An Evaluation Of Trade Policy

The objective of this paper is to evaluate the trade policy of the' caretaker government. This policy proposes a comprehensive tariff reform to be implemented from the fiscal year 1994-95. Main features [Government of Pakistan, (1993)] of this tariff reform package are as follows: 1.Maximum tarifflevels will be set at only 35 or 50 per cent with six slabs of 10,15,25, 35,45 and 50 per cent. Existing tariff rates will apply to motor vehicles, alcoholic beverages, POL, wheat, fertilizers, pesticides and life savings drugs. 2. Tariff reduction will be phased in gradually over a three year period. 3. Many concessions and exemptions present in the existing tariff regime will be withdrawn gradually. 4. Tariff structure will represent a cascading of nominal tariff with progressive stages of manufacturing, Locally produced goods will be subjected to higher tariff rates compared to goods not produced domestically. 5. Tariffs on machinery and equipment will be 10 per cent unless this machinery is produced locally. 6. High priority domestic industries (such as engineering and chemicals) will receive nominal protection of 50 per cent. 7. Raw materials and intennediate goods predominantly used in the production of exports would be subjected to zero rate of duty. 8. Existing import licence fee, iqra surcharge and flood relief surcharge. will be merged with the statutory tariff rates.