ISLAMABAD: Pakistan has suffered a loss of Rs 21.8 billion due to tariff line concession granted to Chinese exporters under China-Pak Free Trade Agreement (FTA) in last fiscal year.
The free and preferential trade agreements became the main tool for trade liberalisation with post Doha stalemate at World Trade Organization (WTO), and besides having political dimensions main purpose of these agreements was to obtain better preferential access for national products in target markets.
According to an official document prepared by the Customs Wing of the Federal Board of Revenue (FBR) and available with this scribe, the Chinese exports to Pakistan enjoy meaningful concession 4.6 time higher than Pakistani exports enjoy in China. Pakistan concluded three free and six preferential trade agreements over the years. China-Pakistan FTA was singed in November 2006 which led to substantial increase in trade between China and Pakistan.
The documents revealed that a perusal of the records of imports from and exports to China over the last six months reflects that value of Pakistani exports to China was $ 9 billion whereas value of imports from China was $ 33.3 billion. “During the second phase negotiations, Chinese side proposed to reduce 70% of the tariff liens to 0% immediately which was proposed by FBR,” the documents stated that tariff reduction modalities (TRM) for the second phase were also discussed.
It is pertinent to mention that the majority of items being imported under Pak-China FTA are finished products like cellular mobile phones, toys, shampoo, electric light, ceramic tiles, rubber tyres, embroidery, machines, ginger, blankets, simcards, fabrics etc.
The document said that presently mechanism of ensuring country of origin in case all imported items comprise of two steps namely examination of imported goods and scrutiny or verification of documents accompanies with import consignments (commercial invoice bill of landing, packing list, certificate of origin etc). The co-relation of these two factors is essential to determine country of origin of all imported goods.
After examination of goods the Customs authorities check the certification of origin issued by the exporting country,” the documents stated that presently certificate of origin submitted by importers were sent for manual verifications to commercial councilor of the concerned Pakistan Embassy.
Papers further said that on the basis of risk analysis, profiling of importers and revenue considerations the certificates are selected for verification and each and e every certificate is not sent for verification as it hampers trade facilitations and increased the dwell time due to which Customs authorities face problem of port congestion.
“Then action is initiated against the importers in case certificate is not verified or fund fake and in the last four years various cases indicting gross misuse of concession under China-Pak FTA were detected,” the papers revealed that Customs department made cases amounting to Rs 233.3 million so far regarding fake forged certificates of origin.
The documents disclosed that FBR was currently working to shift from manual verification of certificates of origin to online verification system and two meetings had already been held with Chinese concerned authorities.
“A technical document containing procedures for online verification and Electronic Data Interface (EDI) has been shared with Chinese Customs Administration and negotiations are underway and it will held in trade facilitations as well as timely action against commercial frauds in FTA through fake forged certificates,” the documents said.
