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Business Recorder
15-07-2025
- Business
- Business Recorder
MoC unveils NTP to narrow trade deficit
ISLAMABAD: The Ministry of Commerce (MoC) has unveiled its National Tariff Policy (NTP) 2025–30, already approved as part of the federal budget. The policy aims to stimulate export growth of 10–14%, while imports are expected to grow by 5–6% — a slower pace intended to narrow the trade deficit. To establish a benchmark for tariff rationalization that is both transparent and comparable, the policy takes into account existing tariff structures in regional economies. The NTP 2025–30 targets a simple average tariff rate of 9.7% by FY 2029–30, implying a more than 20% annual reduction in the first two years, followed by a 5–10% annual reduction in the subsequent years. PM orders urgent overhaul of National Tariff Commission The NTP 2025-30 sets a target of achieving a simple average tariff of 9.70% by the terminal year 2029-30. This corresponds to about more than 20% annual decline in the first two years and a 5-10% annual decrease in subsequent years. This will be done by taking a comprehensive approach that encompasses (1) Readjustment of CD slabs to 4 slabs (0%,5%,10%, &15%) from the existing 5 slabs in 5 years (2) Reduction in CD to a maximum of 15% in 5 years (3) Elimination of RDs in 5 years (4) Elimination of ACDs in 4 years and (5) Phasing out of 5th Schedule in 5 years The reduction in tariff rates will bring the trade weighted average from the current 10.6% to below 6% in a period of 5 years. The current tariff structure follows a cascading principle. There are 5 slabs i.e.0, 3, 11, 16, and 20 with some peaks and specific rates. The uneven spread in tariff slabs or tariff escalation not only inhibits industrialization but also diversification. To simplify tariff structure and remove uneven spread between tariff slabs, in the first year, the current tariff slabs of 0%, 3%, 11%, 16% and 20% will be adjusted as 0%, 5%, 10%, 15% and 20%. Peaks in tariffs above 20%, mainly in the auto sector, will also be reduced gradually. Over the last 15 years, ACD and RD in addition to Customs Duty (CD) have been used as a tool for revenue enhancement. As a result, the number of products subject to ACD and RD has increased manifold. Out of a total of 7,589 tariff lines, around 7,476 tariff lines are subject to ACDs, and 1,996 tariff lines have been subject to RDs. Excessive use of Additional Customs Duties (ACDs) and Regulatory Duties (RDs) in addition to already high Customs Duties (CDs) has not just made the tariff structure high, complex, and protective but unfair, non-transparent, and prone to elite capture. All ACDs will be eliminated gradually in the next 4 years. Few products at 35% CD are subject to Auto sector policy (AIDEP 2021-26), therefore, the auto sector ACDs will be eliminated gradually from July 1, 2026. RDs are mostly serving the purpose of raising revenues and providing extra protection to already protected industries. Moreover, the ad-hoc imposition of RDs over time has resulted in overall discriminatory tariffs, which is evident from high dispersion in RD rates on similar products. First, the RD rates will be harmonized as lowest on raw material, moderate on intermediate and capital goods and highest on consumer goods and will be placed in slabs of 0%, 5%, 10%, 15%, 20%, 30%, 40% and 50%. Moving forward, the following schedule will be followed to eliminate RDs in 5 years. The rates are indicative and actual RD rates will be adjusted in the same range (indicated against each year) by the Tariff Policy Board and the government on year-to year basis. The existing RDs slabs will be completely eliminated in 5 years, keeping in view the annual targets for reduction in RD rates. The 5th Schedule of the Customs Tariff provides concessions or exemptions to certain domestic industries. Starting from a few products in 2013, the number of products claiming concessions or exemptions under the 5th schedule has increased manifold during the last few years. It consists of a long list of products divided into different parts. In FY 2023-24 the 5th Schedule consists of eight parts, each part contains different tables for different types of products. However, what makes the 5th Schedule more complex is the various conditions attached to the listed products. The product specific conditions under the 5th schedule require a wide range of documentation and paperwork. This not only gives huge discretionary powers to EDB and IOCO but also increases cost of compliance. Moreover, as most of the concessions are available only to specific manufacturers, these conditions are seen as restrictive and biased towards large businesses and manufacturers. Small businesses that cannot incur costs for attaining certificates or approvals and related paperwork have to purchase inputs from commercial importers that import at MFN rates. The tariff structure under the Fifth Schedule is different from general tariff structure. There are two ways in which tariffs under the Fifth Schedule are different from the general tariff structure. First, the 5th Schedule has custom duty rates beyond the slabs applicable to the 1st Schedule. Second, most of the products in the schedule are exempt from Regulatory Duty (RD) and Additional Custom Duty (ACD) that are otherwise applied in the 1st Schedule of Customs Act, 1969. Resultantly, as the number of exemptions and concessions under the 5th Schedule has increased over the years, its burden on the federal exchequer is also growing exponentially. The largest portion of customs duty expenditure for FY 2022-23 is given under Fifth Schedule amounting PKR 190.688 billion registering a growth of 10.24% compared to 2021-22. In view of distortions in tariff structure created by the 5th Schedule, all the products/tariff lines will transition from 5th Schedule to 1st Schedule in next 4-5 years in a phased manner. In this process some concessions will be withdrawn, and some concessions will be generalized (made available to all: (i) the products that have virtually no concession under the 5th Schedule shall be transferred to the 1st Schedule;(ii) products with concessionary rates will be transferred to the 1st Schedule either under MFN rate or under the slab closest to the concessionary rate; (iii) products that have specific conditions because there is no product-specific tariff heading in the 1st t Schedule will be moved to the 1st Schedule by creating a new tariff heading; (iv) products falling under the tariff heading 'others' will be transferred from the 5th Schedule to 1st Schedule by creating separate headings with the description as given in the 5th Schedule; and ( v) Minimally used concessions will be withdrawn. In line with the principles and objectives of this policy, the auto sector tariffs will also be rationalized to enhance competitiveness, productivity and consumer welfare including removing any quantitative restrictions on import of old/used vehicles subject to quality and environmental standards and differential tariff structure. The Auto Industry Development and Export Policy (AIDEP) 2021-26 is valid till June 2026 and the new auto policy will be introduced from first July 2026 where a substantial reduction on duties related to the auto sector will be carried out including review of SRO 655 (I)/2006 dated 22-Jun-2006, SRO 656(I)/2006 dated 22- Jun-2006, SRO 693 (I)/2006 dated 1-Jul-2006, elimination of all ACDs and RDs and reduction in the CD rates. Various models including Macro model, Export Forecasting Model, Global Trade Analysis Project (GTAP) Model import tariff revenues show a loss of about PKR 500 billion in static calculations however, considering all other factors ie, increased demand, economic growth, transparency, decrease in under invoicing, smuggling, compliance cost etc., GTAP calculations indicate a positive impact on revenues (7-9%). The major impact of tariff reforms will be on exports. GTAP calculations show that exports will increase by (10-14%); imports will also increase (by 5-6%) but at a slower rate than the increase in exports thereby improving the trade deficit. Resources will move to more efficient and productive sectors as production in export-oriented sectors will pick up. Industry will grow, net employment will increase, and investment will strengthen. Reduced tariffs would not only allow the availability of cheap raw materials and intermediate but would also be a key factor in reducing the imported inflation, especially for food products. Copyright Business Recorder, 2025
Business Recorder
11-07-2025
- Business
- Business Recorder
PM orders urgent overhaul of National Tariff Commission
ISLAMABAD: Prime Minister Shehbaz Sharif on Thursday directed an urgent overhaul of the National Tariff Commission (NTC) as part of a wider strategy to modernise the country's trade policy and shift the focus towards export-led growth. The directive came during a high-level meeting chaired by the prime minister to review the Commission's performance, which was attended by senior government officials. The prime minister called for a complete restructuring of the NTC, the government body responsible for overseeing customs duties, emphasising the need to strengthen its legal, administrative, and institutional capacity. PM Shehbaz orders urgent reorganization of National Tariff Commission According to a statement issued by the Prime Minister's Office, Sharif stressed that the NTC must be 'restructured along modern lines to fulfil its mandate effectively.' He noted that the Commission should possess robust capabilities for collecting and analysing data on domestic business conditions as well as global trade flows. Sharif also ordered a third-party review of the Commission's recent performance, underlining the importance of aligning the body with the evolving needs of the country's new tariff regime. The decision follows the unveiling of the 2025-26 federal budget, which includes plans to lower the country's overall tariff regime by more than four percentage points over the next five years. Under the new National Tariff Policy 2025-30, the government aims to eliminate additional customs and regulatory duties, along with phasing out the fifth schedule of the Customs Act, 1969. The revised tariff structure will include four duty slabs, ranging from 0% to a maximum of 15%. The NTC plays a pivotal role in shaping the country's trade policy. Customs duties are projected to contribute around 6% of total tax revenues in the upcoming fiscal year, according to the Pakistan Economic Survey 2024-25. While a modest share, the duties remain politically sensitive, particularly for domestic industries seeking protection from cheaper imports. The prime minister also directed that the Commission's appellate tribunal be made operational without delay. He underscored the importance of building an independent research capacity within the NTC to better address the challenges faced by local industries. Copyright Business Recorder, 2025
Business Recorder
10-07-2025
- Business
- Business Recorder
PM orders urgent overhaul of NTC
ISLAMABAD: Prime Minister Shehbaz Sharif on Thursday directed an urgent overhaul of the National Tariff Commission (NTC) as part of a wider strategy to modernise the country's trade policy and shift the focus towards export-led growth. The directive came during a high-level meeting chaired by the prime minister to review the Commission's performance, which was attended by senior government officials. The prime minister called for a complete restructuring of the NTC, the government body responsible for overseeing customs duties, emphasising the need to strengthen its legal, administrative, and institutional capacity. PM Shehbaz orders urgent reorganization of National Tariff Commission According to a statement issued by the Prime Minister's Office, Sharif stressed that the NTC must be 'restructured along modern lines to fulfil its mandate effectively.' He noted that the Commission should possess robust capabilities for collecting and analysing data on domestic business conditions as well as global trade flows. Sharif also ordered a third-party review of the Commission's recent performance, underlining the importance of aligning the body with the evolving needs of the country's new tariff regime. The decision follows the unveiling of the 2025-26 federal budget, which includes plans to lower the country's overall tariff regime by more than four percentage points over the next five years. Under the new National Tariff Policy 2025-30, the government aims to eliminate additional customs and regulatory duties, along with phasing out the fifth schedule of the Customs Act, 1969. The revised tariff structure will include four duty slabs, ranging from 0% to a maximum of 15%. The NTC plays a pivotal role in shaping the country's trade policy. Customs duties are projected to contribute around 6% of total tax revenues in the upcoming fiscal year, according to the Pakistan Economic Survey 2024-25. While a modest share, the duties remain politically sensitive, particularly for domestic industries seeking protection from cheaper imports. The prime minister also directed that the Commission's appellate tribunal be made operational without delay. He underscored the importance of building an independent research capacity within the NTC to better address the challenges faced by local industries. Copyright Business Recorder, 2025
Business Recorder
10-07-2025
- Business
- Business Recorder
PM Shehbaz orders urgent reorganization of National Tariff Commission
Prime Minister Shehbaz Sharif on Thursday directed the urgent reorganization of the National Tariff Commission's (NTC) legal, administrative, and other institutional powers and responsibilities. He said this while chairing the meeting on the performance of the National Tariff Commission, said a press release by the Prime Minister's Office (PMO). He also said that a third-party review of the recent performance of the NTC should be conducted to make it more effective. 'The NTC's automated and efficient research capacity can play a key role in resolving the challenges faced by domestic businesses,' the PMO quoted the PM as saying. Moreover, the premier said that the government was committed to addressing the lack of training and resources of the commission and aligning its work with modern requirements. PM Shehbaz directed that the Appellate Tribunal of the NTC should be made functional immediately. Last week, the NTC concluded the first anti-circumvention investigation, extending anti-dumping duties to imports of a slightly modified product that was circumventing duties previously imposed on galvanized steel products. Moreover, the commission has generated Rs40 billion through anti-dumping duties on the import of over 100 products in the last 25 years. As per data provided by the NTC, the commission has conducted a total of 150 investigations into the cases of dumped imports since 2000. Out of the total, it imposed anti-dumping duties on as many as 114 cases, generating a revenue of Rs40 billion.
Business Recorder
02-07-2025
- Business
- Business Recorder
Anti-circumvention probe concluded: NTC acts to protect domestic steel industry
KARACHI: In a key development for Pakistan's trade enforcement, the National Tariff Commission (NTC) has concluded the country's first anti-circumvention investigation, extending anti-dumping duties to imports of a slightly modified product that was circumventing duties previously imposed on galvanized steel products. This action addresses a growing threat to Pakistan's domestic flat steel sector. Although anti-dumping duties had been imposed on galvanized steel coils and sheets, importers began bringing in a slightly modified product (Galvalume), undermining the impact of existing duties and affecting local manufacturers who had invested in production and relied on fair competition. The domestic industry faced financial losses as the benefits of anti-dumping duties were being offset by circumvention. The influx of the modified product, lacking economic justification and aimed solely at evading duties, disrupted market conditions and discouraged investment in local steel production. NTC generates Rs40 billion through anti-dumping duties in 25 years The NTC's investigation marks a significant step and aligns Pakistan with global trade enforcement practices. By identifying and addressing circumvention - a concept well-established in international trade - the Commission has reinforced Pakistan's commitment to fair trade. Anti-circumvention measures, allowed under the WTO Anti-Dumping Agreement, are vital to ensure that duties meant to counter unfair trade are not bypassed through technicalities. While many WTO members have conducted such investigations, this marks Pakistan's first successful use of these provisions. 'The extension of duties sends a strong signal that Pakistan will not allow its trade remedies to be undermined,' said an industry representative. 'It restores fair competition and supports production, employment, and revenue generation.' This case sets an important precedent for future anti-circumvention actions in other sectors. It also strengthens investor confidence in Pakistan's regulatory framework. With this action, the NTC has protected domestic interests and reaffirmed Pakistan's commitment to rules-based trade. Copyright Business Recorder, 2025
