BOP/180 GENERAL AGREEMENT ON TARIFFS AND TRADE. enarnings. Size of the cotton crop declined sharply from 4 million bales in

Transcription

1 GENERAL AGREEMENT ON TARIFFS AND TRADE RESTRICTED BOP/180 6 January 1978 Limited Distribution committee on Balance-of-Payments Original: English Restrictions CONSULTATION UNDER ARTICLE:12(b) WITH Basic Document for the Consultation PAKISTAN 1. The balance-of-paments pressures in non-oil producing developing countries have for long been a strategic constraint on growth Ịnternational economic events since 1973 have made this constraint even more critical. 2. Pakistan faced serious balance-of-payments pressures during Prices of its exports declined (the decline was very sharp in the backdrop of the commodity boom of 1973), while those of imports continued to rise gradually because of the stagflation in the developed countries. Unit prices of imports in increased by per cent, and those of exports by 79.2 per cent compared with The terms of trade of Pakistan thus deteriorated sharply. 3. A measure of the impact of this situation on the economy of Pakistan is the fact that trade deficit in at prices would have been only $425 million, compared with the actual deficit of $1,274 million at current prices. 4. On a weak external situation were superimposed domestic adversities like floods, droughts, and severe pest attack on two consecutive cotton crops. (In a normal year, cotton and. cotton-based products account for over 50 per cent of Pakistan's export enarnings. Size of the cotton crop declined sharply from 4 million bales in to 2.4 million bales in Further to this delay in the availability of irrigation water from Tarbela Dam affected the production of wheat (major staple food) which necessitated additional emergency imports on short-term credits. 1Material supplied by the Pakistan authorities.

2 Page 2 5. A weak balance-of-payments position combined with a slowdown of the national economy affected the pattern of savings, investments and productivity growth. Pakistan's domestic savings rate dropped from 9.9 per cent in to 4.2 per cent in , while the public savings were negative. (In constant prices, however, gross savings increased by 1.2 percentage points during this period.) This together with the large outlays on food subsidies (during and , subsidies were of the order of $510 million) aggravated the budgetary situation in fiscal year 1977, when the rate of monetary expansion was 23 per cent, and government borrowings from the banking system rose by 28 per cent. The average rate of inflation (wholesale price index) was 19.1 per cent during Pakistan is heavily dependent on imports, which are largely for maintenance purposes. During the period under review, the ratio of exports to imports deteriorated from 1.02 to The annual import bill for POL, chemical fertilizers, tea, wheat and edible oils constitutes one third of total imports but absorbs two thirds of total export earnings; while the remaining one third goes towards servicing the outstanding foreign debts. This means that two thirds of Pakistan's import requirements are financed through borrowings from abroad. 7. Although Pakistan had to substantially draw down its reserves in , the level of borrowings in previous years had enabled an accumulation of reserves. However, the increase in reserves in nominal terms was more than offset by the loss of their purchasing power. In consequence, there was an appreciable rise in the international indebtedness of the country (debt servicing ratio - net of rescheduling - to exports reached 36 per cent in 1976) and the ratio of foreign exchange reserves to import payments declined. 8. Imports of capital goods and raw materials for the domestic production of consider goods (including crude POL) have been gradually increasing in the total import-mix. In , it represented 60 per cert of total imports and later rising to 78 per cent in This reflects the structural transformation of the system, and the broad shift in Pakistan's development pattern. 9. Import expenditure on some of the commodities is unavoidable, particularly of those strategic items where domestic production/supplies are inadequate to meet essential requirements. It includes; POL, edible oils, wheat, tea, chemical fertilizers, non-ferrous metals and machinery. In case of tea, POL and edible oils, for instance, 100 per cent, per cent and 45 per cent of domestic requirements are met by imports.

3 Page Import trade in Pakistan is governed by the imports and Exports (Control) Act, Under this Act, the Goverment has issuedanimport Trade Control Schedule which gives description of various goods on the pattern of the BTN. Another notification, viz., the Import Policy Order, is issued every year and contains details of the items which can be imported into Pakaistan. 11. The permission to import goods is given to tne individuals/organizations through permits and licenses. All commercial imports ordinarily take place against import licenses. Import permits are issued in those cases where the foreign exchange resources of the Government of Pakistan are not involved. Import licences and permits areissued by the Offices of the Chief Controller of Imports and Exports. 12. The Provincial Governments and the Federal Ministries are allocated separate foreign exchange quotas. Their imports do not require permits./licences and are authorized by licences issued by the Directorate of Industries (under the Provincial Governments) and the Denartment of Investment Promotion and Supplies (under the Federal Ministry of Industries). 13. Imports are allowed under two titles, viz.,"free list", and "tied list". Imports under the former can be arranged from world-wide sources against Pakistan's own foreign exchange resources. This list included 327 categories of items in , and covered all sorts of industrial raw materials, machinery and spares, and essential consumer goods. In , the "free list' was expanded to 407 items. This liberalization implied an additional. import burden of $250 million. Import of 34 items on the "free list" is restricted to the Trading Corporation of Pakistan, the Edible Oils Corporation and other public-sector corporations. 14. The second list comprises imports that are to be effected under tied loans includinge the USPL-480 Program) and barters. Size of the tied list has gradually been reduced from 25 to 18 items during this period.

4 Page 4 ANNEXI Balance of Payments Position-Pakistan. (Value Million U.S. $) Merchandise A/c -124 (Net) Exports Imports Non Monetary Gold. + 1 Services (Net) Receipts Payments Unrequitted transfers (Net) Private (Net) Government (Net) Current Account Capital Account +253 (Net) Overall Balance Terms of Trade Foreign Exchange Reserves (Gold bullion + drawings on SDRs + exchange balances held abroad. ) * Provisional Fiscal year in Pakistan starts from 1 July and lasts to 30 June.

5 Page 5 ANNEX II Unit Value of Major Exports Items Unit T Rice US cents/kg (i) Fine rice US cents/kg (ii) Other US cents/kg Raw cotton US cents/kg Cotton yarn US cents/kg Cotton cloth US cents/metre Other cotton textile products Carpets and rugs $/sq. ft Fish and prawns $/cwt

6 Page 6 ANNEX III Unit Prices of Major Imports (U.S. $ per ton) POL (i) Crude (ii) Products Wheat Fertilizer Edible oils Tea

7 Items ovw 0 ANNEX IV export of Important Itemsg Value, ~~~~~~~ in Million U$S Rice Raw cotton o0ton Yarn , Cotten Cloth Other cotton Textile products Carpets & Rugs Leather Fish & Prawns All other Commodities Total

8 Page 8 ANNEX V Exports by Economic Categories (Value in $ million) Categories Primary commodities Semi-manufactured goods Manufactured goods Total , , , ,140.8

9 Items Wheat Unmilled * , Tea Petroleum crude & partly refined Petroleum Products * *64 Edible Oil o Total (ValueMilIion ig'$10 US 1) ANNEX VI Import of Major Items Chemical & Dyes , o ,59 Te&tilthreydarn I hra ,7f iron & steel items Metals non-.ferrous t their items

10 Page 10 ANNEX VII Imports by Economic Category (Value in million US$) Categories Consumer goods Raw material for consumer goods Raw material for capital goods Capital goods Total , , , ,324.5

11 Page 11 ANNEX VIII THE IMPORTS AIND EXP0RTS (CONTROL ) ACT, 1950 AS AMENDED UP TO 31- JANUARY 1976 Act No. XXXIX-of 1950 (19 April 1950) An Act to continue powers to prohibit or control imports and exports. WHEREAS it is expedient to continue rowers to prohibit, restrict or otherwise control imports into and exports from Pakistan; It is, hereby enacted as follows: Short title, extent, commencement and duration 1. (1) This Act may be called the Imports and Exports (Control) Act, (2) It extends to the whole of Pakistan. (3) It shall come into force immediately. Definitions. 2. In this Act: (a) "Chief Controller" means the officer appointed by the Federal Government to perform the duties of Chief Controller of Imports and Exports under this Act; (b) "Collector of Customs" means an officer appointed as- such under Section 2 of the Customs Act, 1969 (IV of 1969); and (c) "Import" and. `Export" mean respectively bringing into, and taking out of, the Provinces by sea, land or air. Footnotes on pages 14 and 15

12 Page 12 Powers to prohibit or restrict imports and exports 2 3. (l) The Federal Government may, by order published in the Official Gazette and subject to such conditions and exceptions as may be made by or under the order, prohibit3, restrict or otherwise control the import or export of goods of any specified description, or regulate generally all practices (including trade _ practices) and procedure connected with the import or export of such goods, /and such order may provide for applications for licences under this Act, the evidence to be attached to such applications, the grant, use, transfer, sale or cancellation of such licenses, and the form and manner in which and the periods within which appeals and applications for review or revision may be preferred and disposed of, and the4 charging of fees in respect of any such matter as may be provided in such order/. (2) No goods of the specified description shall be imported or exported except in accordance with the conditions of a licence to be issued by the Chief Controller or any other officer authorized in this behalf by the Federal Government. (3) All goods to which any order under sub-section (1) applies shall be deemed to be goods of which the import or export has been prohibited or restricted under /section 16 of the Customs Act, 1969 (IV of 1969), and all the provisions of that Act shall have effect accordingly/.5 (4) Notwithstanding anything contained in the aforesaid Act the Federal Government may, by order published in the Official Gazette6, prohibits, restrict or impose conditions on the clearance whether for home-consumption or warehousing or shipment abroad of any imported goods or class of goods. Continuance of existing orders - XVIII of All orders made under Section 3 of the Imports and Exports (Control) Act, 1947 and in force immediately before the commencement of this Act, shall so far as they are not inconsistent with the provisions of this Act, be deemed to have been made under this Act. Prohibition to sell or purchase import licence continue in force and shall A. No person shall sell, purchase or otherwise deal in any import licence 7 Prohibition regarding sale and transfer of goods by industrial consumers B. Except with the previous permission in writing of the Chief Controller or any other officer authorized in this behalf by the Federal Government, no person /who in his capacity as industrial consumer imports any goods against a licence issued to him or where no licence is required for the import of such goods by an industrial consumer, without any licence/8 shall sell or otherwise transfer such goods, or use the goods for a purpose other than the purpose or purposes for which the licence was issued or such goods were imported/.3

13 Page 13 Penalty - IV of If any person contravenes [any provision of this Act or10 any order made or deemed to have been made under this Act or the rules made thereunder, or makes use of an import or export licence otherwise than in accordance with any condition in that behalf imposed under this Act, he shall without prejudice to any confiscation or penalty to which he may be liable under the provisions of the Customs Act, 1969, as applied by sub-section (3) of section 3 of this Act be punishable with imprisonment for a term which may extend to one year, or with fine, or with both. Cognizance of offences - IV of No court shall take cognizance of any offence punishable under section 5 except upon complaint in writing made: (a) in the case of an offence which is punishable both under this Act or the rules made thereunder and also, whether by confiscation or otherwise, under the Customs Act, 1969 by a Collector of Customs or by an officer of Customs authorized in writing in this behalf by a Collector of Customs, or (b) in the case of any other offence. by the Chief Controller or by an officer authorized by him in writing in this behalf; and no court inferior to that of a Magistrate of the first Class shall try any such offence. Savings 7. No order made or deemed to have been made under this Act shall be called in question in any court, and no suit, prosecution or other legal proceeding shall lie against any person for anything in good faith done or intended to be done under this Act or any rules made thereunder or any order made or deemed to have been made thereunder. Power to make rules 8. The Federal Government may make rules not inconsistent with this Act for carrying out the purposes of this Act. 9. Repealed.11

14 Page 14 Footnotes: For Statement of Objects and Reasons, see Gazette of Pakistan, 1950, Part V, page 92. The Act has been applied to: (i) Baluchistan, subject to certain Eodifications, with effect on and from 19 April 1950, see Gazette of Pakistan, 1953, Part I, page 90; (ii) the Federated Areas of Baluchistan, see ibid., 1953, Part I, page 152; (iii) the Chittagong Hill tracts subject to certain modifications, see Dacca Gazette, 19554, Part I, page 33; and to the partially excluded Areas of trmensingh District subject to certain modifications, see ibid., 1953, Part I, pages ; (iv) this Act and Rules made thereunder has been applied to those of the Tribal Areas to which it does not already apply by Regulation No. I of The Act has been extended to: (i) the Leased Areas of Baluchistan, see Leased Area (Laws) Order, 1950 (Gornor-Generall's Order No. 3 o~f 1950); (ii) the Baluchistan States Union, see the -Baluchisten States Union (Federal Laws) (Extension) Order, 1953 (Governor-Genera1's Order No. 4 of 1953); (iii) the Khairpur State, see the Khairpur (Federal Laws) (Extension) Order 1953 (Governor-General's Order No. 5 of 1953); and (iv) the Strte of Bahawalpur, see th. Bahawalpur (Exte:-sion of Federal Laws) Order, 1953 (Governor-General's Order No. 11 of 1953); as amended. The Act has been and shall be deemed to have been brought into force in Gwador with effect from. 8 September 1958, by the Gwador (Application of Central Laws) Ordinance, 1960 (37 of 1960). 2For the Registration (Inporters and Exporters) Order, 1952 see Gazette of Pakistan, 1952, Extraordinary, pages ; for the Raw Jute Registered (Marks) Order, 1954, see Gazette of Pakistan, 1954, Extraordinary, pages ; and for order made under this Section, see Gazette of Pakistan, 1957, Part I, page 269; for the Review Appeal and Revision Order, 1957, see Gazette of Pakistan, 1957, Extraordinary, pages ; for the Licences and Permits Fees Order, 1958, see Gazette of Pakistan, 1958, Extraordinary, pages , for notification to import such goods into Gwador without licence in respect of -which firm commitments have been made with foreign supplier before 8 September 1958, see ibid., 1958, Extraordinary, page 1855; and for the wheat and wheat products (Movements Restrictions) Order, 1961, see ibid. 1961, Extraordinary, page M75c.

15 Page 15 3For notifications prohibiting the export to and import from India of goods of all descriptions, see S.R.O. 126(R)/65 and S.R.O. 128(R)/65 dated 9 September 1965, Gazette of Pakistan, 1965, (Extraordinary) page 985. For notification prohibiting the export by sea, land or air to any destination other than Afghanistan, of any goods of the description specified in the Schedule annexed to therewith, see Gazette of Pakistan, 1965, (Extraordinary) page Substituted by the Imports and Exports (Control) (Amendment) Act, 1957 (42 of 1957), Section 2, for certain original words. 5Substituted by Ordinance No. VIII of 1970, S.4. For such an order, see Gazette of Pakistan, 1952, (Extraordinary), page New Sections 4.A and 4.B inserted by the Imports and Exports (Control) (Amendment) Ordinance, 1962 (29 of 1962) (with effect from 18 April 1962). 8Substituted by the Imports and Exports (Control) (Amendment) Ordinance, 1965 (8 of 1965) for "who import goods against a licence issued to him in his capacity as industrial consumer". 9Added ibid. 10Inserted by the Imports and Exports (Control) (Amendment) Ordinance, 1962 (29 of 1962). "Repealed by Repealing and Amending Ordinance, 1965 (X of 1965).

16 Page 16 ANNEX IX ITEMS IMPORTABLE BY PUBLIC SECTOR AGENCIES ONLY I. Items importable by Trading Corporation of Pakistan 1. Bidi leaves. 2. Caustic soda. 3. Coal and coke. 4. Hessian. 5. Iron and steel items as follows: (a) G.I. pipes and tubes and black pipes and tubes; (b) Iron or steel (primequality), blooms, slabs and billets, excluding pieces of less than 3.81 centimetres (12 inches) square or thick; and steel ingots; (c) Iron and steel strips tubes; for G.I. pipes and tubes and black pipes and (d) Pig iron. 6. Jute sacks and jute bags for the packing of goods including second-hand. 7. Mercury. 8. Metals, non-ferrous and ferro-alloys as follows: (a) Aluminium ingots, slabs, rods, blocks, extrusion ingots and billets; (b) Copper rods and ingots; (c) Lead ingots, pig; ( d) Refined lead; (e) Refined zinc; (f) Zinc ingots. 9. Newsprint paper..10. Soda ash (Sodium Carbonate). 11. Sugar.

17 Page 17 II. III..IV. Items importable by Pakistan Edible Oils Corporation Ltd. 1. Butter oil/.ghee. 2. Edible oil (cotton seed/soya bean/palm oil). 3. Vegetable oil, hydrogenated. Items importable by Board of Industrial Management Units 1. Air conditioners, domestic (components only). 2. Motor cars including C.K.D3. 3. Motor lorries, buses, omnibuses, trucks, public,service station wagons and pick-ups, including C.K.D. 4. Motor vehicles, four-wheel drive 4x4 including C.K.D. 5. Power tillers (standardized makes only), combine harvesters and mechanics: farming equipment. 6. Refrigerators, domestic (components only). 7. Storing acrylic base paint for motor car assembly. 8. Tractors (standardized makes only) including C.K.D. Items importable by NAFDEC 1. Cinematographic films, exposed. 2. Cinematographic films: unexposed. V. Items im portable by Ministry of Food and Agriculture 1. Fertilizers. 2. Maize. 3. Pesticides including Anthio. VI. Items importable by other public sector agencies 1. Aircraft finishes in packing of litres (five gallons) and above only. 2. Cement (grey). 3. Electrical transmission and distribution equipment.

18 Page Iron and steel rails, sleepers, fish plates and other track materials for railways. 5. Iron or steel tyres, axles, wheels and buffers for locomotives, wagons and carriages for railways and iron or steel railway springs whether laminated or coiled. 6. Malleable iron rail clips. 7. Wooden sleepers for railways.