of energy and access to credit.
Usman Malik said that numerous industrial zones in India offer concessions to promote the industry while in Pakistan there are frequent and prolonged energy outages, and the production capacities remain unutilised across the board increasing the production costs for the majority of those SMEs who do not have resources to set up captive plants. He said that PAAPAM will always welcome manufacturing and technology based investments from India. Further all trade openings should be two ways rather than one way.
'In spite of this clear advantage for the Pakistani businesses and obvious disadvantage to Indian goods, the official trade figures display huge trade surplus for the Indian economy. Even after discounting the size of the Indian economy, the trade deficit is far too large, considering the restrictive regime Pakistan is accused of maintaining against Indian goods and services,' said a local parts manufacturer.
Therefore, he added, our economy managers need to examine these figures and also take into consideration the historical picture of Pak-India trade relations, before they go for the final review of this critical decision ie giving MFN status to India. He said that our industry believes that trade should be a step-by-step approach, creating a win-win situation for both trading partners and this is only possible when India allows export of raw materials to the Pakistani businesses.
He said the government should realise that granting MFN status to India is our negotiating chip, and they cannot negotiate anything substantial once they have lost this leverage. 'Unhindered flow of Indian goods and services has a major repercussion for the local industry because whatever little foreign investment Pakistan has will gradually go to India.