The government of Pakistan has made a significant decision regarding the imposition of high duties on used cars. The decision comes with its set of implications and has raised eyebrows. Let’s delve into the details.

Proposal on High Duties Rejected

This week, recommendations for imposing regulatory duties on about 125 imported goods, including new and used cars, were brought forward to the Tariff Policy Board. The meeting was initiated following the directives of interim Prime Minister Anwaarul Haq Kakar, who intended to discourage these imports in response to the increasing import costs.

The government had proposed imposing up to 100% regulatory duties on a range of imported goods, including used cars. This proposal was aimed at curbing imports due to concerns over rising import bills. However, the proposal faced resistance expressing concerns that it might jeopardize Pakistan’s ongoing negotiations with the European Union regarding the next phase of the Generalized System of Preference plus, commonly referred to as the GSP-plus scheme.

EU’s Objections On High Duties

The objections raised by the European Union played a pivotal role in the rejection of the proposal. Additionally, it was noted that higher duties might not have a significant impact on reducing imports. This rejection has far-reaching consequences, especially in the context of Pakistan’s negotiations with the EU, particularly the Generalised System of Preference plus (GSP-plus) scheme.

Background

Six months ago, Pakistan had eliminated regulatory duties on used cars up to 1,800cc and had also reduced duty rates on various items, including new cars. These measures were part of broader economic reforms.

Low Impact on Import Bill

During discussions, it was highlighted that imposing duties on certain items, like imported yogurt, would not substantially reduce the import bill, as their annual imports were relatively low. The focus was on targeting items with significant import volumes to have a meaningful impact.

Consumer Relief

The lapse of Statutory Regulatory Orders (SRO) 1571 had resulted in reduced prices for various consumer items, including new and used cars. However, consumers are currently facing economic challenges due to the ongoing economic crisis, which has partly offset the benefits of reduced rates.

It’s worth noting that the import bill for August amounted to $4.5 billion, reflecting a significant increase compared to the previous month. This increase in imports has economic implications that need careful consideration.

The rejection of the proposal to impose high regulatory duties on luxury imports and used cars showcases the complexity of balancing economic interests and international relations. This decision has implications for both consumers and the country’s economic landscape.

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