Allama iqbal open university

Maria javed

Ayesha zahoor

Presented by:

TOPIC:

Non Tariff Barriers In Pakistan

Definition of Tariff:

The definition of a tariff is a list of fees charged by a government on goods going in and out of a country.A tax or duty to be paid on a particular class of imports or exports.

DEFINITION of 'Nontariff Barrier

A form of restrictive trade where barriers to trade are set up and take a form other than a tariff. Non-Tariff Barriers include all measures, other than tariffs, that are used to protect domestic industry and discourage imports. Nontariff barriers include quotas, levies, embargoes, sanctions and other restrictions, and are frequently used by large and developed economies.

NON-TARIFF BARRIERS:

A non tariff barrier is any barrier other than a tariff, that raises an obstacle to free flow of goods in overseas markets. Non-tariff barriers, do not affect the price of the imported goods, but only the quantity of imports. Some of the important non-tariff barriers are as follows:

1. Quota System: 2. Domestic Content Requirements: 3. Product Labelling: 4. Packaging Requirements: 5. Consular Formalities6. State Trading: 7. Preferential Arrangements: 8. Foreign Exchange Regulations9. Other Non-Tariff Barriers

Invisible Barriers to Trade

Non Transparent and cumbersome Administrative Procedures and Government Policies and RegulationsMarket StructureInstitutional Factors

Non Tariff Barriers in Pakistan

•Lack of information:

Entry of new firms into trading with Pakistan indicates anonymous entry into trading which is facilitated by modern modes such as the internet.

•Lack of Adequate Banking Relations:Some Indian banks do not recognize L/Cs from all Pakistani banks. Moreover payments through Asian currency union are delayed.

•Trade Logistics

Goods move by air, sea, and rail between India and Pakistan . While road routes for trade are non-existent, rail and air connectivity between the two countries has been erratic.

•Visa Restrictions:

Visas can be obtained only for specific cities prior to entry into Pakistan.

•Communication Problems:

Whenever there are disturbances at the Indo-Pak border, the mobile connections are not operational.

•Application of standards:

Barriers are often encountered in the application of measures related to standards necessary to protect human, animal or plant life or health, to protect environment and to ensure quality of goods.

Private Sector’s Views

•Political uncertainty, instability and mistrust between the two countries.•India cannot be viewed as reliable and long-run market for both imports and exports.•Pakistani consignment are subject to more stringent checking and detailed security checks in India. •Visa and travel restrictions, one port of entry and exit.•Lack of banking facilities of each other’s bank is also mentioned as a barrier to trade with India .

Non Tariff Barriers (NTB’S) Between Pakistan & India

Non-Tariff Barriers (NTBs) between Pakistan and India

Indian stubborn attitude on removing non trade barriers with Pakistan is explained by the fact that due to tax customs in Pakistan and porous borders, Indian consumable goods find their way into Pakistan informally- two times more than formal trade.Pakistani manufacturers have said that as long as the Indians have easy access to Pakistani markets through informal trade, its government would not be serious in removing the non trade barriers on Pakistani exports. Informal exports from India to Pakistan save the Indian government the duty drawbacks that they would have to give to exporters in case of formal exports while it deprives Pakistan from the import levies that are collected from formal imports.

A working definition of non-tariff barriers included six major categories, namely, quantitative restrictions, trade facilitation and customs procedures, technical barriers to trade and sanitary and phytosanitary measures, financial measures, Para-tariff measures and visas.

•Positive List Approach (Embargo)•Trade Facilitation and Customs Procedures.•Technical Barriers to Trade and Sanitary and Phytosanitary Measures.•Financial Measures.•Para-tariff Measures.•Visas

The Positive List Approach:

The most apparent barrier having a positive list approach is that it limits Potential trade. Over the years, the positive list approach has expanded gradually but there are several problems that traders face in the application of this policy measure.

Trade Facilitation and Customs Procedures:

Trade between India and Pakistan takes place by sea, rail, air and road. Barriers related to customs procedures, customs clearance, and rules of origin Certification has also been of great Importance.

Inadequate Land Transport Routes:

The most feasible and cost-effective way of moving goods between the two countries are through the land route. 

Exports from India to Pakistan

In the survey conducted in India and Pakistan there was no evidence on nontariff Barriers related to the application of SPS and TBT measures in Pakistan on imports from India.In fact traders in India and Pakistan felt that the implementation of standards to imports was not a rigorous process in Pakistan. It was pointed out by Indian exporters that if the importing country has lower standards, India should allow exporters to follow those standards. 

Exports from Pakistan to India

Pakistani exporters have complained about the stringent conditions imposed by India on imports of various products. There is a strong perception in Pakistan that the two most important products of export interest for Pakistan – textile products and agricultural and related products – are the ones that have the highest non-tariff barriers.

BILATERAL TRADE STATISTICS SUMMARIZED

India Imports from Pakistan 274,983, 000 USDPercentage of Total Indian Imports 0.1%

INDIA TOTAL IMPORTS FROM THE WORLD:

220,290,673,000

SWOT Analysis

Strengths Weaknesses

•Strategic location provides the shortest route to seaports.•Three seaports open throughout the year.•Road connectivity to the seaports is in reasonable condition.

•Pakistan has not acceded to TIR Convention.•Security concerns and political uncertainty.

ThreatsOpportunities

•Pakistan borders the two fastest growing economies in the world India and China.•Current Government of Pakistan keen on increasing regional connectivity.

•Transit trade not viewed favorably by general public.•Vested interests prevent full utilization of Pakistan’s potential.•Local industry may oppose due to perceived increase in smuggling.

Conclusion

•Pakistan is the least protected economy in south–east Asia.

•Tariffs used to be high in the past but now in non agricultural products max. Tariff is 25%.

•Tariffs applied ad valorem

•There is no accredited laboratory in the country. Now such laboratories are being established with the assistance of the world bank and Asian development bank.

Recommendations

•There should be no quantitative restriction in the guise of security reasons.•Pakistan is exporting food and agri. products all over the world, India should accept SPS certificate issued by Pakistani authorities•There cannot be a single bullet solution to deal with the most complicated issues.