Pakistan WT/TPR/S/95
Page 25
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) OVERVIEW
1. Since its previous Trade Policy Review in 1995, Pakistan has taken steps, often unilaterally,
to liberalize its trade regime.  These steps are aimed at fostering private sector activity, notably
investment.  Trade liberalization has been especially marked since January 1999 as a consequence of
commitments made to the IMF and World Bank as well as efforts by Pakistan to integrate its economyinto the international trading system.
2. The tariff remains Pakistan's main trade policy instrument;  its importance increased as a
result of the recent elimination of non-tariff barriers on several items.  At the same time, it is a major,
albeit declining, source of tax revenue.  Pakistan's average applied tariff rate has fallen from 56% to
20.4% since its previous Review.  Nevertheless, tariff protection is still high, especially for a fewsensitive items, and although efforts are being made to reduce tariff peaks and dispersion, tariff rates
vary widely.  Consequently, the tariff remains a potentially important distortion to domestic
competition and thus an obstacle to the efficient allocation of resources.  The scope for improving
efficiency through further substantial cuts in tariffs may be limited by their importance to the
Government as a source of revenue and by the internal tax system's vulnerability to avoidance andevasion (see below).
3. Some one third of tariff lines are currently bound.  Given the reduction in applied rates, there
is a widening gap between bound and applied rates.  This imparts a degree of uncertainty to the tariff,
with the Government retaining freedom to raise applied rates within bindings;  this uncertainty is
somewhat compounded as applied tariff rates on 91 tariff lines (down from 241 in 2000/01) (mostly
textiles and clothing) exceed the bound rates by as much as 17 percentage points;  steps are to be
taken to address this problem.
4. During the period under review, Pakistan's tari ff has been simplified considerably.  Some
two fifths of all tariff lines are now concentrated in the 25% to 30% range, although there are no
longer any duty-free lines.  Nonetheless, the tariff remains relatively complex, involving 26 different
rates (49 in 2000/01), 13 of which are ad valorem , 11 specific, and 2 compound.  Widely different
tariff rates provide considerable scope for misclassification of imports by customs officials.  Thecomplexity of the tariff is exacerbated by concessions, although their scope seems to have been
reduced recently.  While most tariffs involve relatively transparent ad valorem  r a t e s ,  s o m e  1 %  o f
tariff lines are subject to either specific or compound duties, which are intrinsically more opaque than
ad valorem  rates, tending to conceal relatively high ad valorem  equivalent (AVE) rates.  The
transparency of Pakistan's tariff regime has improved through submissions to the WTO IntegratedDatabase as well as its availability on the Internet.
5. Further protection from imports is provided by several other border taxes and charges.
"Regulatory" duties appear to have been reinstated (for imports of edible oil and oil seeds for
crushing).  Moreover, withholding taxes are levied on imports (and exports);  these taxes, which may
be deductible from income taxes, are apparently intended to combat income tax evasion.  In addition,a capital-value tax is levied on imported motor vehicles.
6. Plans for the simplification of existing complicated registration requirements for importers are
under consideration.  In addition, customs clearance for specific items or importers has been
accelerated by the introduction of an express lane facility and an electronic assessment system.  In the
context of the implementation of the WTO Agreement on Customs Valuation, Pakistan discontinued
the use of the Brussels Definition of Value, but maintained provisions for setting minimum importWT/TPR/S/95 Trade Policy Review
Page 26
values for a few items.  Cash margin requirements on the opening of all import letters of credit were
imposed temporarily, but have now been abolished.
7. Import prohibitions and restrictions have been maintained on a number of grounds.  However,
virtually all those for balance-of-payments purposes (numerous textiles and clothing articles, chassis
for trucks) were phased out;  the importation of certain items depends largely upon the status of the
importer, origin, prior approval or other conditions.  The scope of restrictions on imports of useditems has been widened.  Imports of a specific type of raw sugar have been prohibited (as of 2000),
but seemingly are no longer in force.  No contingency measures have been applied.  In government
procurement, price preferences have been granted to domestic suppliers, particularly for engineering
goods contracts.  Having encountered difficulties in eliminating its local content scheme by the date
set under the WTO Agreement on Trade-Related Investment Measures, Pakistan obtained anextension of the transition period for implementing this commitment.
8. The scope of export prohibitions seems to have been reduced by, inter alia,  placing greater
emphasis on compliance with international commitm ents (including those aimed at protecting
intellectual property rights).  Nevertheless, several restraints (including prohibitions and export taxes)
aimed at ensuring adequate domestic supplies and minimum value added for certain items have beenmaintained, although their scope was reduced;  these restraints tend to reduce the prices of the goods
covered and therefore constitute an implicit subsidy to domestic users of these goods.  Exports of
certain textiles and clothing items remain subject to access-related restraints in several major markets.
Preshipment registration of export contracts is required for certain sensitive items (cotton, rice, urea);
preshipment inspection requirements have applied to rice (since 1999).  Export subsidies, largely
linked to export-performance requirements, have been provided in various forms, including financial
support (quality certification, software, sugar, freight costs), concessionary export finance, andexport-processing zones;  support to software exports is a new element in this policy since the
previous Review.
9. Support to production and trade is provided through a variety of tax and non-tax incentives;
priority areas are science and technology and small and medium-sized enterprises.  During the period
under review, state participation in production and trade has persisted mainly in agriculture,chemicals, transport equipment, fuels, machine tool s, mining and energy, as well as in engineering,
financial, telecommunication, transport, and tourism services.  Financial support has also been
provided to strengthen quality certification.
10. New legislation has been passed to strengthen the protection of intellectual property rights;
however, limited adherence to international treaties in this area, and poor enforcement seem to havecontributed to persistent high levels of piracy and trade in counterfeit goods.
11. As regards competition policy, the elimination of business entry restrictions seems to have
reduced industrial concentration.
(2) M
EASURES DIRECTLY AFFECTING IMPORTS
(i) Registration and documentation requirements
12. Since the previous Review of Pakistan, there have been no major changes in the list of entities
eligible to import, except for the inclusion in the list of overseas Pakistanis.1  The entities comprise
                                                     
1 Overseas Pakistanis are allowed to import or send freely importable goods up to an annual value of
US$10,000;  these items must be paid with their own foreign exchange earnings and there is no need to open aPakistan WT/TPR/S/95
Page 27
any firm holding a registration certificate, commercial importers, industrial consumers, and actual
users.2  Nearly all importers must register as importers with the Export Promotion Bureau (EPB)3;
public sector departments are exempt from registration requirements.  Only firms listed in public
notices issued by the Ministry of Commerce may apply for import authorization;  a person or family
owning more than one firm, may register one of its firms only.  In the year 2000, there were plans to
amend the regulatory framework w ith a view to simplifying registration procedures and introducing
an automatic database upgrade.4
13. The EPB issues a so-called "Category Pass Book" to importers of items subject to certain
import conditions (other than freely importable goods), for purposes of opening letters of credit and
customs clearance (section 2(vi), Table III.3).5
14. Basic documentation requirements remain unchanged (Import General Manifest, bill of entry,
invoice, packing lists, copies of letters of credit6, and insurance certificates).  In the case of items
subject to certain conditions, a recommendation/clearance or prior approval from the competent
government agency, or certificates from the exporting country may be required (section 2(xi)(a),
Table III.3).7  In most cases, in order to obtain the duty concessions for import of machinery and raw
materials granted to various industrial establishments, importers need to furnish an indemnitybond/bank guarantee to the extent of duty exempted.  A certificate of origin may be required for items
subject to special import (e.g. preferential treatment), depending on the origin.
15. As of February 2000, an Electronic Assessment System (EASY) ensures more speedy
assessment and customs clearance as well as reduced contact between taxpayers and the tax collectors
(which leaves less scope for corruption).
8  At a first stage, EASY has been available to multinationals
and local firms eligible for an "express lane facility" (operated since 1998).  EASY covers:  dutiable
imports by public-sector entities (i.e. federal/provincial governments, state-owned corporations, localbodies);  all items subject to specific rates of customs duty (excluding compound rates,
section 2(ii)(d));  and, certain items subject to zero rates of customs duty and sales tax.  EASY does
not apply to old/used/second-hand/re-conditioned items, scrap, and items subject to restrictions or
bans or duty exemptions (section 2(ii)(i)).  A share of 5% of goods are randomly selected by computer
for clearance under "normal" (i.e. ordinary) procedure, which takes about one day.
16. No compulsory storage requirements seem to have been applied.
                                                                                                                                                                    
letter of credit, register as an importer or for sales ta x registration by the consignee (Articles 2.2(d) and 2.5 of
Import Policy Order, 1999 and Articles 1.5 and 15.1(o) of Import Export Procedure Order (1999)).
2 GATT (1995).
3 Since the previous Review, exemption from regist ration has been extended to imports of reading
material and goods for mountaineering and imported by some members of trekking expeditions for their own
use, and to imports by overseas Pakistanis and to importers exempt under the terms of paragraph 9 ofRegistration (Importers and Exporters) Order (1993).
4 Export Promotion Bureau (2000).
5 Article 1.1 of the Import Export Procedures Order (1999), and F.E Circular No. 54 of 1998 of the
State Bank of Pakistan [Online].  Available at:  http://www.sbp.org.pk/femanual/FE%20Circulars/1998/c54.htmand http://www.sbp.org.pk/femanual/FE Circulars/1998/c54.htm [18 September 2000].
6 When opening the letter of credit the importer must, inter alia,  ensure that the import is made at the
most competitive price.
7 For example, food colouring material requires a certificate from the responsible agency in the
exporting country indicating that it is in use in the country of origin at the time of shipment or registered in that
country (Import Policy Order (1999)).
8 Central Board of Revenue online information.  Available at:  http://www.cbr.gov.pk/customs/igm/
easy.html [24 July 2000].WT/TPR/S/95 Trade Policy Review
Page 28
(ii) Tariffs
(a) General features
17. The customs tariff is Pakistan's main trade policy instrument.  It is announced annually
through the Finance Act and published in the official gazette ( Gazette of Pakistan Extraordinary
Part II ).  In addition, at the start of each financial year the Central Board of Revenue (CBR) publishes
the Customs Tariff along with Notifications (SROs)  containing various duty exemptions, rules, and
changes;  the Customs Tariff and accompanying regulations are also available at the CBR online
information.  Although it has provided import data since 1997, Pakistan has submitted its customs
tariff to the Integrated Database of the WTO only as from 2000.9  The customs tariff is an important,
albeit declining, source of tax revenues;  its share of total tax revenues dropped from 30.1% in
1994/95 to 13.7% in 2000/01 (section 4(i)).
18. As of 2001/02, the tariff structure has been simplified considerably.  As an instrument of trade
policy, the tariff accords varied levels of protection to domestic industry and is therefore a potentially
important distortion to competition and thus an obstacle to the efficient allocation of domestic
resources.10  The tariff is also a complex instrument; based on the 1996 nomenclature of the
Harmonized System (HS), it currently (2001/02) contains 5,477 tariff lines (at the 8-digit HS), 13.6%less than in 1996/97, and involves 26 different rates (13 ad valorem  rates levied at the c.i.f. value of
imports, 11 specific rates, and 2 compound rates).
11  On the other hand more than 99% of tariff rates
are ad valorem , which are more transparent than other tariffs.  As a result of subsequent cuts in
applied rates, bound MFN tariff rates are, by and large, considerably higher than applied MFN rates,
thereby providing plenty of scope for the authorities to raise applied rates without breaching bindings.
The summary indicators highlight these and several of the other main features of Pakistan's customs
tariff, together with the significant changes that it has undergone during the period under review(Table III.1).
12
19. Duties (as well as all indirect taxes and other charges levied at the border) seem to be settled
with the Customs prior to the goods' release from custody.13  In cases of "urgent consignment",
however, customs duties may be paid within ten days of clearance.14  Duty payment may also be
deferred for other items under certain conditions (section 2(ii)(j) and Table III.2).  Under the1969 Customs Act, the Ministry of Finance, Econom ic Affairs, Statistics and Revenue and the CBR
are empowered to exempt imports from duty and impose regulatory or special customs duties.
15
                                                     
9 WTO document G/MA/IDB/2/Rev.11, 7 June 2001.
10 The authorities indicated that the tariff barely offs ets high domestic costs of transport, infrastructure,
purchase of technology, and interest rates.
11 In 1996/97 there were 60 different rates (22 ad valorem , 20 compound, 5 alternate, and 13 specific
rates).
12 All tariff-related estimates in the charts and tables of this report reflect import duties contained in
Pakistan's Customs Tariff and its amendments;  only the ad valorem  component of compound and alternate
duties is used as no ad valorem  equivalents are available.  No specific rates or occasional/temporary tariff
increases or reductions or other types of duties are taken into consideration in these calculations.
13 U.S. Commercial Service (1999a).
14 Urgent consignments are:  human body organs, perishable medicines, live animals and plants,
newspapers, journals, radioactive material, replacement parts of computers, machines and drilling components,fertilizer imported by Fertilizer Import Department, etc. (Prior Release of Urgent consignments (Import andExports) Rules (1994)).
15 Various Customs SROs;  and GATT (1995).Pakistan WT/TPR/S/95
Page 29
Table III.1
Structure of tariffs in Pakistan, 1996-2002
(Per cent)
Indicators 1996/97 2000/01 2001/02 U.R.a
1.  Bound tariff lines (% of tariff lines) 36.3 34.8 36.8 36.8
2.  Duty-free tariff lines (% of tariff lines) 0.8 4.0 0.0 0.0
3.  Non- ad valorem  tariffs (% of tariff lines) 1.7 1.1 0.9 0.9
4.  Tariffs with no ad valorem  equivalent 1.7 1.1 0.9 0.9
5.  Simple average bound tariff rate 71.1 62.8 61.5 61.4
6.  Simple average applied tariff rate 41.7 24.8 20.4 20.2
Agricultural products (HS 01-24)b47.2 28.0 21.8 21.8
Industrial products (HS 25-97) 40.8 24.3 20.2 20.0
7.  Domestic tariff "peaks"c0.4 1.1 0.7 0.9
8.  International tariff "peaks"d82.7 61.7 57.2 56.0
9.  Overall standard deviation (SD) of tariff rates 22.5 17.8 16.0 16.0
10.  Coefficient of variation (CV) of tariff rates 0.5 0.7 0.8 0.8
a Based on 2001/02 nomenclature.
b Under the definition, used in the WTO Agreement on Agriculture, the simple average applied tariff on agricultural imports is
43.9%, 26.7%, and 22.1% in 1996/97, 2000/01, and 2001/02, respectively.
c Domestic tariff "peaks" are defined as those exceeding three times the overall simple average MFN rate.d International tariff "peaks" are defined as those exceeding 15%.
Note: Calculations exclude specific rates and include the ad valorem  component of alternate and compound rates.
Source: WTO Secretariat calculations, based on data provided by the authorities of Pakistan.
(b) MFN tariff bindings
20. As a consequence of the Uruguay Round (UR), Pakistan has expanded considerably its
binding commitments beyond its minimal undertakings in the past.16  Pakistan has bound 89.6% of its
agricultural tariff lines17 (exceptions including alcoholic beverages, swine and pig meat and products
thereof, mainly on religious grounds), 12.6% of lines pertaining to fishery products, and 27.5% of
industrial tariff lines (HS code 25-97).  Currently, 36.8% of all tariff lines are bound, compared with36.3% in 1996/97 (Table III.1);  this tariff line increase reflects the reduction of more unbound tariff
lines (sub-positions) than bound lines at the latest customs tariff in force.  The authorities indicated
that Pakistan will gradually increase the number of its bound items as it gains experience in
multilateral, reciprocal tariff-cutting negotiations;  as a country suffering from acute fiscal
imbalances, it will need flexibility for some time.
21. Since 1996/97, Pakistan's average bound tariff ra te has fallen from 71.1% to 61.5%, with a
further decline to 61.4% expected by the end of the implementation period;  nonetheless, the gap
between bound and applied rates has widened as a result of generally faster reductions in the latter,
and of the high binding levels for certain items (section 2(ii)(e), Chapter IV(2) and (4).  While
Uruguay Round bindings for agricultural items have been in force since 1995, those on industrialitems are being implemented in five (HS Chapters 25-49 and 64-95) or ten (HS Chapters 50-63
(textiles and clothing)) equal annual instalments from July 1995.
18
                                                     
16 Pakistan's pre-Uruguay Round binding commitments covered 113 CCCN tariff lines;  they had been
waived since 1977 (GATT, 1995).
17 This share corresponds to the product coverage under the sectoral definition of the WTO Agreement
on Agriculture.
18 Schedule XV – Pakistan.WT/TPR/S/95 Trade Policy Review
Page 30
22. Between November 1977 and December 1995 Pakistan's pre-Uruguay Round commitments
were waived to, inter alia,  allow the introduction of the Harmonized System nomenclature19;  in this
context, Pakistan notified improvements to its concessions on textiles and clothing products and these
were approved.20  As of April 1997, its Uruguay Round commitments under Article II of GATT 1994
have been waived to allow for the implemen tation of the recommended amendments to the
Harmonized System nomenclature on 1 January 1996, and subsequently to undertake Article XXVIIInegotiations.
21  In October 1998, Pakistan submitted documentation required for these negotiations22;
reservations regarding Pakistan's proposed HS96 documentation were raised by three trading partners,
of which one withdrew its reservation in September 2000, one was consulting with Pakistan by
November 2000 and the third had to specify its concerns for its general reservation.  In 1999, Pakistan
made a notification subsequent to its tariff commitments under Attachment II of the Memorandum ofUnderstanding on Market Access for Textile Produc ts, signed between Pakistan and the EU on
27 March 1996.
23  The authorities indicated that Pakistan was transposing its customs tariff, at the time
of completion of this report, to HS 2000.
(c) Duty-free items
23. Following changes introduced in the customs tariff, as from 2001/02 no tariff lines are duty
free as the lowest tariff rate has been raised to 5% (Chart III.1);  duty-free entry is allowed on an
exceptional basis.  Prior to this change (i.e. 2000/01), 4% of the tariff lines were duty free (five times
as many as in 1996/97).
(d) Specific, compound, and alternate duties
24. Specific and compound duties currently account for only 0.9% of all tariff lines, and their
scope has been reduced since 1996/97 (Table III.1);  alternate duties (29 items in 1996/97) are no
longer in force.  Such duties tend to be more opaque than ad valorem  duties and can therefore conceal
high rates.  Whereas specific duties presently cover 44 (8-digit HS) tariff lines (e.g. certain oil seeds,
vegetable plaiting materials, motor spirit, soya-bean and palm oil, liquid soda), compound duties are
applied to 3 lines (lubricating oil).  Ad valorem  equivalent (AVE) rates for these duties are not
available.
25. Pakistan introduced specific duties (set and settled in foreign currency), in July 1999, ranging
from US$5,000 to US$175,000 per unit on imports of passenger motor vehicles with an engine
capacity exceeding 800 cm3, for a period of one year.24  These duties favoured four-wheel-drive
vehicles with an engine capacity exceeding 1,600 cm3.25  In the light of the prohibitively high rate
(section 2(ii)(f)) that is regularly applied to automobiles of all types (250%), the only reason for
adopting specific duties seems to have been to reduce the ad valorem  customs duty burden for a
specific category of buyers (i.e. buyers of large engined four-wheel-drive vehicles).
                                                     
19 WTO document WT/L/102, 24 November 1995 .  Pakistan renegotiated modifications of its
pre-Uruguay commitments with nine contracting parties.
20 WTO documents G/SP/10, 13 January 1995 and G/MA/SP/2, 8 A ugust 1995.
21 WTO documents WT/L/216, 20 May 1997, G/C/W/200, 7 April 2000, and WT/L/400, 10 May 2001.
22 WTO document G/SECRET/HS96/40, 10 December 1998.
23 WTO documents G/MA/TAR/RS/61, 26 October 1999 and G/MA/TAR/RS/61 Corr.1, 5 May 2000.
24 Section 18 of Finance Act (1999) available online at:  http://www.cbr.gov.pk/customs/finance/
Act.pdf [24 July 2000].
25 Duties on all vehicles up to 1,600 cm3 range from US$5,000 to US$20,000 and are similar for
four- and two-wheel-drive cars.  For vehicles with higher engine capacity, the level of duties is significantlylower for four-wheel-drive cars;  for example, the rate for a two-wheel-drive vehicle with an engine capacityexceeding 4,200 cm
3 is US$175,000, against US$70,000 for a four-wheel-drive car with similar engine capacity.Pakistan WT/TPR/S/95
Page 31
05001,0001,5002,0002,500
Duty
free>0- 5 >5-10 >10-15 >15-20 >20-25 >25-30 >30-35 >35-40 >40-45 >4 5-50 >50-55 >55-60 >60-65 >65
Calculations exclude specific duties and include the ad valorem component of alternate and compound rates.  
WTO Secretariat calculations, based on data provided by the authorities of Pakistan.MFN 1996/97
MFN 2001/02Number of tariff linesChart III.1                                                
Distribution of MFN tariff rates, 1996/97 and 2001/02
Tariff rates
Note:
Sourc e:
(e) Applied MFN tariffs
26. Since its previous Review, Pakistan has introduced  changes to its tariff in accordance with the
scheduled implementation of binding commitments under the Uruguay Round, IMF-funded
programmes and domestic policy considerations.  Between 1993/94 and 2001/02 the overall simple
average applied MFN tariff rate fell considerably, from 56% to 20.4% as a result of tariff restructuring
(four main tiers and general high tier reduced to 30%).26  The simple average will fall slightly further
once the Uruguay Round tariff cuts are fully implemented (Table III.1).
27. Additional decreases in tariff protection may arise from the reduction of the currently applied
rate of 30% to 25% by June 2002.
28. The large and increasing gap between bound and applied rates (due to recent cuts in applied
rates) imparts a high degree of uncertainty to Pakistan's customs tariff (section 2(ii)(b)).  The
difference between average applied and bound rates in 2001/02 was much higher in the agriculture
sector (HS definition) than in the industrial sector (Charts III.2 and III.3).  Further uncertainty arisesfrom the fact that, in 2001/02, applied tariff rates on 91 eight-digit HS items (mostly textiles and
clothing) exceed their binding levels by up to 17 percentage points;  this number is lower than in
1996/97 (214 items) and 2000/01 (241 items).  The authorities are aware of this difficulty and have
taken steps to address it in the next Budget.
                                                     
26 GATT (1995).WT/TPR/S/95 Trade Policy Review
Page 32
29. In line with the downwar d trend in bound rates, and especially applied MFN tariff rates, the
average rate of customs duty collected on total imports has also dropped, from 24.5% in 1994/95 to
12.9% in 1999/00 (Chart III.4).  This collected duty rate has been considerably lower than the average
applied MFN rate.  The large, albeit declining, gap between these two rates may be attributed,
inter alia,  to the duty concessions still available on a large number of products (section 2(ii)(j),
Table III.2), the possibility that some tariff rates are prohibitive (i.e. automotive sector), andmisclassification of imports.
(f) MFN tariff dispersion
30. The potential efficiency losses associated with the customs tariff depend not just on the
average applied MFN tariff rates, but also on the dispersion of those rates across products.  Judging
from three of the four summary indicators (7-10) of tariff dispersion reported in Table III.1, thedispersion in applied tariff rates has declined as  a consequence of the changes introduced into the
2001/02 tariff;  that is, domestic and international tariff "peaks" as well as the standard deviation of
applied tariff rates have declined (the coefficient of variation has risen slightly).  However, these
summary indicators do not show the increasing concen tration of tariff lines in rates ranging between
10% and 30% (Chart III.1);  at present, 62 eight-digit HS items are subject to duties exceeding 30%.In 2001/02, imports of 9 eight-digit HS items (automobiles) bear the highest ad valorem  tariff of
250%, while one item (certain fermented beverages) is subject to the second highest rate of 200%, and
nine items (beer, other types of motor vehicles) to the third highest rate of 150%;  about 24 items
(wine, ethyl alcohol, spirits and spirituous beve rages, certain types of automobiles, trucks,
motorcycles) are subject to tariffs of 100% and 120%.
(g) MFN tariff escalation
31. Escalation remains an important feature of Pakistan's customs tariff in most sectors.  It is most
pronounced for fully processed goods (Chart III.5 and Table AIII.1).
(h) Regulatory duties
32. Pakistan appears to have reinstated regulatory duties on imports of edible oil at a rate of
five paisa (US$0.0042) per kg. (as from July 1999), a nd on oil seeds for crushing at a rate of 10% on
the amount of the customs duty collected (as from July 2000);  at the time of the previous Review,regulatory duties were apparently merged into the tariffs.
27  The stated purpose of this regulatory duty
is the development of a "Cess Fund" to finance the activities of the Pakistan Oilseed Development
Board.  (Regulatory duties are not reflected in the tariff indicators found in Table III.1.)
33. In July 2001, regulatory duties on several other items were abolished.28  Remaining regulatory
duties are to lapse gradually, in line with outstanding agreements with certain industries.
                                                     
27 SRO 816(I)/99, 1 July 1999;  SRO 372(I)/2000, 17 June 2000;  and GATT (1995).
28 These duties affected:  calcium chloride, urea fer tilizer, steel bars, formic acid, urea formaldehyde,
moulding compound, BOPP film, medium density fibre board, craft paper, sacks, and jute bags.WT/TPR/S/95 Trade Policy Review
Page 34
01020304050607080
25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 78 80 82 84 86 88 90 92 94 96Per cent
HS ChapterAverage applied rate
HS 25-97 (20.2%)
HS         Description
Chapter  
25          Salt; sulphur; earths and stone, etc.
26          Ores, slag and ash
27          Mineral fuels, mineral oils, etc.28          Inorganic chemicals; organic or 
              inorganic compounds of precious
              metals, etc.
29          Organic chemcials
30          Pharmaceutical products
31          Fertilizers    
32          Tanning or dyeing extracts etc. 
33          Essential oils and resinoids;
              perfumery, cosmetic or toilet              preparations
34          Soap, organic surface-active 
              agents washing prep., etc.    
35          Albuminoidal substances;
              modified starches; glues, etc.
36          Explosives; pyrotechnic products;
              matches, etc
37          Photographic or cinematographic 
             goods
38          Miscellaneous chemical products
39          Plastics and articles thereof40          Rubber and articles thereof
41          Raw hides and skins and leather
42          Articles of leather, etc.
43          Furskins and artifical fur; 
              manufactures thereof
44          Wood and articles of wood, etc.
45          Cork and articles of cork
46          Manuf. of straw, of esparto, etc.   
47          Pulp of wood or of other 
              fibrous cellulosic materialHS        Description
Chapter
48          Paper and paper board, etc.
49          Printed books, newspapers, etc.
50          Silk51          Wool; fine or coarse animal
              hair, etc.
52          Cotton
53          Other vegetable textile fibres 
54          Man-made filaments   
55          Man-made staple fibres 
56          Wadding, felt and non-wovens;
              special yarns; twine, cordage, etc.
57          Carpets; other textile floor              coverings
58          Special woven fabrics; lace, etc.
59          Impregnated, coated, covered or
              laminated textile fabrics, etc.
60          Knitted or crocheted fabrics    
61          Articles of apparel and clothing
              accessories, knitted or crocheted
62          Articles of apparel and clothing
              accessories, not knitted, etc.
63         Other made-up textile articles;
              sets, worn clothing, etc.64          Footwear, gaiters, etc.
65          Headgear and parts thereof
66          Umbrellas, walking-sticks, etc. 
67          Prepared feathers and down, etc.
68          Articles of stone, plaster, etc.
69          Ceramic products
70          Glass and glassware
71          Natural or cultured pearls,
              precious or semi-precious stones,
              precious metals, etc.HS         Description
Chapter
72          Iron and steel
73          Articles of iron and steel
74          Copper and articles thereof75          Nickel and articles thereof
76          Aluminium etc. 
78          Lead and artilces thereof   
79          Zinc and articles thereof 
80          Tin and articles thereof
81          Other base metals, etc.
82          Tools, implements, cutler
              spoons and forks, etc.
83          Misc. articles of base metals84          Nuclear reactors, boilers,
              machinery, etc.
85          Electrical machinery and
              equipment, etc.
86          Railway or tramway 
              locomotives, etc.
87          Vehicles other than railway
              or tramway rolling-stock; etc.
88          Aircraft, spacecraft, etc.
89          Ships, boats, etc.
90          Optical, photographic, etc.               apparatus
91          Clocks and watches, etc.
92          Musical instruments, etc.
93          Arms and ammunition, etc.
94          Furniture, bedding, etc.
95          Toy, games, etc.
96          Miscellaneous manuf. articles
97          Works of art, antiques, etc.Chart III.3
Average tariff rates on manufactured products by HS chapter, 2001/02 and 2004/05
26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 79 81 83 85 87 89 91 93 95 97Average bound rate 
HS 25-97 (45.4%)
Overall average applied rate 
HS 01-97 (20.4%)Applied rate (2001/02)
Bound rate (2001/02)
Average final bound rate 
HS 25-97 (43.9%)Final bound rate (2004/05)
Calculations exclude specific duties and include ad valorem parts of compound rates.  The absence of average bound rates for most 
chapters is due to these chapters remaining unbound.  
WTO Secretariat calculations, based on data provided b y the authorities of Pakistan.Note:
Source:Pakistan WT/TPR/S/95
Page 35
051015202530354045
1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01Chart III.4                                      
Share of customs duties collection in total import value and indirect tax revenue, 1994-2001
Per cent
Share of custom duties in total import valueShare of custom duties in total indirect tax revenue
Source : Ministry of Finance, Economic Survey 2000-2001,  Appendix Tables 4.3 and 8.2 [Online].  Available at:
http://www.finance. gov.pk/ [21 Se ptember 2001].
(i) Duty concessions/exemptions
34. In recent years, Pakistan has contained the expansion in the scope of duty (and related tax
concessions) in form of exemptions or deferred payment (Table III.2);  at present, more than 60 legal
texts (SROs) provide for activity- or industry-specific concessions that exclude items produced locally(thus protecting local industry);  no expiry date has been defined for these concessions.  In June 2000,
several duty (and related tax concessions) affecting machinery, equipment or parts for special
industrial zones, sea ports, oil or gas projects, agri-based industries, hi-tech industries, pharmaceutical
industries, were eliminated or replaced (i.e. hi-tech industries, export industries, pharmaceuticals).
35. Payment of half of customs duties on machinery and spare parts for any project may be
deferred for a period up to three years upon submission of a bank guarantee, undertaking/collateral
guarantee and payment of surcharges at an annual rate of 14%, calculated on six monthly basis;deferred payment for whole or part of the dutie s on import of machinery and spare parts for power,
gas, and energy projects is subject to an 18% annua l surcharge (which is substantially more than the
inflation rate and nominal interest rates).
29
                                                     
29 SRO 490(I), 30 May 1991 and SRO 36(I), 15 January 1994.WT/TPR/S/95 Trade Policy Review
Page 36
01020304050607080
Food,
beverages
and tobaccoTextiles and
leatherWood and
furniturePaper,
printing and
publishing Chemicals Non-metallic
mineral
products Basic metal Fabricated
metal
products and
machineryOtherChart III.5
Tariff escalation by 2-digi t ISIC industry, 1996/97 and 2001/02
Calculations exclude specific duties and include the ad valorem component of alternate and compound rates.  
WTO Secretariat calculations, based on data provided b y the authorities of Pakistan.01020304050607080
Food,
beverages
and tobaccoTextiles and
leatherWood and
furniturePaper,
printing and
publishingChemicals Non-metallic
mineral
products Basic metal Fabricated
metal
products and
machineryOtherAverage applied rate in manufacturing
(42 1%)
Note:
Source :Per cent
First stage  of process ing Fully processed Semi-processedPer cent
Average applied rate in manufacturing
(20.9%)1996/97
2001/02Pakistan WT/TPR/S/95
Page 37
Table III.2
Main duty and sales tax concessions, as of 2000/01
Activity Type of concession Entry into
forceExpiry date
A. Concessions on imports of machinery and equipment not manufactured locally
Machinery, equipment and tools for  the manufacture of
jewelleryExemption from customs duty 10.04.1989 18.06.2001
Machinery Deferment of customs duty 30.05.1991 Undefined
Imports relating to power, gas and energy projects
(Rules 1994)Deferment of customs duty 15.01.1994 Undefined
Machinery and equipment including coal mining equipment
for balancing, modernization, extension/setting up of new
power generation projectsExemption from customs duty 02.04.1994 Undefined
Machinery, equipment materials etc. for projects of the
petroleum sectorExemption of customs duty in
excess of 10% (i.e. applied rate is
10%)09.05.1994 Undefined
Specific machinery of specified export-oriented industries Exemption of customs duty in
excess of specified rates09.06.1994 18.06.2001
Raw materials for manufacture of goods by industries that
commence commercial operations up to 30.06.1999 in
Special Industrial ZonesExemption from 25% of customs
duty19.01.1995 Undefined
Machinery and equipment for setting up hydel power
generation projectsExemption of customs duty in
excess of 10% (i.e. applied rate is
10%)30.05.1995 Undefined
Machinery and equipment for transmission system projects
and grid stationsExemption of customs duty in
excess of 10% (i.e. applied rate is
10%)04.06.1995 Undefined
Machinery and equipment for setting up or for balancing,
modernization, and extension of power generation through
oil, gas, coal, wind, and wave energy projectsExemption of customs duty in
excess of 10% (i.e. applied rate is
10%)01.07.1995 Undefined
Machinery, equipment, chemicals etc. for Iran-Pak Refinery
at Hub, BaluchistanExemption from total customs duty
and sales tax25.04.1996 Undefined
Machinery, equipment, spares, chemicals imported by foreign
mining companiesExemption from customs duty in
excess of 5% (i.e. applied rate is
5%) and whole of sales tax, till the
commencement of commercialproduction;  and from customs duty
in excess of 10% (i.e. applied rate is
10%) and whole of sales tax aftercommencement of commercial
production.09.05.1996 Undefined
Machinery, equipment, and construction material for imports
under contracts C01 and C02 of Ghazi Brotha Project.Exemption from customs duty 05.03.1997 Undefined
Machinery, equipment, materials, specialized vehicles,
accessories, spares and chemicals as are not manufacture
locally, if imported by Exploration and Production
Companies including O.G.D.C.Exemption from customs duty 31.05.1997 Undefined
Components, sub-assemblies and assemblies to the extent of
10 percentage points compared with leviable rates on the
finished goods to be produced by such imported components,
sub-assemblies and assembliesExemption from customs duty 13.06.1997 Undefined
Machinery, equipment and construction materials imported
by WAPDA or its contractors for Ghazi Brotha Hydro Power
Projects (in excess of 2%)Exemption of customs duty in
excess of 2% (i.e. applied rate is
2%)28.07.1997 Undefined
Table III.2 (cont'd)WT/TPR/S/95 Trade Policy Review
Page 38
Activity Type of concession Entry into
forceExpiry date
Import of machinery (not manufactured locally) by
engineering units for export related productionExemption from customs duty.
limited up to 200% of the export
value during the preceding financial
year of the claimant and shall be
available up to 30 June 2000.07.08.1997 Undefined
Plant and machinery if imported by the service sector, social
sector, and agricultural sectorExemption of customs duties in
excess of 10% (i.e. applied rate is
10%) and whole of sales tax17.01.1998 Undefined
Machinery, equipment, conversion kits and cylinders, if
imported by CNG companies during the period from
1 November 1997 to 31 October 2002Exemption from whole of customs
duty and sales tax21.01.1998 Undefined
Machinery, equipment, materials, specialized vehicles,
accessories, spares, chemicals and consumables, if imported
for the oil pipe line projectsExemption from whole customs
duty and sales tax04.04.1998 Undefined
Cellular phones if imported by the recognized cellular mobile
companiesExemption from customs duty in
excess of PRs 1,250 per cellulartelephone (hand-held set) along
with one battery  and a battery
charger, and whole of sales tax02.06.1998 18.06.2001
Machinery or spares thereof, imported for setting up a
manufacturing unit or for the expansion, balancing,
modernization, and replacement of existing unitsExemption from customs duty and
sales tax12.06.1998 Undefined
EM-2 contractors (M/s Cegelec of France and M/s Marubeni
of Japan) working on Chashma Hydro Power ProjectExemption from customs duty in
excess of 5% (i.e. applied rate is
5%)18.06.1998 Undefined
Plant and machinery if imported by specified Hi-Tech
industries, engineering/capital goods/chemicals agri-based
and other industries and value added or export industriesExemption from whole of customs
duty and in case of engineering/
capital goods/chemicals agri-basedand other industries exemption of
customs duties in excess of
10% (i.e. applied rate is 10%)17.06.2000 Undefined
B. Concessions on imports of raw materials and components
Raw materials for manufacture of wires and cables, bolts,
nuts and machine screws, tubing for transformers, wire rope,
welding electrodes, aluminium rod, etc.Exemption of customs duty in
excess of 10%11.06.1983 Undefined
Raw materials and components not produced or manufactured
locally for manufacture of machinery equipment etc., to be
supplied to electric power generation projectsExemption of customs duty 02.04.1994 Undefined
Raw materials and components for the manufacture of
machinery, equipment, materials etc. to be subject to the
petroleum sector companiesExemption from  customs duty in
excess of 10% (i.e. applied rate is
10%)09.05.1994 Undefined
Raw materials, sub-components, and components of
agricultural equipment and machineryExemption from customs duty in
excess of specified rates and sales
tax09.06.1994 Undefined
Raw materials, sub-components, and components for the
manufacture of specified consumer durable goodsExemption of customs duty in
excess of specified rates and sales
tax09.06.1994 Undefined
Raw materials and components to be used in the manufacture
of machinery equipment, vehicles, intermediate goods, and
capital goods to be supplied against International TendersExemption from customs duty 03.07.1994 Undefined
Raw materials, sub-components, and components for use in
the manufacture of special goods meant primarily for export
or supply to industrial units entitled to import them at
concessionary ratesExemption form whole of customs
duty and sales tax14.06.1995 Undefined
Materials used in the manufacture of goods supplied to
industrial units or project entitles to concessionaryRepayment of customs duties 14.06.1995 Undefined
Table III.2 (cont'd)Pakistan WT/TPR/S/95
Page 39
Activity Type of concession Entry into
forceExpiry date
Materials, components, modules, and sub-assemblies for the
manufacture of electronic equipment and systemsExemption from customs duties in
excess of specified rates and sales
tax14.06.1995 Undefined
Raw material, sub-components, and components for
manufacture of automotive vehicles and their
components/sub-assembliesExemption from customs duty in
excess of specified rates.08.01.1996 Undefined
Karachi Shipyard and Engineering Works on raw materials,
components, machinery etc. for use in building/repairing
ships, boats, etc.Exemption from duty in excess of
20% (i.e. applied rate is 20%) forlocal use and from whole of
customs duty for exports13.06.1996 Undefined
Goods imported by manufacturers-cum-exporters of gems
and jewelleryExemption from customs duty 07.08.1997 18.06.2001
Conditional exemption of import duties  of raw materials and
components as are not manufactured locallyExemption from customs duty 12.06.1998 Undefined
Raw materials and packing materials for manufacture of
pharmaceutical products, drugs, and pharmaceutical active
ingredientsExemption from customs duty in
excess of 10% (i.e. applied rate is
10%)17.06.2000 Undefined
C. Other
Goods for manufacture of leather made-ups Exemption of customs duty in
excess of 20% (i.e. applied rate is
20%)26.12.1990 Undefined
Ships for scrapping (Rules 1993) Deferment of customs duty 31.03.1993 Undefined
Ground handling equipment Exemption from customs duty 08.09.1998 Undefined
Hemodialysis machines, etc. Exemption from customs duty and
sales tax28.11.1998 Undefined
Source: Various SROs contained in Central Board of Revenue (1999a), Pakistan Customs Tariff , Volume II Allied
Notifications & Orders, 15th Edition, Islamabad;  SROs contained in Central Board of Revenue of Pakistan online
information.  Available at:  http://www.cbr.gov.pk/budget/sro.htm [24 July 2000];  and Government of Pakistan.
(j) Tariff preferences and rules of origin
Preferences
36. Pakistan continues to grant limited preferential tariff treatment on imports from:  Iran and
Turkey under the additional Protocol on Preferential Tariff of the Economic the Co-operationOrganization (16 items);  signatories to the GATT Protocol relating to Trade Negotiations among
Developing Countries (12 items);  the Global System  of Trade Preferences;  Iran, Afghanistan, China,
and Nepal (17 product categories)
30;  and countries participating in the SAARC Preferential Trading
Arrangements (SAPTA) (677 products, mainly conf ined to items originating in least developed
participants, as from July 2000) (Chapter II(6)(ii)(b)).  Preferential treatment has taken the form oftariff cuts (between 10% and 30%) or a fixed cu stoms duty (i.e. 25% lower than the rate otherwise
applied) depending on the arrangement.
Rules of origin
37. Since its previous Review, Pakistan has not applied non-preferential rules of origin.  Pakistan
uses the rules of origin criteria set under each preferential scheme cited above;  minimumlocal-content requirements range from 30% (S APTA, least developed member) to 50% (GATT
                                                     
30 These preferences affect only imports by land and include all manufactured articles, manufactured
tobacco, silk, motor vehicles and parts thereof,  tea, apples, etc. (S RO 492(I)/88, 26 June 1 988 and subsequent
amendments)WT/TPR/S/95 Trade Policy Review
Page 40
Protocol, SAPTA regional content) of the f.o.b. value of the product concerned.31  In the context of
the WTO Committee on Rules of Origin, in 1999 Pakistan emphasized the need for prompt
completion of the work on harmonization in this area;  it believes that interim arrangements have
trade restrictive, distortive, and disruptive effects, in particular for developing countries.32
(iii) Customs valuation
38. As of January 2000, Pakistan replaced its Import Trade Price (ITP)33 valuation system with
the declared "transaction value" method unde r the WTO Agreement on Customs Valuation.
Nevertheless, a provision for the setting of minimum values remained in force, although it had not
been invoked by November 200034;  at the time of completion of this Report, the authorities indicated
that this provision will only apply upon authorization by the WTO (i.e. granting of waiver for
retention of minimum values).  Under a Custom s Valuation Information System (CVIS), Customs
stations are being connected through a computer network to exchange data on assessed import values
of each individual consignment on a daily basis;  upon arrival of this data at one central location and
scrutiny by the System Administrator, the entire database may be accessed by the general public (on
the Internet) and the Customs stations.35
39. Upon acceptance of the WTO Agreement, Pakistan invoked Article 20.1 of the Agreement on
Customs Valuation to delay its application for a five-year period.36  To implement the Agreement on
Customs Valuation, Pakistan amended the relevant provisions of the 1969 Customs Act in July 1999
and in 2000;  the date of entry into force of these amendments, which were notified to the WTO, was
to be announced in the official gazette.37  Under these amendments, the authorities may, inter alia,
seize and sell under-invoiced merchandise.
40. Pakistan has received WTO and WCO technical assistance (seminars, workshops) for
implementing the Agreement in Customs Valuation.38  In the context of the WTO General Council, in
1999 Pakistan suggested a multilateral solution to valuation problems;  this would entail access to
information on values contained in the export declaration from the customs authority of the exporting
country, and certain modifications to the valuation methods.
                                                     
31 WTO document G/RO/N/16, 5 March 1997;  and GATT (1995).
32 WTO document WT/GC/W/354, 11 October 1999.
33 Following the cancellation of preshipment inspection contracts, between March 1997 and
December 1999, Pakistan reverted to the ITP valuation system, which was based upon the Brussels Definition of
Value.  Values were updated every three months (or one month for goods with abrupt price fluctuations), andwere set on an "all origin" basis;  values of identical/similar goods originating from any "economic zone" of thesame economic level were fixed on an eight-zone basis (U.S. Commercial Service, 1999a).
34 Finance Act (1999), available online at:  http://www.cbr.gov.pk/customs/finance/Act.pdf
[24 July 2000].  To continue using a system of minimum values, Pakistan should have invoked the reservation
in paragraph 2, Annex III of the Agreement on Custom s Valuation prior to its da te of application (i.e.
1 January 2000);  Pakistan did not invoke this provision.
35 Central Board of Revenue online information, Customs Valuation Information System .  Available
at:  http://www.cbr.gov.pk/ncvis/index.html [24 July 2000].
36 Pakistan invoked Article 20.2 (delayed application computed value) and paragraphs 2, 3, and 4 of
Annex II (reservation concerning minimum values, reversal of sequential order of Articles 5 and 6 and
application of Article 5.2).  WTO documents WT/LET/1, 27 January 1995 and G/VAL/W/25, 24 April 1998.
37 WTO documents G/VAL/W/78/Rev.1, 10 November 2000 and G/VAL/N/1/PAK/1, 15 May 2001.
38 WTO documents G/VAL/8, 21 October 1996, G/VAL/W/25, 24 April 1998, G/VAL/8/Add.3,
4 May 1998, Job(99)/3169 and Add. 1, 7 June 1999, G/VAL/M/10, 6 September 1999, G/VAL/W/39,14 September 1999, G/VAL/8/Add.6, 27 January 2000, and WT/GC/W/354, 11 October 1999.Pakistan WT/TPR/S/95
Page 41
(iv) Import deposits
41. Since its previous Review, Pakistan has imposed minimum cash-margin requirements on the
opening of all import letters of credit at rate s of 30% (from Ju ly 1998 to February 1999) and 35%
(from October 1999 to July 2000)39;  in both cases the requirement was withdrawn progressively.  The
authorities indicated that there is no intention to reintroduce such requirements.
(v) Other levies and charges
42. A few withholding-type taxes have also been levied on imports.  As of July 2000, the rate of
the withholding tax (section 4(i)(a)) was increased from 5% to 6% (edible oil at 3%) of the c.i.f. value
plus customs duties plus taxes and charges on virtually all imports.40  This tax is, in principle,
deductible from income tax, which means that it does not constitute an additional levy on imports as
long as the income taxes payable are sufficient to be offset by the tax.  If the importer is in anon-taxpaying position, however, (e.g. because the importer is operating at a loss for income tax
purposes, or enjoying a tax holiday), the levy is effectively an import surcharge.  (The same applies to
similar types of withholding taxes on exports (section (3)(ii).)
(vi) Import prohibitions, restrictions, and licensing
43. Import prohibitions or restrictions are operated for the protection of health, national security,
environmental conservation, as well as on religious or commercial grounds in accordance with
domestic legislation or international commitments.  Imports of any good from any source may be
temporarily or permanently suspended to protect public interest.  Imports from countries applying
discriminatory measures against Pakistan's exports may also be restricted.41  The terms and conditions
governing importation are set annually, and are currently found in three Orders.42
(a) Import prohibitions
44. Since its previous Review, Pakistan has continued to prohibit imports of several items
contained in its negative list (Table III.3, Section A) on an MFN basis;  the number of items in this list
seems to have been reduced.43  The main prohibitions on commercial grounds affecting numerous
textiles and clothing articles and chassis for trucks were phased-out between July 2000 and
January 2001;  these prohibitions were introduced for balance-of-payments reasons (GATT 1994
Article XVIII:B) in 1997.44  As of September 2000, Pakistan prohibited imports of raw sugar below
                                                     
39 Initially, cash-margin requirements were imposed at rates of 10% (industrial raw materials) and 20%
(machinery and parts) but were soon withdrawn.  WTO documents WT/BOP/S/11, 28 March 2000 andWT/BOP/N/51, 7 July 2000;  State Bank of Pakistan, BPRD Circulars Nos. 03, 05, 08, 33, 37, 38 of 1999 andCircular No. 15 and 19 of 2000.  Available online at:  http://www.sbp.org.pk/bprd/index.htm[18 September 2000].
40 The following importers are exempt:  provincial and local authorities;  foreign companies held by a
foreign government;  importers of machinery and equipment for setting up industry;  importers entitled to tax
holiday, etc. (Ministry of Finance (2000a)).
41 Article 1.4 of the Import Policy Order (1999), SRO 895(I)/99, 3 August 1999.
42 The Import Policy Order, the Import Export Procedure Order, and the Import Trade Order, issued
from time to time (latest issue 6 July 1998).
43 In September 2000, the list contained 71 items (excluding those of general nature) under around
121 HS headings, compared with 75 in 1994 (GATT, 1995).
44 In October 1997, Pakistan submitted to the WTO a list of BOP-restricted items (textile and clothing
products, chassis), but a phase-out programme was announced only one year later;  in July 2000, thisprogramme was temporarily suspended due to a worsening in the BOP situation (WTO documentsWT/BOP/N/31, 31 October 1997, WT/BOP/N/31/Add.1, 31 October 1 997, WT/BOP/N/40, 12 November 1998,WT/TPR/S/95 Trade Policy Review
Page 42
the grade of 600 ICUMSA45;  this measure seems to be no longer in force.  Imports of beef from the
United Kingdom and Northern Ireland, and of animal bones from Afghanistan are not allowed.46
Other changes to the negative list include the withdrawal of a number of products prohibited oncommercial grounds (potatoes, certain textiles and clothing items) and the introduction of two items
on environmental grounds (waste plastics, pressure horns).  Certain public-sector agencies may import
prohibited items for their own use provided th ey pay for them from their foreign exchange
allocation.
47
Table III.3
Main import prohibitions, restrictions, and rights, as of 2001
A. Negative list
General
The import of the following items, unless specifically authorized (see Section B and below), is prohibited:
(a) Translation of the Holy Quran without Arabic text;
(b) Goods (including their containers) bearing any words or inscription of a religious connotation, the use or disposal of whic h may
injure the religious feelings of any sect, class, or group in Pakistan;
(c) Goods (including their containers) bearing any obscene pictures, writings, inscriptions, or visible representations;(d) Obscene and subversive literature and anti-Islamic literature;
(e) Second-hand machinery, commodities or reconditioned goods or factory rejects and goods of job-lot, stock-lot or sub-standar d
quality except for used books, magazines, journals, clothing (including footwear, travelling rugs, and blankets), certain
waste/seconds/cuttings of iron and steel/stainless steel)/tin sheets and plates and re-rollable scrap;
(f) Any goods containing ingredients or parts which may be repugnant to the Injunctions of Islam as laid down in the Holy Quran
and Sunnah of the Holy Prophet (peace be upon him), including products and by-products of pigs, hogs, boars or swine;
(g) Dyes based on benzidine or containing it;(h) Hazardous wastes as defined and classified in the Basle Convention;(i) Any edible product not fit for human consumption;  and(j) Alcoholic beverages and spirits, including brewing and distilling dregs and waste, and wine lees and argol.
Prohibited product list (specific items)
HS item Description
1211.9010 Cannabis herbs and coca leaves
1301.9010 Cannabis resin and cannabis balsams
1302.1100 Opium
1302.1920 Concentrate of poppy straw;  extracts and tinctures of cannabis
2921.5900 Other (benzidine and its derivatives)
2925.1110 Paraphene-tole carbamide and 5-Nitro-2nd proxy-aniline in both tablet and powder or crystalline
forms
2930.9010 Allyl-isothio-cyanate
2939.3010 Caffeine citrate
3604.1000 Fireworks
3604.9090 Other (pyrotechnic articles)
3704.0010 Cinematograph film wholly or partly exposed in any Pakistani or Indian language, with or
without a sound track and depicting Pakistani or Indian way of living either silent or dubbed, or
in which leading roles have been played by Pakistani or Indian actors or actresses
Table III.3 (cont'd)
                                                                                                                                                                    
WT/BOP/N/51, 7 July 2000, WT/BOP/N/53, 13 Decembe r 2000, WT/BOP/N/53/Add.1, 10 January 2001, and
WT/BOP/N/53/Add.2, 10 January 2001).
45 State Bank of Pakistan, F.E. Circular No. 18.  Available online at:  http://www.sbp.org.pk/femanual/
FE%20Circulars/2000/2000.htm [6 October 2000].
46 CBR Import Policy Order (1999).  Available online at:  http://www.cbr.gov.pk/ [19 July 2000].
47 Public sector agencies with foreign exchange a llocation are specified in Appendix D of Import and
Export Procedure Order (1999), August 1999.Pakistan WT/TPR/S/95
Page 43
3706.0000 Cinematograph film wholly or partly exposed and developed in any Pakistani or Indian language,
with or without a sound track and depicting Pakistani or Indian way of living, either silent or
dubbed, or in which leading roles have been played by Pakistani or Indian actors or actresses
3915.1000, 3915.9000 Waste, parings and scrap, of polyethylene and polypropylene plastics
4012.1000 Retreaded tyres
4012.2000 Used pneumatic tyres
4301.0000 to 4303.0000 Furskins and manufactures thereof, other than raw furskins and tanned or dressed furskins of
sheep, lambs, rabbits, goats, kids thereof and calf
6812.5010 Clothing (of asbestos)
8438.4000 Brewery machinery
8512.3000 Pressure horns
8710.0000 Tanks and other armoured fighting vehicles, motorized, whether or not fitted with weapons and
parts of such vehicles, other than armoured security vans
9301.0000 Artillery weapons, machine-guns, sub-machine-guns, automatic rifles of all calibre and other
military fire-arms and projectiles (other than revolvers and pistols)
9302.0010 Revolvers and pistols of prohibited bores and of calibers higher than 0.46 inches bore
9303.3020 Arms of prohibited bores including semi-automatic rifles of 7.62 mm and rifles of 8 mm to 9 mm
bores
9303.3030 Arms of calibers higher than 0.22 bore rifles
9303.9000 Other (fire arms and similar devices which operate by firing of an explosive charge)
9304.0000 Other arms (for example, spring, air or gas guns and pistols truncheons), excluding those of
heading No. 9307
9305.1000 and 9305.2000 Parts and accessories of articles of heading No. 9301 to 9304, excluding parts and accessories of
heading No. 9305.2900 barrel blanks for recoilless rifles, guns, and mortars
9306.1000, 9306.2110,
9306.2900, 9306.3019,9306.3029, 9306.3090 and
9306.9000Parts of ammunition and ammunition, except ammunition for weapons of non-prohibited bores
9508.0010 Gambling equipment
B. Prior approval, recommendation and/or clearance requirements (compliance with health and safety requirements)
Item Requirement/agency
Animal semen Recommendation and clearance/Livestock Division
Animals and plants, dead or alive,
including any recognizable part or
derivatives thereof specified in
Appendices I, II and III to theConvention on International Trade
in Endangered Species of WildFauna and Flora.Prior approval/Ministry of Food and Agriculture
Cotton seed Prior approval/Ministry of Food and Agriculture
Sugarcane seeds and banana
suckersPrior approval/Department of Plant Protection
Vegetable seeds, seed potatoes,
flower seeds and other field crop
seeds including tubers, rhizomes,
roots, cuttings, etc.Drawing of seeds samples and testing of seed quality/Federal Seed Certification
Agency (Ministry of Food & Agriculture)
Radioactive material and radiationapparatusPrior approval/Directorate of the Pakistan Nuclear Safety and Radiation Protection (Pakistan
Atomic Energy Commission)
Calcium carbide, whether or notchemically defined.Prior approval/Department of Explosives
Explosives Prior approval/Department of Explosives
Steam and vapour generating
boilers (other than central heatinghot water boilers capable also of
producing low pressure steam) and
super-heated water
boilers (HS 8402.0000)Prior approval/Chief Inspector of Boilers
Table III.3 (cont'd)WT/TPR/S/95 Trade Policy Review
Page 44
Used or refurbished cylinders (for
compressed or liquid gas) for usein motor vehiclesSafety certificate/Department of Explosives
Petroleum oils and oils obtained
from Bituminous minerals, crude
and processed.Recommendation/Ministry of Petroleum and Natural Resources or Department of Petroleum and
Energy Resources
Drugs and medicines (allopathic) Registration/Ministry of Health
Security paper Recommendation/Security Printing Corporation of Pakistan
Second-hand aircraft andhelicoptersRecommendation/Ministry of Defence and Aviation
Second-hand ships for carrying
cargo and passengers, oil tankers,
liquid cargo carriers, and fishing
trawlers.Certificate of sea worthiness/Mercantile Marine Department
C. Import rights to authorized or registered entities or firms
Item Beneficiary
Barrel blanks for recoilless rifles,
guns and mortars and other parts
and accessories of armsPublic sector units authorized to manufacture arms
Ingredients for formulation/
manufacture of pesticidesIndustrial consumers
Lube base oils Lube/oil marketing companies, refineries and lube oil blending plants
Mineral oils Importable by the industrial or commercial importers, including lubricant blending, Lube Oil
marketing companies and refineries on the recommendation of the Ministry of Petroleum and
Natural Resources or Department of Petroleum and Energy Resources
Pharmaceutical (allopathic) rawmaterial of pharmaceutical grade in
the form of unprocessed
ingredientsPharmaceutical industries holding valid pharmaceutical manufacturing licence
Silver (including silver plated with
gold or platinum) gold (includinggold plated with platinum),
unwrought or in semi-
manufactured forms or in powder
formCompanies specifically registered and authorized/Ministry of Commerce
Large agriculture tractors in CKD
conditionRecognized assemblers and prospective investors for progressive manufacturing
Motor cars and other motor
vehicles, principally designed for
the transport of persons (other than
those specified in HS heading87.02) including station-wagons
and racing cars in CKD conditionRecognized assemblers as per deletion programme approved by the Ministry of Industries and
Production
Armoured security vans, includingsecond handBanks and security companies for their own use, or for another bank or security company
Aircraft, spacecraft, except aircraft
partsPublic sector agencies, private sector airlines, private flying clubs, charter and aviation services,
and charitable foundations with valid licences/Ministry of Defence
TV transmission antenna system,
field pick-up units STL equipment,VHF set, TV modulator and
demodulator, video projection
systems, and video switching
systemPakistan Television Corporation and other licensed by the Federal Governments
Transmission apparatus whether or
not incorporating reception
apparatus, excluding fax machinesPakistan Television Corporation Ltd., concerned public sector agencies, and companies having
agreement with government agencies for supply of cellular and mobile phone facility and
recognized manufacturers and their authorized agents
Source: Government of Pakistan.
45. Although imports of second-hand machinery, re conditioned goods or any kind of factory
rejects are prohibited, some second-hand or used goods not manufactured locally are importablePakistan WT/TPR/S/95
Page 45
subject to certain conditions (Table III.3, Sections A and B)48;  imports of permissible second-hand
machinery are subject to preshipment inspection, however, to ensure that the machinery has
reasonable useable life.
46. Pakistan prohibits all imports from Israel;  it has increased progressively the number of
(HS) items that may be imported from India from 571 (1993) to 603 (as of July 2000).49
(b) Import approval and restrictions
47. Pakistan maintains that it does not operate an import licensing system;  nonetheless, prior
approvals/recommendations/clearance requirements implicitly entail import licensing.50  As of
September 2000, Pakistan had notified its regulatory framework on import-licensing procedures;  but
it has not submitted any replies to annual questionnaires on its import licensing procedures.51
48. At present, imports of several products are subject to prior approval, recommendations, and
clearance from different ministries/departments in  accordance with safety and health requirements
(Table III.3, Section B).  Import authorization from the Ministry of Commerce is required mainly in
the case of the importation, by certain entities, of otherwise banned items:  foreign airlines, oil and gas
companies, refineries and mining companies, fore ign construction companies, and foreign contracting
firms engaged in various projects in Pakistan;  and where no foreign exchange is involved.
49. Certain products may be imported only by the public sector or industrial consumers
(Table III.3, Section C).  Imports of 19 product categories are subject to various conditions, such as
receipt of certificates by suppliers, payment for imports from the importer's own foreign currency
account, etc.  Although Pakistan does not maintain any quantitative restrictions, certain imports (e.g.
ozone depleting substances, certain chemicals) are subject to quantitative limits determined on a
domestic needs basis or by the Central Board of Revenue in consultation with competent government
agencies.
(vii) State-trading
50. Despite efforts to reduce its involvement in the economy, the State participates in a
wide-range of trade and/or trade-related activities (Table III.4).  Participation seems particularly
pronounced in the following activities:  trade in certain essential commodities;  production/marketing
of vegetable ghee, fertilizers, chemicals, cement, tr ansport equipment, fuels, machine tools;  oil and
gas exploration and exploitation;  power production and distribution;  financial, telecommunication,
transport, tourism, and engineering services.  Gove rnment-owned industrial enterprises are thought to
employ almost 46,000 workers.52
                                                     
48 Other exceptions include used books, magazines, journals, clothing (including footwear, travelling
rugs, and blankets), certain waste/seconds/cuttings of iron and steel/stainless steel/tin sheets and plates andre-rollable scrap.
49 Export Promotion Bureau (2000);  and Appendix E of the Import & Export Procedure (1999),
SRO(I), 898(I)/99, August 1999.
50 WTO document G/LIC/N/1/PAK/1, G/LIC/N/2/PAK/1, 29 May 1996.
51 WTO document G/LIC/W/13, 21 September 2000.
52 U.S. Commercial Service (1999a).WT/TPR/S/95 Trade Policy Review
Page 46
Table III.4
State involvement in enterprises in Pakistan, 2001
Entity ActivityDegree of state ownership/situation
in privatization programme
GOODS
Agriculture
Trading Corporation of Pakistan (merged with
Cotton Export Corporation of Pakistan and RiceExport Corporation of Pakistan)Trading of essential commodities Not included in the privatization
programme
Manufacturing (including food processing)
Industries and production
A&B Industries Gases Production of cooking oil/ghee 100% / excluded from privatization
programme.  Liquidation under process
A&B Oil Industries .. 100% / privatized
Al-Abbas Ltd. (Rice) .. Not included in the privatization
programme
Bela Engineering Ltd. Manufacture/assembly of diesel engines 100% / liquidated
Bolan Textile Mills Qeutta Textile:  spinning, weaving, processing 100% / privatization under process
Civic Centres Corporation Not included in the privatization
programme
Dir Forest Industry Complex Production of plywood 100% / excluded from privatization
programme and transferred to
provincial government
Domestic Appliances Ltd. - JV Production of domestic appliances Not included in the privatization
programme
E&M Oil Mills Production of cooking oil/ghee 100% / privatization under process
ENAR Petrotech Services (Pvt) Ltd. Technical consultancy;  feasibility
studies;  energy conservation studies;
technology/process evaluation;conceptual/basic/process engineering
design;  procurement services;  project
management services;  supervision ofinstallation and commissioning
operations;  installation services for
instrumentation systems.Not included in the privatization
programme
Federal Ceramics and Chemical Corporation Production of ceramics and chemicals Not included in the privatization
programme
Ghee Corporation of Pakistan Several firms producing ghee and
cooking oilNot included in the privatization
programme
Harnai Woollen Mills Manufacture of woollen fabric and
blankets81.4% / liquidated
Hazara Phosphate Fertiliser Ltd. Production of phosphate fertilizer 100% / privatization under process
Heavy Electrical Complex Production of power transformers. Not included in the privatization
programme
Heavy Mechanical Complex (HMC) Design, manufacture and supply of
industrial plants and machineryincluding complete sugar mills, portland
cement plants and white cement plant,
etc.Not included in the privatization
programme
Karachi Pipe Mills Ltd. Production of G.I. & M.S. pipes Not included in the privatization
programme
Koh-i-Noor Oil Mills Production of cooking oil/ghee 45.69% / excluded from privatization
programme
Larkana Sugar Mills Sugar manufacture 100% / liquidated
Lasbella Textile Mills, Ulhal Textile spinning, weaving, processing 100% / privatization under process
Lyallpur Chemicals and Fertilizer Ltd. Fertilizer manufacture 75% / privatization under process
Maqbool Oil Mills Production of cooking oil/ghee 61.85% / privatization under process
Morafco Industries Production of cooking oil 53.10% / privatization under process
Table III.4 (cont'd)Pakistan WT/TPR/S/95
Page 47
Entity ActivityDegree of state ownership/situation
in privatization programme
National Fertilizer Corporation Several firms producing fertilizers Not included in the privatization
programme
National Fertilizer Marketing Ltd. Marketing of fertilizers Not included in the privatization
programme
National Refinery Ltd. .. Not included in the privatization
programme
Northern foundry and Engineering works .. Not included in the privatization
programme
Nowshera Engineering Company Ltd. .. Not included in the privatization
programme
Pak-American Fertilizer Marketing Ltd. Fertilizer manufacture 100% / privatization under process
Pak-Arab Fertilizers Ltd. Fertilizer manufacture:  nitro phosphate,
CAN, urea, ammonia, and nitric acid48% / privatization under process
Pak-Dye Chemicals Production of chemical dyes 100% / privatization under process
Pak-Iran Industry Ltd. – JV .. 100% / privatization under process
Pakistan Automobile Corporation .. Not included in the privatization
programme
Pakistan Engineering Company Ltd. Engineering products:  machine tools,
electric motors, pumps, bicycles, powerlooms, transmission towers, steelfabrication65% / privatization under process
Pakistan Industrial Development Corporation .. Not included in the privatization
programme
Pakistan Machine Tools Factory (PMTF) Manufacturing of center lathes, milling
machines, turret milling, copy milling
and boring milling machines,automotive parts such as gear boxes,
transfer cases, axles, steering/timing
gears etc.;  non-ferrous die castings.Not included in the privatization
programme
Pakistan Steel Fabricating Company Ltd. Steel mill 100% / excluded from the privatization
programme
Pakistan Steel Mills Corporation Ltd. Production of coke, pig iron, billets, hot
and cold rolled sheets etc.100% / excluded from the privatization
programme
Pakistan Switchgear Ltd. .. 100% / privatized
Pak-Motor Car Company Trading company 100% / excluded from the privatization
programme
Pak-Saudi Fertiliser Ltd. Fertilizer manufacture:  urea 100% / excluded from the privatization
programme
PECO (BBW Land lot A & B) Real estate 65% / privatization under process
PECO (Kot Lakhpat) Engineering products:  machine tools,
electric motors, pumps, bicycles, power
looms, transmission towers, steelfabrication35 % / privatization under process
People Steel Mills Ltd. Steel mills 100% / privatized
PIDC Printing Press (pvt) Ltd .. Not included in the privatization
programme
Punjab Vegetable Ghee Production of vegetable ghee 100% / privatized
Ravi Rayon Ltd. Production of acetic yarn and other by-
products40.36% / privatization under process
Republic Motors Ltd. Workshop/real estate 100% / privatization under process
Sargroh Vegetable Ghee Production of cooking oil/ghee 100% / excluded from the privatization
programme
Shahdadkot Textile Mills Ltd. Textile spinning, weaving, processing 100% / excluded from the privatization
programme.  Liquidation under process
Sind Engineering Ltd. Assembly of Mazda light trucks and sale
of Mazda parts100% / privatization under process
Spinning Machinery Co. Production of machinery 100% / excluded from the privatization
programme
Table III.4 (cont'd)WT/TPR/S/95 Trade Policy Review
Page 48
Entity ActivityDegree of state ownership/situation
in privatization programme
State Cement Corporation of Pakistan Cement production Not included in the privatization
programme
State Engineering Corporation Manufacturing of power plant
equipment;  designing, engineering andmanufacturing know-how for industrialplants and machineryNot included in the privatization
programme
State Engineering Project Co. .. Not included in the privatization
programme
Suzuki Motorcycles Pakistan Ltd. – JV Production assembly of motorcycles 4.18% / excluded from the privatization
programme
Talpur Textile Mills Textile mills 100% / privatization under process
Tarbela Cotton and Spinning Mills Spinning and mills Not included in the privatization
programme
Trailer Development Corporation of Pakistan .. 100% / excluded from the privatization
programme
Universal Vegetable Ghee Production of cooking oil/ghee 77.25% / excluded from the
privatization programme
Utility Stores Corporation (930 stores) .. Not included in the privatization
programme
Mining/Quarrying and Energy
Petroleum and NR
AC Rohri Cement Cement production 100% / privatization under process
Attock Refinery Ltd. Processing crude oil found in the
northern region.35% / privatization under process
Baluchistan Development Authority Joint ventures in mining projects. Not included in the privatization
programme
Degari Collieries .. Not included in the privatization
programme
Iran Pak Refinery Ltd. .. Not included in the privatization
programme
Jatta Salt Mines .. Not included in the privatization
programme
Javedan Cement Ltd. Cement production 95.5% / privatization under process
Kalabagh Salt Mines .. Not included in the privatization
programme
Karak Salt Mines .. Not included in the privatization
programme
Lakhra Coal Development Company Joint ventures in coal Not included in the privatization
programme
Lakhara Coal Mines .. Not included in the privatization
programme
Mari Gas Company Ltd. .. 40% / not included in the privatization
programme
Meting Collieries .. Not included in the privatization
programme
Mustekham Cement Ltd. Cement production 85.3% / privatization under process
Nagarparkar China Clay .. Not included in the privatization
programme
National Crescent Petroleum Ltd .. Not included in the privatization
programme
Oil and Gas Development Corporation Oil and gas exploration, development,
gas production and sale at the field-gate.100% / privatization under process
Pakistan Mineral Development Corporation .. Not included in the privatization
programme
Pakistan Oilfields Ltd. Extraction of crude oil, gas, LPG,
sulphur, solvent oil35% / privatization under process
Table III.4 (cont'd)Pakistan WT/TPR/S/95
Page 49
Entity ActivityDegree of state ownership/situation
in privatization programme
Pakistan Petroleum Ltd. Oil and gas exploration, development,
production and sale at the field-gate.94% / privatization under process
Pakistan Refinery Ltd. .. Not included in the privatization
programme
Pakistan State Oil Company Ltd. Procurement, marketing, distribution
and sale of fuel products and lubricants;bottling, marketing, distribution and sale
of LPG;  and development and operation
of petroleum-related infrastructure(terminals/storage, pipeline, etc.)25.51% / privatization under process
Pirkoh Gas Company Ltd. Production of gas 100% subsidiary of OGDCL /
privatization under process
Punjab Mineral Development Corporation Joint ventures in mining projects. Not included in the privatization
programme
Saindak Metal Corporation Joint ventures in mining projects. Not included in the privatization
programme
Sarhad Development Authority Joint ventures in mining projects. Not included in the privatization
programme
Sindh Coal Authority Joint ventures in mining projects. Not included in the privatization
programme
State Petroleum Refining and PetrochemCorporationPetroleum refineries Not included in the privatization
programme
Sui Northern Gas Pipelines Ltd. Gas transmission from different fields to
city-gate(s);  distribution operations;
marketing and sale of natural gas to
different categories of consumer;  smallLPG bottling and sale operations andcompressor repairs facilities59% / privatization under process
Sui Southern Gas Company Purification of sour gas at the Sui gas
field, transmission, distribution, and sale
of natural gas in the provinces of Sindhand Balochistan;  bottling and
distribution of LPG in all the four
provinces of the country, and assemblyof Domestic Gas Meters89% (direct or indirect) / privatization
under process
Thatta Cement Cement production 100% / privatization under process
Water and power
Faisalabad Electric Supply Company (FESCO) Distribution of electricity to mainly
seven districts of Punjab Province ofPakistan i.e. Faisalabad, Sargodha,
Jhang, Toba Tek Singh, Khushab,
Mianwali and Bhakkar.100% / privatization under process
Faisalabad Steam and Gas Turbine Stations .. Not included in the privatization
programme
Guddu Power Complex .. Not included in the privatization
programme
Gujranwala Area Electric Board .. Not included in the privatization
programme
Hyderabad Area Electricity Board .. Not included in the privatization
programme
Islamabad Area Electricity Board .. Not included in the privatization
programme
Jamshoro Power Company (GENCO-1) Generation of electricity through three
thermal power plants i.e. 880 MWJamshoro, 174 MW Kotri and 150 MWLakhra100% / privatization under process
Table III.4 (cont'd)WT/TPR/S/95 Trade Policy Review
Page 50
Entity ActivityDegree of state ownership/situation
in privatization programme
Karachi Electric Supply Corporation Vertically integrated electricity utility
responsible for the generation,
transmission and distribution ofelectricity in Karachi and suburbs91% / privatization under process
Kotri Gas/Combined Cycle .. Not included in the privatization
programme
Lahore Area Electric Board .. Not included in the privatization
programme
Lakhra Fluidised-bed Power Plant .. Not included in the privatization
programme
MESCO .. Not included in the privatization
programme
Multan Area Electricity board .. Not included in the privatization
programme
Muzzaffargarh Steam Power Station .. Not included in the privatization
programme
National Engineering Service Pak Ltd. (NESPAK) Multi-disciplinary consulting
engineering firm100% / not included in the privatization
programme
National Power Construction Co. Turnkey contractors for power projects
transmission lines100% / privatization under process
National Tubewell Construction Corporation Ltd. Construction of SCARP tubewells 100% / not included in the privatization
programme
Pasni .. Not included in the privatization
programme
Peshawar Area Electricity Board .. Not included in the privatization
programme
Quetta Area Electricity Board .. Not included in the privatization
programme
Shahdra Gas Turbine .. Not included in the privatization
programme
Sukkur Steam Plant .. Not included in the privatization
programme
Water and Power Development
Authority (WAPDA).. Not included in the privatization
programme
SERVICES
Financial services
Finance
Agricultural Development Bank of Pakistan .. Not included in the privatization
programme
Allied Bank of Pakistan Ltd. Commercial bank 49% / privatization under process
Bankers Equity Ltd .. Privatized
Equity Participation Fund .. Not included in the privatization
programme
Federal Bank for Cooperatives .. Not included in the privatization
programme
First Women Bank Ltd. .. 57.75% (directly and indirectly) (will
stand privatized automatically afterprivatization of UBL)
Habib Bank Ltd. Commercial bank 100% / privatization under process
House Building Finance Corporation .. Not included in the privatization
programme
Industrial Development Bank of Pakistan DFI 100% / not included in the privatization
programme
Investment Advisory Corporation of Pakistan .. Not included in the privatization
programme
Investment Corporation of Pakistan Managing 26 closed-end mutual funds,
underwriting and project finance73% / privatization under process
Table III.4 (cont'd)Pakistan WT/TPR/S/95
Page 51
Entity ActivityDegree of state ownership/situation
in privatization programme
Muslim Commercial Bank Ltd. Commercial bank 17% / privatization under process
National Bank of Pakistan Commercial & retail banking and
related services domestically and
overseas100% / privatization under process
National Development Finance Corporation Development Finance Institution (DFI) 100% / merger with NBP being
considered by Finance Division
National Investment Trust Open and mutual fund 58% / privatization under process
Pakistan Industrial Credit and InvestmentCorporationDFI 46% / already being managed by
private sector management
Punjab Provincial Cooperative Bank .. Not included in the privatization
programme
Regional Development Finance Corporation .. Not included in the privatization
programme
Small Business Finance Corporation .. Not included in the privatization
programme
United Bank Ltd. Commercial bank 100% / privatization under process
Youth Investment Promotion Society .. Not included in the privatization
programme
Insurance
National Insurance Corporation Insurance Not included in the privatization
programme
Pakistan Insurance Corporation Insurance 74% / privatization under process
State Life Insurance Corporation of Pakistan Insurance 100% / privatization under process
Communications and media
Telecommunications
Carrier Telephone Industries Engaged in manufacture of telecom
equipmentJoint venture of PTCL with private
sector.  Privatization under process
with PTCL
Pakistan Post Office Postal services, a wide range of banking,
life insurance, and a number of otherpublic services.Not included in the privatization
programme
Pakistan Telecommunication Co. Ltd. Provider of basic telephone services to
the private sector in Pakistan88.12% / privatization under process
Telephone Industries of Pakistan Engaged in manufacture of telecom
equipmentJoint venture of PTCL with private
sector.  Privatization under process
with PTCL
Audiovisual
National Film Development Corporation .. Not included in the privatization
programme
Transportation
Sea transport
Gwadar Port .. Not included in the privatization
programme
Karachi Port Trust .. Not included in the privatization
programme
National Tanker Corporation .. Not included in the privatization
programme
Pakistan National Shipping Corporation .. Not included in the privatization
programme
Pakistan Railway Pakistan Railways has three business
units, Passenger, Freight, andInfrastructure.  Corporatization of thebusiness units is under process.100% / not included in the privatization
programme
Port Qasim Authority .. Not included in the privatization
programme
Table III.4 (cont'd)WT/TPR/S/95 Trade Policy Review
Page 52
Entity ActivityDegree of state ownership/situation
in privatization programme
Railways
Bridge Workshop, Jhelum .. Not included in the privatization
programme
Concrete Sleeper Factories – Five .. Not included in the privatization
programme
Locomotive Factory, Risalpur .. Not included in the privatization
programme
PR Freight, Passenger and Infra. .. Not included in the privatization
programme
Railway Carriage Factory .. Not included in the privatization
programme
Railway Construction Co. of Pakistan .. Not included in the privatization
programme
Railway Steel Shop, Moghalpura .. Not included in the privatization
programme
Railway Workshop Complex, Moghalpura .. Not included in the privatization
programme
Aviation
Airports – Civil Aviation Authority Business at airports - aeronautical
(airside) and non-aeronautical
(landside).  Landside business at the
airports, exclusively under the domainof the Civil Aviation Authority (CAA).
Out of 42 airports (7 international and
35 feeder airports) the Pakistan AirForce and the CAA jointly use 18
airports and the CAA is also responsible
for management, maintenance, anddevelopment, exclusively operates 19airports (5 are closed).Not included in the privatization
programme
Duty Free Shops (Pvt.) Ltd. .. Privatized in 1999
International Advertising Ltd. .. Not included in the privatization
programme
Midway House (Pvt.) Ltd. .. Not included in the privatization
programme
Pakistan International Airlines Corporation .. Not included in the privatization
programme
PIA Shaver Poultry Breeding Farms Ltd. .. Not included in the privatization
programme
Skyrooms (Pvt.) Ltd. .. Not included in the privatization
programme
Construction
Federal Lodges Property Lodges No. 1-4 privatized.  Lodges No.
5 and 6 excluded from the privatization
programme
National Construction Ltd. .. 100% direct and indirect / privatization
under process
Tourism
Flatties Hotel, Lahore Property 87% / privatization under process
Malam Jabba Tourist Resort .. 100% / privatization under process
Pakistan Tourism Development Corporation Largest chain of 29 motels and 2 hotels
located all over Pakistan.Not included in the privatization
programme
PIA Hotels Ltd .. Not included in the privatization
programme
PTDC Hotels .. 87% / privatization under process
.. Not available.
Source : Government of Pakistan;  Privatisation Commission of Pakistan online information.  Available at:
http://www.privatisation.gov.pk/information;  and State Engi neering Corporation online information.  Available at:
http://www.sec.gov.pk/ [25 October 2000].Pakistan WT/TPR/S/95
Page 53
51. Although no state enterprise appears to enjoy monopoly rights in trade, the Government,
along with numerous state-run corporations, is the country's largest importer.53  In January 1995,
number of tasks entrusted to the state-owned (Ministry of Commerce) Trading Corporation of
Pakistan (TCP) was reduced.54  These include:  the importation of essential commodities in
emergency cases, soyabean oil under US PL-480 and CC Credit programmes, palm oil from Malaysia
under Malaysian credit, industrial raw materials and ot her bulk items;  the u tilization of import credit
facilities;  exports of selected items of public-sector corporations and agencies;  and export promotion
activities (section 3(ix)).  The TCP's trading activities have declined;  apparently it signed no import
or export contracts in 1998-99.  Its 1997-98 imports (12,500 tonnes of sugar from Brazil) and exports
(rice and fresh mangoes), were well below its 1996/97 import (sugar, palm oil seeds, palm oil) and
export (rock salt, rice, fresh mangoes, clinker) operations.  As of January 2001, the Rice ExportCorporation and Cotton Export Corporation have been merged into the TCP.
52. Pakistan considers that it does not maintain any state trading enterprises within the meaning
of Article XVII:4(a) of the GATT 1994;  it is of the view that existing state firms are not granted any
exclusive or special rights (including statutory or  constitutional powers) allowing them to influence
the level and/or direction of foreign trade.
55  In the context of the WTO Working Party on State
Trading Enterprises, in 1996-97, Canada, New Zealand, and the United States raised questions on this
issue and on the absence of notifications in this matter;  they also enquired about the rights and
activities of the TCP, the Cotton Export Corporation and the Rice Export Corporation, as well trade in
agricultural products carried out by the Ministry of Agriculture.
(viii) Government procurement
53. Pakistan is not a signatory to the Plurilateral WTO Agreement on Government Procurement.
Domestic legislation on government procurement dates back to 1972;  it was amended most recentlyin March 1998.
56  By the time of completion of this Report a new amendment was under
consideration.  Pakistan accords price preferences to domestic suppliers in order to develop its private
sector;  according to the authorities, this practice is recognized by certain international institutions.57
54. As from 1998, all public-sector agencies under the direct or indirect control of the
Government58 have been "advised" to give price preferences of up to 25% to domestic suppliers of
engineering goods;  these preferences vary directly with the degree of domestic value added.59
Furthermore, public sector agencies have been "advised" to procure engineering goods domesticallyand omit such items from the list of barters, credit, and loans, as well as to provide educational and
                                                     
53 U.S. Commercial Service (1999a).
54 Trading Corporation of Pakistan (1997, 1998, and 1999).
55 WTO documents G/STR/N/1/PAK, 16 April 1996, G/STR/Q1/PAK/1, 27 June 1996,
G/STR/Q1/PAK/2, 5 July 1996, G/STR/M/4, 15 A ugust 1996, G/STR/N/3/PAK, 21 May 1997,
G/STR/Q1/PAK/4, 31 July 1997, G/STR/W/36, 8 October 1999, G/STR/N/4/PAK, G/STR/N/5/PAK, andG/STR/N/6/PAK, 1 February 2001.
56 Purchase Manual (1972);  Import of Engineering Goods (Control) Order (1998);  and Central Board
of Revenue (1999a), SRO/98, 26 March 1998.
57 GATT (1995), "Replies by the Representative of Pakistan" and additional comments at the Trade
Policy Review of Pakistan.
58 "Public sector agencies" include all the statutory or autonomous corporations, attached departments
or other agencies or bodies under administrative control of the Federal and the Provincial Governments,
including private or public companies with government shareholding (Central Board of Revenue (1999a),
SRO/98, 26 March 1998).
59 Price preferences are set at rates of 15%, 20%, and 25% for minimum value added of 20%, 20% to
30%, and over 30%, respectively.  Price comparisons are made in rupees (Central Board of Revenue (1999a),SRO/98, 26 March, 1998).WT/TPR/S/95 Trade Policy Review
Page 54
development contracts for an amount of 10% of their annual procurement budget to local industry on
mutually agreed terms.  Requirements for inviting tenders and quotations, making enquiries,
furnishing earnest money and security deposit are waived if goods and services are procured from
other public-sector agencies.  In the case of all industrial and infrastructural projects, the importation
of turnkey plants or the awarding of turnkey contracts to foreign manufactures by public sector
agencies are prohibited.
55. Government procurement is in general operated through publicly announced tenders, and in
accordance with the principles of international competitive bidding.60
56. Domestic agents as well as agents of foreign suppliers are generally registered with the
Department of Investment Promotion and Supplie s of the Ministry of Industries and Production,
which is responsible for government procurement in Pakistan;  final purchase is undertaken by thePurchasing and Inspection Agency.  The authorities indicated that a large number of government
bodies make their suppliers' registration and procurement operations independently.  No obligation to
purchase exclusively from registered suppliers is in force;  nevertheless, registered suppliers do not
need to lodge earnest money upon submission of tender document, and may pay a lower security
deposit than non-registered suppliers.
61  A national independent board or institution for public
procurement (National Regulatory Authority) was established in order to eradicate corruption in the
procurement process.62
57. In 2000/01, Pakistan's total government procurement market for goods and services was
estimated at PRs 366.1 billion (US$6.3 billion), in terms of current consumption expenditure.63  At the
time of the previous Review, the bulk of government procurement was executed with foreign firms as
major projects were financed with foreign financial assistance or developed by foreign firms.64
(ix) Local-content requirements
58. Under its August 1987 Indigenization/Deletion Programme, Pakistan has continued to provide
incentives in the form of duty concessions on imports of prescribed components and parts, for the
assembly and manufacture of engineering goods, electrical items, and automobiles.  The programme's
objective has been to promote industrial development through the exploitation of available resources,
transfer of technology, and the strengthening of links between large-, medium-, and small-scaleindustries, while safeguarding Pakistan's external financial position.
65  Under agreed time schedules,
the enterprises concerned are required to increase progressively the use of domestically produced
components and parts.66  The programme, which is open to both local and foreign investors, is not
mandatory in principle (see below);  it is run jointly by the Ministry of Industries and Production and
an Indigenization Committee.67  Plans to expand the programme to the manufacture of deep freezers,
                                                     
60 U.S. Commercial Service (1999a).
61 GATT (1995).
62 USTR (2000a).
63 Ministry of Finance (2000c), Appendix Table 1.6.
64 GATT (1995), "Replies by the representative of Pakistan" and additional comments.
65 WTO document G/TRIMS/N/1/PAK/1, 7 April 1995.
66 The schedules are established in consultation with the enterprises concerned and the related vendor
industries, and take into account the potential of the local industrial base, the availability of technical know-howin the country, and the facility with which the transfer of technology could be arranged from abroad.
67 GATT (1995).Pakistan WT/TPR/S/95
Page 55
motorcycles, and tractors was under preparation between 1998 and 1999.68  The authorities indicated
that the sectoral/item coverage of the programme has not been expanded over the past five years.
59. According to the authorities, the programme ha s succeeded in stimulating investment in many
joint ventures and in technical collaboration for local manufacturing;  the degree of self-sufficiency in
local components varies from 58% to 100%.  No data are available on the operation and benefits of
the programme.  Some industries have obtained quality certification, such as ISO 9000 and havesucceeded in exporting parts and components.
69  On the other hand, concern has been expressed about
the allegedly compulsory nature of the programme in the telecommunications equipment sector as
well as the rigidities of sectoral schedules, which do not allow for voluntary increase of local content,
and the subsequent rise in tariff preferences conditional upon local content.70
60. In the light of the programme's inconsistency with the provisions of the WTO Agreement on
Trade-Related Investment Measures (TRIMs), in 1995 Pakistan notified it to the WTO Committee on
Trade Related Investment Measures.71  In 1999, Pakistan together with certain other Members
requested a seven-year extension of the time-limit (January 2000) for the elimination of its TRIMs
programme;  it also suggested that the TRIMs provisions be revised in order to allow developing
countries to maintain local-content schemes depending on their developmental needs.72  In July 2001,
Pakistan was granted an extension of its transition period until end December 2001;  subsequently, it
requested an additional extension period.  The authorities are exploring a new policy approach in this
area.
(x) Contingency measures
(a) Anti-dumping and countervailing measures
61. Between January 1996 and 30 June 2001, Pakistan did not resort to any anti-dumping or
countervailing measures.
62. Domestic legislation on anti-dumping and countervailing actions was promulgated in 2000
and 2001, respectively, bringing domestic regulations in line with the provisions of the relevant WTO
Agreements.73  The National Tariff Commission, which has the investigative authority, is being
re-organized, strengthened, and given further power.74
63. Pakistan has regularly submitted semi-annual reports on the status of its anti-dumping and
countervailing actions.  In the context of the WTO Committees on Anti-Dumping Practices and
Subsidies and Countervailing Measures as well as in the review of the SCM Agreement Articles 6.1,
8, and 975, it has expressed views on, inter alia, the unfair use of anti-dumping measures by developed
                                                     
68 Ministry of Finance (2000c).
69 Ministry of Finance (2000c).
70 USTR (2000a).
71 WTO document G/TRIMS/N/1/PAK/1, 7 April 1995.
72 WTO documents WT/GC/W/354, 11 October 19 99, G/C/W/173, 11 January 2000, G/L/466,
7 August 2001, and G/C/W/294, 31 A ugust 2001.
73 Anti-dumping Duties Ordinance, 22 December 2000, and Countervailing Duties Ordinance,
3 January 2001.
74 Export Promotion Bureau (2000).
75 WTO documents Job(99)/3169 and Add. 1, 7 June 1999, WT/GC/W/354, 11 October 1999,
WT/GC/W/355, 11 October 1999, G/SCM/M/22, 17 February 2000, and G/SCM/M/24, 26 April 2000.WT/TPR/S/95 Trade Policy Review
Page 56
countries76, and implementation issues.  Pakistan's sugge stions for improving the agreements in this
area included the strengthening of the special and differential treatment for developing countries by
increasing their de minimis  margin, and incorporating subsidies that could be essential for achieving
their legitimate developmental goals into the definition of non-actionable subsidies.
(b) Safeguards
64. During the period under review, Pakistan has not resorted to any safeguard measures under
GATT 1994 Article XIX.  At the time of the previ ous Review, Pakistan did not have any safeguard
legislation;  at the time of completion of this Report the authorities indicated that legislation has been
prepared and was expected to enter into force soon.77
(xi) Standards and other technical requirements
65. Pakistan considers the standardization process as an essential element for improving industrial
productivity as well as ensuring sustainable export growth.78  The authorities indicated that Pakistani
technical requirements do not distinguish between foreign and domestic goods.
(a) Standards
General Framework
66. The basic rules concerning the national standards system were updated in 1996.79  The
Pakistan Standard and Quality Control Authority (PSQCA) (created by merging the Pakistan
Standards Institute, the Central Testing Laboratories, and other standards setting bodies) develops and
adopts standards as well as providing testing/quality control services and facilities.80
67. However, different ministries and departments are empowered to establish and enforce their
own standards in their area of responsibility81;  the PSQCA seemingly coordinates work between
national and international standards bodies, and is responsible for arranging their publications as well
as for providing consultancy and other services relating to standardization and quality control.82
Coordination among governmental agencies is ensured by sectional committees consisting of
technical experts from the public and private sectors.  For example, technical regulations relating to
food and health safety are established by the Ministry of Health, Social Welfare and Population
Planning.83  The Pakistan Environmental Protection Agency (PEPA) is responsible for the
development, implementation, and monitoring of compliance with National Environmental QualityStandards (NEQS) that are approved by Pakistan  Environmental Protection Council (section 4(v)).
84
                                                     
76 Since 1996, Pakistan's exports of cotton fabrics and/or bed linen have been subject to anti-dumping
investigation in the EU and South Africa;  by June 2000, out of four cases only one (the EU) had led to theadoption of final measures.
77 Export Promotion Bureau (2000);  and GATT (1995).
78 Export Promotion Bureau online information, (ISO 9000).  Available at:  http://www.epb.gov.pk/
iso.htm [28 July 2000].
79 Pakistan Standard and Quality Control Authority (PSQCA) Act 1996.
80 Board of Investment (1999), pp. 43-46.
81 GATT (1995).
82 Ministry of Science and Technology online information.  Available at:  http://www.most.gov.pk/PSI/
index.htm [24 September 2000].
83 WTO document G/TBT/ENQ/12, 20 August 1998.
84 Ministry of Environment online information.  Available at http://www.environment.gov.pk/
[25 July 2000];  and U.S. Commercial Service (1999a).Pakistan WT/TPR/S/95
Page 57
Standards
68. At the time of completion of this Report, there were about 4,621 national standards for
agriculture, food, chemicals, civil and mechanical engineering, electronics, weights and measures, and
textile products.85  In principle, ISO, IEC, OIML and other international, regional, and national
standards are used as the basis for the preparation of Pakistani standards.86  The authorities indicated
that more than half of national standards are identical to international standards, while 45% are similarto international standards.  Mandatory standard s are incorporated in technical regulations of
regulatory authorities for public health and safety.
87  No information was available to the Secretariat
on the number, product coverage, and compliance with international norms of compulsory/mandatory
standards at the time of completion of this Report.  Reportedly, importers experience difficulty owing
to domestic quality standards.88
Quality certification
69. Recognizing that quality has become a decisive  factor in increasing exports, since 1997/98
Pakistan has helped exporters of manufactured goods to achieve ISO 9000/14000 certification through
financial support (section 3(iv)) and the strengthen ing of the institutional setting in this regard.89
Since 1997/98, the Ministry of Commerce has pr ovided financial assistance (PRs 150,000 to
June 2000;  PRs 100,000 (US$1,934) since July 2000) to achieve certification;  there has been a
proposal to extend this support to QS9000 certification.  The Ministry of Science and Technology
provided grants for undertaking professional studies (50% of the cost up to PRs 50,000 per study) in
favour of small to medium-sized enterprises (SMEs) intending to improve industrial productivity and
management quality and to obtain ISO 9000/14000 accreditation.  The programmes of these
ministries were merged in 1997.
70. In January 1998, the Pakistan National Accreditation Council (PNAC), an autonomous body
under the administrative control of the Ministry of Science and Technology, was created (operational
later) to operate the ISO 9000 registration and certification system.90  Further institutional efforts have
included:  the establishment of a special section of the EPB to increase awareness and facilitate
implementation of ISO 9000 requirements (2000);  and, cooperation of the Board of Investment with
the private sector Pakistan Institute of Quality Control to promote quality management inmanufacturing.
91  By 2000, there were ten ISO 9000 certification bodies/firms (mostly foreign) in
Pakistan.  By April 2001, out of 704 applicants 409 companies had obtained ISO 9000 certification
assistance.
Transparency and international cooperation
71. Pakistan has accepted the Code of Good Practice for the Preparation, Adoption, and
Application of Standards.92  Pakistan has notified its enquiry points to the WTO, but has neither taken
domestic measures nor actually used the consultation and notification (prior to implementation)
                                                     
85U.S. Commercial Service (1999a).
86 WTO document G/TBT/2/Add.45, 12 February 1998.
87 WTO document G/TBT/2/Add.45, 12 February 1998.
88 USTR (2000a).
89 Export Promotion Bureau online information, (ISO 9000).
90 Planning Commission (2000), p. 45.
91 Board of Investment online information.  Available at:  http://www.pakboi.gov.pk/ [20 July 2000].
92 WTO documents G/TBT/ENQ/12, 20 August 1998, G/TBT/CS/2/Rev.6, 20 January 2000, and
G/TBT/ENQ/16, 25 April 2000.WT/TPR/S/95 Trade Policy Review
Page 58
procedures under the WTO Agreement on Technical Barriers to Trade.93  In the context of the WTO
Committee on Technical Barriers to Trade, Pakistan has, inter alia,  expressed concern about the lack
of effective participation of developing countries in the standardization process, implementation
issues, definition of international standards in mandatory regulations, and notification issues.94
(b) Sanitary and phytosanitary regulations
72. Pakistan's sanitary and phytosanitary regime is  governed largely by legislation dating back to
1976 and 1985.95  At the time of completion of this Report, the Pakistan Plant Quarantine Act 1976
was being revised in the light of the provisions of the International Plant Protection Convention 1997
and the WTO SPS Agreement.  The Animal Quarantine and Plant Protection Departments of the
Ministry of Food, Agriculture, and Livestock are entrusted with the implementation of measures in
this area;  coordination among these departments is seemingly being increased.96
73. The Animal Quarantine Department provides a central certification service to importers and
exporters of animals and animal products, and formulates regulations to prevent the introduction or
dissemination of diseases of foreign origin;  nevertheless, the quarantine regulations are seemingly of
limited scope as they focus on diseased organisms only and not the introduction of invasive species.97
Although uniform standards are applied through examinations and tests in line with international trade
requirements, the testing facilities for agricultural goods are reportedly inadequate and standards are
inconsistently applied resulting in occasional discrimination.98  The authorities indicated that a
pest-risk analysis is being put in place.
74. As from January 2000, emergency measures in form of dioxin-free certification have affected
all livestock and livestock products originating in  Belgium;  this requirement was notified to the
WTO.99  As of June 2001, live animals (cattle, buffal o, sheep, and goats), meat and bone meal, tallow
containing protein, and feed ingredients from BSE infected countries (such as Belgium, Denmark,France, Germany, Italy, Ireland, Luxembourg, Spain, the Netherlands, and the United Kingdom) have
been prohibited.
75. Pakistan is a member of the three standard-s etting bodies explicitly referred to in the
SPS Agreement (i.e. the Codex Alimentarius Commission, the International Office of Epizootics, and
the International Plant Protection Convention).
100  It has notified the WTO of its national enquiry
point and national notification authority.101  In the context of the WTO Committee on Sanitary and
Phytosanitary Measures, Pakistan has highlighted the difficulties faced by developing countries in
applying SPS measures, emphasized the need for increased technical cooperation in this area, and
expressed concern over an EU proposal to set new maximum aflatoxin levels.  Pakistan has received
                                                     
93 These are:  the PSI (standardization and certification) and the Ministry of Health, Social Welfare, and
Population Planning (technical regulations relating to food health and safety) (WTO documentG/TBT/2/Add.45, 12 February 1998).
94 WTO documents Job(99)/3169, and Add. 1, 7 June 1999, WT/GC/W/354, 11 October 1999,
WT/GC/W/355, 11 October 1999, and G/TBT/M/19, 27 June 2000.
95 LEAD-Pakistan (2000), Pakistan Animal Quarantine (Import and Export of Animals and Animal
Products) Act (1985) and  Pakistan Plant Quarantine Act 1976.
96 LEAD-Pakistan (2000).
97 LEAD-Pakistan (2000).
98 LEAD-Pakistan (2000);  and USTR (2000a).
99 WTO document G/SPS/N/PAK/1, 6 January 2000.
100 WTO documents G/SPS/GEN/23, 8 July 1997, G/SPS/R/7, 29 April 1997,
G/SPS/GEN/143/Rev.1/Add.1, 16 June 2000, G/SPS/GEN/143/Rev.1, 8 March 2000, G/SPS/R/19,1 August 2000, G/SPS/GEN/204, 27 September 2000, and G/SPS/GEN/49/Rev.2, 23 October 2000.
101 WTO documents G/SPS/ENQ/10, 9 March 2000 and G/SPS/GEN/167, 9 March 2000.Pakistan WT/TPR/S/95
Page 59
technical assistance regarding, inter alia,  the development of national laws and regulations in the field
of food safety (from Canada), as well as disinfection technology expertise relating to fruit flies (from
Japan).
(c) Marking and labelling
76. Pakistan has no uniform system of labelling and marking requirements;  these requirements
differ depending on the item or the regulations of the agency in charge.  The Import Policy Orderspecifies labelling and packaging requirements with respect to imports
102;  the authorities indicated
that no distinction is made between domestic and foreign goods.  Labelling requirements affect
imports of edible product, cigarettes, food colours, and pharmaceutical raw materials, drugs, and
medicines.  Product-specific labelling and packaging requirements on imports include:  the date of
manufacture and expiry (for food and food colours, packages of insecticides and pesticides);indication of Halal and free from products of haram an imals (meat products);  warnings both in Urdu
and English (packets of cigarettes and cigars, etc.).
(3) MEASURES DIRECTLY AFFECTING EXPORTS
(i) Registration and documentation
77. All exporters must be registered with the Export Promotion Bureau (EPB) under similar terms
as importers (section (2)(i)).103
78. Preshipment registration of export contracts with the EPB in respect of cotton, rice, and urea
has remained in force during the period under review (Table III.5), while registration of export
contracts involving potatoes was in force temporarily and is no longer in force (section (iii)(b) below).
Exports of several items to Afghanistan require registration, for monitoring purposes.104  T h e
preshipment authorization certificate from the EPB for exports of textile items to non-quota countries
was removed in 1999.105  At the time of the previous Review exports of certain textile products to
countries for which Pakistan had export quotas, and consignments intended for re-export from quota
countries, were also subject to preshipment contract registration with the All-Pakistan Textile
Association;  this measure was removed in 1999/00.106
79. Since July 1999, a system for quality (preshipment) inspection of all rice has been fully
implemented by officials of the Ministry of Commerce,  with the participation of representatives of the
Rice Exporters Association of Pakistan, to safeguard the market reputation of Pakistani rice.107  To
provide for efficient and speedy handling of perishable cargo, a "one window" operation for exports
of fresh fruit and vegetables at the Karachi and Multan Airports was to be provided as from 1999.
                                                     
102 U.S. Commercial Service (1999a).
103 Import Policy Order 1999 [Online].  Available at:  http://www.cbr.gov.pk/ [19 July 2000];  and
GATT (1995).
104 These items include:  cotton, live animals, beef and mutton, grains, pulses and beans, blood meals,
meat meals, corn gluten feed and sesame oil cakes, bran and fodder of all sorts, hides and skins, wet blueleather, ferrous and non-ferrous metals, arms and ammunition, maps and charts, unfinished and semi-finishedhockey blades, paper waste, oil-seeds, coke, rock salt, sodium hydroxide, onyx blocks, breeding camels, sodaash, endemic birds, cement and clinker, cinematographic films, rose ringed parakeet, and kitchen items (i.e. rice
basmati, rice irri-6, masur pulse (washed), mash pulse (washed) gram pulse (washed), beef, mutton, sugar, milk
fresh, vegetable ghee (tinned and loose), cooking oil (tinned and loose), potato, onion, tomato, red chillies
(powder) and garlic (Import Export Procedure Order, 1999).
105 Central Board of Revenue (1999b).
106 GATT (1995).
107 Central Board of Revenue (1999b).WT/TPR/S/95 Trade Policy Review
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Table III.5
Export prohibitions, rights, and authorization, as of September 2001
Items Exemptions
A. Negative list (i.e. export prohibition)
Sann hemp
Intoxicants and intoxicating liquors (enforcement of Hadd) Ethyl alcohol undentured.
Wildlife species of the CITES and all animals, mammals,
reptiles and endemic birds protected by any provincial
Wildlife Act;  meat, horns, bones, hides and skinsuntanned/tanned, finished leather or garments made thereof;
products and materials related to wild life their derivatives;
stuffed/unstuffed, mounted hunting trophies;  and preserved
specimens of wild animalsThe National Council for Conservation of Wildlife (NCCW) as
Management Authority of Convention of International Trade in
Endangered Species of Wild Fauna and Flora (CITES) may authorizeexemptions for:  research;  trophies from community-managed
conservation areas;  and commercially-bred sweet-water turtles (uponthe issue of no objection certificate (NOC) by the NCCW).
Wild boar, its meat and skin Non-Muslim registered exporters.
Charcoal and firewood
Wood and timber
Fissionable material
Anti-personnel landmines
Antiquities
Edible oil All edible oils in bottles or other consumer packs provided there is
value-addition of 15% for edible uses in packs up to 5 litres and 50%
value addition for non-edible uses in packs up to 1/2 litre.
Poppy seeds Exports of imported poppy seeds are allowed if originating in
countries where they are grown licitly under provisions of single
convention.
Toxic chemicals and precursors Export to States or countries that have ratified the Chemical Weapons
Convention.
Counterfeit products
Export of all imported goods in their original or unprocessedformsParts obtained from ship breaking;  scrapped battery cells;  waste
dental amalgam;  waste exposed X-ray films;  over 20 year-oldautomotive vehicles and aircraft provided that export earnings are
received in foreign exchange;  imported goods in their original or
unprocessed form, provided that their re-export f.o.b. price is higherby at least 2.5% than their C & F price;  specified items imported
against back to back letters of credit for re-export subject to procedure
and conditions notified by the State Bank of Pakistan;  re-export of old
and second-hand machinery (directly imported or locally purchased);
and, re-export of imported items, purchased against US dollars or
other freely convertible currencies, to Central Asian Republics.
B. Exports allowed through public sector agencies only
High-speed diesel and furnace oil
C. Products subject to main authorization requirements
Registration of contracts with Export Promotion
Bureau (EPB):
All varieties of rice, cotton and urea.
Special procedure:
Cotton
Pakistan Standard Mark requirements 
(Pakistan Standards and Quality Control Authority Act of
1996):
Surgical instruments (as of 28 August 2001).
Table III.5 (cont'd)Pakistan WT/TPR/S/95
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Items Exemptions
Special procedure
(S.R.O. 266(1)/2001, 7 May 2001):
Precious and semi-precious stones and gold jewellery
(including gold jewellery embedded with indigenous or
imported precious or semi-precious stones)
No Objection Certificate (NOC):
Endemic birds, exotic captive bred birds (guinea fowl, turkeycommon, domesticated or exotic pigeons, Java sparrows,
zebra finches, white finches, domestic ducks, domestic geese,budgerigars, cockatiels, love birds, common crows, house
sparrows, Japanese quails, bob white quails, day old
ducklings, Bengali finches, screne and gimp/fereme finchesand domesticated rabbits (NCCW or the Provincial Wildlife
Department);  arms, ammunition, explosives, and ingredients
thereof;  complete rocket and Unmanned Air Vehicle (UAV)Systems and their parts;  nuclear substances, radioactive
material or any other substances prescribed by the Pakistan
Atomic Energy Commission;  equipment used for production,use or application of nuclear energy including generation of
electricity.
Special mechanism for checking the prices etc. for the
purpose of royalty (to be identified):
Metals by foreign enterprises (Ministry of Petroleum and
Natural Resources)
Source: S.R.O. (880)I/99 ( Export Policy Order ), 28 July 1999;  S.R.O. (898)I/99 ( Import and Export Procedures ),
3 August 1999.  Available at:  http://www.cbr.gov.pk/ [28 July 2000];  Export Promotion Bureau (2000);  andGovernment of Pakistan.
(ii) Export duties and minimum prices
80. There has been a considerable reduction in the use of these instruments during the period
under review.108  Despite WTO information suggesting the elimination of export duties (including the
tax on cotton) and minimum prices as from July 1999, regulatory duties on exports of crushed bones
(10%), uncrushed bones (5%) and raw/wet blue hides and skins (20%) are still in force.109 Minimum
price requirements now affect cotton yarn only and are set by the All-Pakistan Textile Association.
Such restraints on exports tend to reduce the prices of the affected goods and therefore constitute an
implicit subsidy to domestic users of these goods.
81. Pakistan has maintained its withholding tax (i.e. advance payment of personal income tax) for
exports at rates of:  0.75% (manufacturers), 1% (specified mineral products), or 1.25% (all other
items) of the export proceeds.
(iii) Export prohibitions, restrictions, and licensing
(a) Export prohibitions
82. Since July 1999, the scope of export prohibitions seems to have been reduced and focused on
health, social, or environmental protection in accordance with commitments under international
treaties110;  the introduction of counterfeit products in the negative list reflects efforts to strengthen
                                                     
108 At the time of the previous Review, 25 product groups (mainly agricultural items) were subject to
ad valorem  rates (ranging from 10% to 45%), specific or compound duties, for revenue reasons or to discourage
exports of raw materials (GATT, 1995).
109 WTO document WT/BOP/S/11, 28 March 2000;  and Export Promotion Bureau (2000).
110 In the past, exports of live animals, meat, animal fat, milk, and milk products were prohibited.WT/TPR/S/95 Trade Policy Review
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border enforcement of intellectual property rights (IPRs) protection (section 4(iv)).111  A few bans do
remain, however, to ensure adequacy of internal supply of "essential" commodities at reasonable
prices or to encourage domestic processing or both (as in the case of edible oil).112  The ban on
exports of wheat and its milling products was removed in 2000/01.
83. In November 1997, a complaint on export prohibitions (introduced in August 1996)
concerning, inter alia , hides and skins and wet blue leather made from cow hides and calf hides was
lodged by the EU in the context of the WTO Dispute Settlement mechanism (Chapter II(7));  it was
claimed that this measure limited access to competitive sourcing of raw and semi-finished
materials.113  The authorities indicated that at present exports of this item are subject only to
regulatory duties (section (3)(ii)).
(b) Export licensing and restrictions
84. The scope of exports reserved for public-sector agencies has been reduced;  coverage
previously included coke, caustic soda, salt, sodium hydroxide, and cement.  As from 2001/02,
exports of petroleum and petroleum products have been liberalized;  at present exports of furnace oil
and high speed diesel oil are reserved for public sector entities only (Table III.5).
85. During the period under review, there has been some change in the range of goods (i.e.
removal of agricultural items except rice and cotton) subject to:  quality control requirements (mainly
engineering and electrical goods, agricultural items, except rice and cotton have been removed);  and
to "no objection" certification or special procedures (e.g. precious and semi-precious stones and gold
jewellery) (Table III.5).
86. Potato exports have been temporarily subject to quantitative restrictions (100,000 tonnes in
1998, 200,000 in 1999), which have not yet been notified to the WTO.  The associated export
contracts have been allocated on a first-come-first-served basis.114  As of 1999, cotton exports, which
in the past were subject to periodic quantitative restrictions, have been unrestricted (including those of
raw cotton from the beginning of the season).115  It seems that exports of urea are also subject to
quantitative limitations.
(c) Access-related export quotas
87. Pakistan's exports of textiles and clothing products (Chapter IV(4)(i) have been subject to
quotas to varying extents, in the EU, the United States, and Canada under the WTO Agreement on
Textiles and Clothing (ATC).  When the Multifibre Arrangement expired at the end of 1994, all
quotas maintained under it were carried over into the transitional process of the ATC.  The EU carried
over 14 quotas with one sub-limit;  the United States, one group limit and 35 quotas with one sub-
limit;  Canada, 11 quotas;  and Norway 3 quotas.116  In the first integration stage, Canada removed
                                                     
111 Action may be taken against exporters of counterfeit products upon receipt of complaint through the
EPB from the holders of the trade mark, franchise or licensee;  penal action may also be taken for lodging
unfounded complaints (Export Policy Order, 1999).
112 Exports of edible oil in consumer packs is authorized.
113 WTO document WT/DS107/1 , 20 November 1997.
114 EPB Public Notices:  No1(COM)/PT/98, 13 February 1998, and EPB-1-(COM)/PT/98-99/PDD,
5 January 1999.
115 Central Board of Revenue (1999b);  and Export Promotion Bureau (2000).
116 WTO documents G/TMB/N/60 and Add.4 (EU), 19 April 1995 and 26 July 1996, G/TMB/N/61
(Norway) and G/TMB/N/63 (United States), 19 April 1995.Pakistan WT/TPR/S/95
Page 63
quotas on work gloves, affecting Pakistan.117  As a result of the second stage of product integration,
one quota was removed in the United States.118  In Canada, the quota on tailored collar shirts was
removed in July 1997119 and in 1998, quotas on products in three additional categories were removed,
while the quota on category 2, winter outerwear, was increased by 10%.120  Norway has removed all
three quotas with Pakistan.121
88. Certain textile exports from Pakistan have been subject to safeguard action under the ATC.
In 1998, the United States took safeguard action on category 301, combed cotton yarn.  This matter
was twice examined by the Textiles Monitoring Body122, which recommended that the measures be
rescinded.  In the absence of a mutually satisfactory solution, it was taken to the DSB by Pakistan;  a
panel was formed on 19 June 2000.123  Argentina took five safeguard actions in 1999 against various
fabric categories from Pakistan.  Following examination of these actions and recommendations by theTMB, four of these quotas were removed, and for the fifth, the duration was limited to 18 months.
124
89. As of 1998, the private sector has been involved in handling the textile quota allocation, for
transparency purposes.125  Overall textiles quota utilization has been relatively high, exceeding 80% in
several markets and product categories:  up to 132.26% (poplin and broadcloth) in 27 (out of 37)
product categories to the United States in 1999;  up to 111.55% (cotton fabrics) in 7 (out of 15)categories to the EU;  and between 80% and 97.73% (cotton/terry/towel/wash) in 5 (out of 19)
categories to Canada.  Elements of flexibility contained in the bilateral agreements (i.e. swing from
one category to another and carry over) have allowed for quota utilization beyond 100% subject to
adjustments in the following quota year.
(iv) Export subsidies
90. Exports are considered by the authorities to be the linchpin of Pakistan's economic policy
from the standpoints of self-reliance, balance-of-payments equilibrium, and the need for externalborrowing.
126  Therefore, the authorities continue to encourage exports through several tax and
financial measures, including duty and sales tax concessions on imports used in the production of
export items;  income tax rebates;  concessional export finance (removed as of 2001/02);  as well as
subsidies for production (sections (2)(ii)(j), 3(v), 3(viii), 4(i) and 4(ii)).
91. Since the previous Review, a few direct export incentives have been operated for quality
certification and freight costs, as well as for exports of sugar (for one year only).127  The cost of
ISO 9000 certification for manufacturers/exporters has been financed by the authorities up to an
amount of PRs 150,000 (or about US$2,900) in each case128;  out of 784 firms qualifying for support,
464 received payments amounting to a total of PRs 80.52 million (US$1.4 million).  In 1997/98, an
export subsidy for sugar of PRs 4,500 (about US$90) per tonne was applied and apparently involved
                                                     
117 WTO document G/TMB/N/298, 23 September 1997.
118 WTO documents G/TMB/N/213/Add.1, 23 May 1997.
119 WTO document G/TMB/N/214/Add.2, 27 June 1997.
120 WTO document G/TMB/N/316, 30 January 1998.
121 WTO document G/TMB/N/306, 9 October 1997.
122 WTO documents G/TMB/18, 29 April 1999, and G/TMB/19, 29 June 1999.
123 WTO documents WT/DS/192/1, 3 April 2000 and WT/DS/192/2, 4 September 2000.
124 WTO document G/TMB/R/66, 21 July 2000.
125 Planning Commission (1998), p. 7.
126 Ministry of Finance (2000a).
127 WTO document WT/BOP/S/11, 28 March 2000;  and Planning Commission (1998), p.7.
128 In addition, a maximum of PRs 50,000 has been granted to SMEs for studies aimed at improving
industrial productivity and management quality and to obtaining ISO/9000.WT/TPR/S/95 Trade Policy Review
Page 64
total disbursements of about US$45.5 million.129  The subsidy, covering 25% of freight costs for
exports of fresh fruit and vegetables, fresh fishery products, flowers, and confectionery, continues to
be operated and has been notified regularly to the WTO.130  Between 1996/97 and 1997/98 annual
disbursements for this type of support increased by 67%, to US$2.84 million;  93% related to exports
of fresh fruit and vegetables (Chapter IV(2)(ii)(a)).  In 1999/00 disbursements dropped to
US$0.38 million.  The authorities indicated that at present this freight subsidy covers only potatoes.
(v) Duty and tax concessions
92. Between 1998 and 2001, Pakistan followed the "no-duty, no-drawback" policy in line with
export performance and value-added conditions set for beneficiaries of duty and tax exemptions on
imports of export-related items (Table III.2);  however, this system is no longer in force.131  At the
same time, reimbursement of duties, sales tax, and other fees paid on imported raw materials for themanufacture of export products has been operated on the basis of drawback rates notified periodically
by the Central Board of Revenue;  the authorities maintain that drawback rates correspond to actual
duties, taxes, and other charges affecting export production.
132
93. To raise value added in exports of fish and other food items (canned or bottled), of rice (up to
5 kg. packs), and of engineering, contracting, and consultancy services (resident Pakistani firms only),the relevant withholding tax rate (for income purposes) has been reduced (section 3(ii)).
133
94. Software firms are allowed to re-export capital goods without any (export) levies.134
Furthermore, as of July 1997 software firms are ex empt from corporate income tax on export earnings
from software and related services;  in addition, software exporters have been exempt from the 0.5%
minimum income tax otherwise payable.135  The authorities maintain that this type of exemption does
not have any impact on the cost of the product.
95. As at September 2001, none of the measures discussed in this section had been notified to the
WTO Committee on Subsidies and Countervailing Measures;  questions were raised by the EU and
the United States on these measures in 1997.136
(vi) Export-performance and value-added requirements
96. Since 1998, duty and tax exemptions on imports (other than polyester staple fibre) of all
export related industries have been subject to a requirement of 25% or 40% value added spread over aperiod of ten years (e.g. rice processing, cotton ginning).
137  To benefit from exemption from all
duties, taxes, surcharges, etc., on imports of all computers and related hardware, peripherals
(including communications hardware and software), telematic infrastructure, and software
development tools as well as from income tax reba tes, a mandatory export obligation in net foreign
                                                     
129 USTR (2000a).
130 Under Article 9:1(d) and 9:(4) of the WTO Agreement on Agriculture, during the implementation
period, developing countries are not required to undertake reduction commitments in respect of these export
subsidies.  WTO documents G/AG/N/PAK/2, 27 May 1997, G/AG/N/PAK/4, 19 February 1998,G/AG/N/PAK/7, 29 April 1999, and G/AG/N/PAK/9, 20 August 2001.
131 Ministry of Finance (2000a).
132 Import Export Procedure Order (1999).
133 Central Board of Revenue (1999b).
134 Pakistan Software Export Board (PSEB) online information.  Available at:  http://www.pseb.org/
[20 July 2000].
135 Pakistan Software Export Board (PSEB) online information;  and Central Board of Revenue (2000).
136 WTO documents G/SCM/Q2/PAK/2, 20 March 1997 and G/SCM/Q2/PAK/4, 3 April 1997.
137 Planning Commission (1998), p.7;  and Central Board of Revenue (1999b).Pakistan WT/TPR/S/95
Page 65
exchange terms (US dollar value) must be met over a period of five years.138  This consists of
exporting software equivalent to three times the c.i.f. value of the imported computer hardware,
software, and/or software development tools.
97. To date these measures have not been notified to the WTO Committee on Subsidies and
Countervailing measures.
(vii) Export-processing zones
98. Export-processing zones (EPZ) are considered a means for boosting industrialization, creating
job opportunities, bringing in new technology and know-how, and raising export capacity by creating
facilities for domestic and foreign investors.139  Establishment within EPZs involves benefits such as
tax holidays (e.g. capital gains;  salary of foreign personnel), indefinite carry forward of losses,
exemption of imports from duties and other federal/provincial taxes, and freedom from nationalimport restrictions, as well as exemption from labour laws and various other regulatory regimes
(including unrestricted repatriation of capital, profits, and dividends).
140  All industries other than
those classified as "specific" and "competitive", may set up in these zones.141  Since 1980, the Export
Processing Zones Authority (EPZA), an autonomous body under the Ministry of Industries and
Production, has planned, developed, and operated export processing zones in Pakistan.
99. Pakistan has one EPZ (Karachi Export Processing Zone, since 1981) in which 78 firms with
foreign equity are operating;  two new EPZs (Sialkot, Rawalpindi) were established under public –
private joint-venture arrangements, and about 12 more EPZs are in the process of being established.142
Food processing, plastics, chemicals, fabric/yarn pr ocessing, garments, leather products, stuffed toys,
precision mechanics and electrical/electronic are among the industries operating in the Karachi EPZ;
firms located in this EPZ account for US$74 billion of domestic and foreign investment.  So far
6,000 jobs have been created in relation to EPZs.
100. A composite scheme of National Industrial Zones (NIZs) appears to have been under
consideration to encompass industrial estates, free industrial zones, free trade zones and
export-oriented units (EOU) and estates for small and medium industries within areas of its boundary,
to further promote exports.143  Draft legislation for a National Industrial Zone Authority (NIZA) was
prepared by the Board of Investment (BOI) with technical assistance from UNCTAD.
101. Under Article 3 and Annex I of the WTO Agreement on Subsidies and Countervailing
Measures, certain tax exemptions available under the EPZ regime are classified as prohibited export
subsidies.  However, as a developing country, Pakistan has until the year 2003 to bring its legislation
                                                     
138 Pakistan Software Export Board (PSEB) online information.
139 Export Processing Zones Authority (EPZA) online information.  Available
at:  http://www.epza.com.pk [29 July 2000].
140 Although domestic labour laws are, by and large, applicable, employees of firms in these zones may
not refuse to work, go slow, or go on strike;  issues relating to control of employment are governed by orders
issued by the managing authorities of the zone.  Domestic and international environmental protection provisionsmust be observed (Board of Investment, 1999, pp. 25 and 27).
141 The "specific" and "competitive" industries cover:  arms and ammunition, security printing,
currency and mint, explosives, radioactive substances, sugar manufacturing, flour milling, ghee or vegetable oil,beverages (excluding fruit juices), alcohol (except fo r industrial use), tobacco processing, cotton ginning,
carpets, plastic bags, steel re-rolling and furnaces, automobile assembly, and polluting activities (Board of
Investment, 1999, p. 22).
142 U.S. Commercial Service (1999a);  and Export Processing Zones Authority (EPZA) online
information.
143 U.S. Commercial Service (1999a).WT/TPR/S/95 Trade Policy Review
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into line with WTO provisions.  At the time of completion of this Report, no measure discussed in this
section had been notified to the WTO Committee on Subsidies and Countervailing Measures, and as
indicated earlier questions were raised by the EU on these or similar requirements in 1997.144
(viii) Export finance, guarantees, and insurance
102. Pakistan has revised its Export Finance Scheme  (EFS), which is administered by the State
Bank of Pakistan and operated through commercial banks under concessional terms;  efforts havebeen made to reduce gradually reliance on preferential interest rates.  All value-added products
(except 24 items/category) are eligible for a concessional rate set at 10.5% (lower than nominal
commercial lending rates) for export finance and at 9% for export re-finance.
145  Lower-value-added
items (i.e. all types of yarn) and bleached and unbleached cloth have no longer been eligible as of
January and July 2001, respectively.  Export finance coverage was to be extended to softwareexporters;  the ceiling for re-finance was set at 50% of previous year's exports.
146  Other
improvements to the EFS include:  the extension of financial provision to indirect exporters;  the
extension of export credit from 150 to 180 days;  and the reduction of fines to exporters failing to
meet repayment commitments.
103. In 2001, a Foreign Currency Export Finance (FCEF) facility was introduced to provide
support for domestic manufacturers requiring foreign inputs for exportable goods and to increase
access to export financing for small and medium-size exporters.  The FCEF is to be available to the
exporter either for purchase of inputs and raw materials domestically, or to finance their imports
against import letter of credit to be opened for the portion that will be utilized for export purposes.
The FCEF is to be a self-liquidating dollar-based window for pre- and post-shipment finance.  Under
the FCEF, market-based export finance will be available to small- and medium-size direct exporters
(DEs) and their suppliers (i.e. indirect exporters, IDEs) for inputs linked to an export order.  TheFCEF is to run in parallel to the existing Export Finance Scheme (EFS) as an additional and alternate
facility.  The financing of inputs under the FCEF facility would be available for a maximum period of
180 days for both DEs and IDEs from the date of  drawdown of the facility.  Non-eligible items
include:  arms, ammunition, and other military material;  radioactive and associated material;  nuclear
reactors or parts thereof, fuel (cartridges), non-irradiated nuclear reactors;  and luxury and consumergoods.
(ix) State-trading
104. Several state-owned firms (including the Rice Corporation (TCP), Cotton Export Corporation,
and other firms in Table III.4) have been involved in export activities.  In particular, the TCP
(section 2(vii)) has:  channelled exports enjoying government credit to certain destinations (e.g.Commonwealth of Independent States, African countries);  exported to new/non-traditional markets;
exported fresh fruit, vegetables and minerals;  and undertaken countertrade operations with countries
facing cash constraints.
147  Despite its export promotion and market diversification tasks, the TCP
signed neither import nor export contracts in 1998-99, as its foreign trade operations have declined.
In response to questions in the context of the WTO Working Party on State-Trading, in 1997 Pakistanexplained that it does not notify the activities of these firms because they do not benefit from
exclusive trading rights.
148
                                                     
144 WTO document G/SCM/Q2/PAK/2, 20 March 1997.
145 Ministry of Finance (2001).
146 Pakistan Software Export Board (PSEB) online information.
147 Trading Corporation of Pakistan (1997, 1998, and 1999).
148 WTO documents G/STR/Q1/PAK/3, 1 October 1996 and G/STR/Q1/PAK/4, 31 July 1997.Pakistan WT/TPR/S/95
Page 67
(4) MEASURES AFFECTING PRODUCTION AND TRADE
(i) Taxation
105. Internal taxation in Pakistan is characterized by:  a low overall tax burden (as mentioned in
Chapter I, tax revenues in 2000/01 amounted to only 14% of GDP);  high reliance on indirect taxes,
many of which are unduly complex (and therefore lack transparency);  a multiplicity of taxes, often
narrowly based as a result of numerous concessions, if not exemptions, and some involving high taxrates
149;  an administration with inefficient and corrupt elements;  cumbersome assessment
procedures, including long delays in the resolution of disputes;  and endemic tax evasion owing to the
large size of the "informal" economy (less than 1% of the population paid any income taxes in
1999).150  In order to address these deficiencies, steps have been taken to reform Pakistan's tax system.
These steps include:  significant amendments to the general sales tax (GST) law in June 1996;clampdown on tax evasion;  a Self-Assessment Scheme intended to broaden the income tax base;  and
the imposition of an agriculture income tax on farmers with high incomes at the provincial level
(section 4(i), Chapter IV(2)).
151  In addition, it would appear that the provincial authorities plan to cut
the number of taxes from 29 to about 9.
106. Indirect taxes account for 71% of total tax revenue (Table III.6), which, according to the
authorities, is not a healthy sign as these taxes distort economic choices.152  Since the previous Review
of Pakistan, the general sales tax has replaced taxes on international trade as the main indirect tax.
Table III.6
Structure of direct and indirect tax revenue, 1994-2001
(Per cent and US$ billion)
1994/95 1995/96 1996/97 1997/98 1998/99 1999/00a2000/01a
Total (US$ billion) 8.4 9.1 8.3 8.2 8.4 7.8 8.1
Direct taxes 24.5 26.2 26.8 29.6 27.0 27.7 29.0
(a) Federal 23.9 25.6 26.2 29.1 26.5 27.0 28.4
(b) Provincial 0.6 0.6 0.6 0.5 0.5 0.8 0.6
Indirect taxes 75.5 73.8 73.2 70.4 73.0 72.3 71.0
(a) Central excise duty 17.2 17.0 17.3 17.7 16.0 14.3 11.7
(b) Sales tax 16.9 16.3 17.1 15.2 17.6 28.8 35.2
(c) Tax on international trade 30.1 29.1 26.5 21.0 20.1 15.7 13.7
(d) Surcharges 8.0 8.1 8.4 12.1 15.8 9.6 6.7
(e) Other taxes 3.3 3.3 3.8 4.3 3.4 3.9 3.6
a Estimates.
Source : Ministry of Finance (2001), Economic Survey 2000-2001,  Appendix Table 4.3.
(a) Indirect taxation
107. Since its previous Review, Pakistan has taken steps to overhaul its traditionally complex and
price-distorting system of indirect taxes (inc luding customs duties (section 2(ii))), which are,
inter alia,  a potentially serious source of inefficiency and have allegedly encouraged corruption,
                                                     
149 By the year 2000 only 36,000 companies or registered firms paid the bulk of the direct taxes on
income and wealth (Ministry of Finance, 2000a).
150 Financial Times , 4 April 2000, "Pakistan's tax gatherers limber up for marathon".
151 Ministry of Finance (2000a).
152 Ministry of Finance (2000a).WT/TPR/S/95 Trade Policy Review
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smuggling, and other types of tax evasion.153  These steps include simplifying the system, shifting
reliance away from customs duties to the GST, and raising the efficiency of the Central Board of
Revenue, the body responsible for making tax policy and collecting taxes.
108. The levy of different rates of excise duties on foreign and domestic goods seems to have been
eliminated as of June 2000.154
Sales Tax
109. During the period under review, the rate of the general sales tax (ST), which is a multi-stage
value-added type of tax, levied on domestic and foreign goods and several services alike (at the
import, manufacturing, wholesale, and retail stages), has varied;  however since December 1998 it has
remained at 15%.155  As of August 2000, a slightly higher ST rate of 16% has applied to imports of
furnace oil.156  The ST is riddled with exemptions, which have varied considerable over the review
period.  While some of these exemptions pertain to inputs (including poultry and cattle feed,
pesticides, fertilizer, cement, computer hardware/software), others apply to consumption items (such
as medicine and foodstuffs).157  Broadening the base of the ST is one of the Government's major
policy objectives.  A zero percent rate has applied to exports, and sales tax is refunded for inputs used
in exported goods.
Central excise tax
110. With a view to rationalizing the central excise tax (CET), certain adjustments in the rate
structure were made in favour of locally produced goods in 2000;  16 import-competing items were
exempted from the tax.158  At the time of the previous Review, the CET was levied on 63 domestically
produced items and 15 services at ad valorem rates (ranging from 3% to 200%) or specific rates;
imports of such goods were exempt from the tax.159
Other indirect taxes
111. In response to a long-standing demand by the trading community, as of July 1999, the
"Octroi" (a municipal toll tax) and "Zilla" (a district tax) taxes were eliminated.160
(b) Direct taxation
112. Companies resident in Pakistan are subject to corporation tax on their world-wide income.
The rates of tax are 58% for banking companies (down from 64% in 1993/94), 33% for companies
quoted on Pakistan's stock exchange (down from  42%), and 43% for other companies (down from
52%).  Companies other than banks are also subject to a 5% surcharge as of July 2000.  Furthermore,
various withholding taxes are levied at different rates depending on the type of income (dividends,
interest, royalties, etc.) and whether the company (or individual) is a resident or non-resident.  In
addition, all resident companies are subject to a minimum income tax equal to 0.5% of gross receipts
                                                     
153 U.S. Commercial Service (1999a).
154 WTO document WT/BOP/N/51, 7 July 2000.
155 ST rates of 18% (from 1 July 1996 to 27 March 1997) and 12.5% (from 28 March 1997 to
30 November 1998) have also applied (Central Board of Revenue, 1999a, p. 1165).
156 Ministry of Finance, Economic Affairs, Statistics and Revenue SRO 60/(I)2000, 29 A ugust 2000.
157 Central Board of Revenue of Pakistan online information.
158 Ministry of Finance (2000a).
159 GATT (1995).
160 Central Board of Revenue (1999b).Pakistan WT/TPR/S/95
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from the sale of goods, services or the execution of contracts, presumably to combat tax avoidance
and evasion.  The gross revenue of non-residents' air transportation and shipping business is taxed at
3% and 8%, respectively (unless a treaty for avoidance of double taxation provides a different rate or
reciprocal exemption), and this income is not subject to any other tax including the related
withholding tax.161
113. However, these income and other direct taxes provide the Government with less than a third
of its tax revenue (Table III.6).  This is partly due to the Government's use of such taxes as
instruments of industrial policy, by building into them various incentives.  Tax incentives are granted,
inter alia , for the generation or transmission of electricity, software exports, new investments,
brokerage houses, and banks.162  They include:  an exemption for private-sector projects engaged in
the generation of electricity;  a five-year exemption for income of computer training institutions set upbetween 1997 and 2005;  the exemption from corporate tax of income from software exports,  and
even of software exporters from 0.5% minimum income tax (section 3(v));  an exemption of income
from fruit processing, soft toys (undertakings set up as from June 2000) and solar energy equipment
(five-year exemption only);  a tax credit equal to 10% of investment in plant and machinery for new
investments and investments for BMR (balancing , modernization, and replacement) made during
two years starting from July 2000;  a one-year tax exemption commencing 1 July 2000, to facilitate
corporatization of brokerage houses;  and interest on non-performing loans and credited to a suspense
account is not taxed on accrual basis.
163  Estimates of the amounts of tax revenues forgone as a result
of these and other tax measures do not appear to be publicly available;  clearly, publication of such
estimates would greatly enhance fiscal transparency in Pakistan.  Furthermore, no studies have been
undertaken to evaluate the effectiveness of these incentives in relation to the tax revenue forgone;  in
the absence of any convincing evidence to the contrary, experience in other countries suggests that taxincentives are seldom cost-effective.
164
114. Since 2000/01, agriculture income tax has been taxed, thereby placing agriculture and
non-agricultural on a more equal footing for income taxation and thereby stimulating investment in
non-agricultural sectors.165  In a move towards maintaining three taxes at federal level and eliminating
barriers to new investment, the wealth tax was abolished in June 2001.
(c) Other types of direct tax
115. A number of other direct taxes are levied.  These include:  capital value taxes at rates of 1.5%
on purchases of airline tickets for international travel and 3.75% to 7.5% on imported motor
                                                     
161 Ernst and Young International (2001).
162 Ministry of Finance (2000a).
163 In the year 2000, it was estimated that this measure was to represent an annual cost of around
PRs 700 million (or US$13.5 million).  This concession is to improve the profitability of banks and allow them
to inject much needed capital in their balance sheets.  This concession would be allowed from the assessmentyear 2001-02 and the conditions under which it would be a llowed are being incorporated in the law (Ministry of
Finance (2000a)).
164 Most econometric studies show that forgone tax revenues exceed the increase in desired investment,
(OECD, 1995).  Furthermore, according to Shah (1995), se veral countries (for example, Brazil, Indonesia, and
Mexico), having observed that the investment induced by tax incentives falls short of the tax revenue forgone,
curtailed such measures.  Tax holidays are regarded as a particularly ineffective type of tax incentive comparedto tax credits (Mintz, 1990, 1992).
165 Ministry of Finance (2000a).WT/TPR/S/95 Trade Policy Review
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vehicles166;  contribution to the Workers Welfare Fund at a rate of 2% on the firm's income exceeding
PRs 200,000 (US$3,870);  and a "once and for all" tax on corporate assets.167
(ii) Production assistance
116. Since its previous Review, in addition to considerable border protection afforded to sensitive
sectors, Pakistan has continued to provide assistance to domestic producers, not just in the form of tax
incentives, but also by means of several financial support measures (sections 2(ii)(j), 3(iv), 3(v),3(vii), 3(viii), 4(i), and Chapter IV(2) and (4)).  The objectives of such assistance are to accommodate
domestic policy and promote export-led growth.  Notwithstanding these measures, Pakistan's
notification to the WTO Committee on Subsidies and Countervailing Measures (in 1996), contains
mainly wheat- and electricity-related support (Table III.7);  questions have been raised in this
Committee regarding several tax and non-tax measures that have not been notified.  Total budgetaryoutlays have declined by about 11% during the past three years (Table III.8);  most of these outlays
are directed at corporations and "others".
117. Pakistan has continued to provide electricity to farmers, manufacturers, and households at
prices up to 51.7% (1997/98) lower than to offi ces (i.e. commercial activities) (Chapter IV(2)
and (4));  this type of support was notified to the WTO Committees on Agriculture, and Subsidies andCountervailing Measures.
168
Table III.7
Subsidies notified under WTO provisions, 1993-2000
1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/2000
Agriculture (US$ million)
Wheat  118.1  111.3 208.9a138.5a-143.42 -191.29 -257.37
Fertilizers and agricultural credit 55.7 35.0 1,047.0 1,000.0 .. .. ..
Electricity (US$ million) 1.8 37.6 10.4 15.5 22.5 22.6 12.6
1993 1994 1995 1996 1997 1998 1999
Industry (US$'000)
Utility Store Corporation of Pakistan .. .. 1,243.1 38.9 .. .. ..
.. Not available.
a Not including locally produced wheat.
Source : WTO documents G/SCM/N/3/PAK, 21 October 1996 and G/AG/N/PAK/8, 20 August 2001.
118. Since 1996, the pattern of assistance in agriculture, livestock, fisheries, and forestry has
remained virtually unchanged;  in addition to border measures, it has consisted of research, marketing,infrastructural support, flood protection and provision of water supply services/facilities, as well as
input subsidies (investment, credit, fertilizer), price support, public stockholding and tax incentives,
including, until recently, tax exemption of agricultural income (section 4(i), and Chapter IV(2)).  In
the Uruguay Round, Pakistan did not undertake specific commitments to reduce support to
agricultural producers;  thus, it must abide by the general rules on domestic support and export
subsidies of the WTO Agreement on Agriculture.
169  Domestic support measures consist mainly of
"Green Box" measures, which are exempt from reduction commitments.  In addition, non-exempt
                                                     
166 Ernst and Young International (2001).
167 Central Board of Revenue online information.
168 WTO documents G/SCM/N/3/PAK, 21 October 1996 and G/AG/N/PAK/6, 12 August 1999.
169 Schedule LX Part IV Section I, 15 April 1994;  G/AG/AGST/PAK;  and WTO Agreement on
Agriculture Articles 15, 9:(4) and 7:(2):(b).Pakistan WT/TPR/S/95
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input subsidies are granted to agriculture;  (these are not product specific).  Since its previous Review,
Pakistan has regularly notified the WTO its budgetary outlays for domestic support;  these
notifications indicate a persistently high concen tration (e.g. 93.7%, 2000/01) of "Green Box" spending
on infrastructural services (e.g. irrigation, drainage, flood protection), and "negative" price support for
wheat when measured against a fixed external reference price of US$175 per tonne
(1986/88 average).170  In this context, in 1999 discussion took place in the context of the
WTO Committee on Agriculture over Pakistan's compliance with the de minimis  ceiling of
non-exempt domestic support requirements.171
119. Support in the form of tax and financial incentives to the manufacturing sector has been
provided with a view to, inter alia,  increasing domestic value added and export potential.  In addition
to credit facilities for the textiles sector, particular emphasis has been placed on promotinginformation technology, bio-technology and genetic engineering, oceanography, and human resources
development;  since 1997/98 the share of science and technology in total budgetary outlays have
grown twelve-fold (Table III.8).
172  Another priority area has been the small and medium-sized
enterprises (SMEs) involved in non-traditional activities (e.g. gems, jewellery, marble, fisheries),
where the institutional setting (i.e. Small Business Finance Corporations and Small and MediumEnterprise Development Authority), technical assistance, and financial support are being
revitalized.
173
Table III.8
Budgetary outlay for certain sectors, 1997-2001
(Million US$ and share of total expenditure)
1997/98 1998/99 1999/00 2000/01
Total (US$ million) 2,085.9 2,363.3 2,249.4 2,316.0
Agriculture 0.5 0.4 0.2 0.3
Industry 0.6 0.5 0.2 0.6
Minerals 0.4 0.6 0.0 0.0
Power 4.9 4.0 2.5 2.2
Fuels 1.3 1.0 1.0 1.9
Transport and communication 6.2 3.8 2.7 3.4
Science and technology 0.2 0.2 0.4 2.4
Rural development 2.4 2.5 9.1 2.0
Environment 0.3 0.3 0.2 0.2
Regional development projects 3.7 3.6 3.5 3.9
Corporations (e.g. WAPDA, Village
Electrification)29.7 30.8 33.3 25.3
Other 49.9 52.2 46.8 57.9
Source: Government of Pakistan Planning Commission (various years), Economic Framework and Public Sector
Development Programme:   Annual Plan,  Islamabad.
120. Price controls have affected several items;  in particular, those on pharmaceutical end
products seemingly had an adverse impact on foreign manufacturers' profitability, although these
controls apply equally to both domestic and foreign producers.174  At the time of the previous Review,
price controls applied to automobiles (to prevent the abuse of oligopoly power of domestic producers
                                                     
170 WTO documents G/AG/N/PAK/3, 28 May 1997, G/AG/N/PAK/5, 19 February 1998,
G/AG/N/PAK/6, 12 August 1999, and G/AG/N/PAK/8, 20 August 2001.
171 WTO document G/AG/R/20, 22 October 1999.
172 Planning Commission (2000), p. 45.
173 Ministry of Finance (2000a).
174 USTR (2000a).WT/TPR/S/95 Trade Policy Review
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(Chapter IV(4)), drugs and medicines (for social reasons), potassic fertilizers (in support of state
involvement in production of this item), and paper.175  Those on automobiles are not in force at
present.
(iii) Competition and consumer policy
(a) Competition policy
121. Domestic legislation on competition policy (Monopolies and Restrictive Trade Practices
(Control and Prevention) Ordinance) was passed in 1970 and amended most recently in 1995;  certain
amendments were under consideration in 1998, an d a Consumer Protection Act was passed in 1995.176
Since the previous Review, business entry restrictions (i.e. industry licensing regimes, bureaucratic
controls) favouring the creation of monopolies and oligopolies have been eliminated, thus reducing
industrial concentration.177  State-owned entities are beyond the purview of the legislation in this area.
At the time of completion of this report, a new competition policy law was under consideration to
address anti-competitive, restrictive business, and unfair trade practices;  exemptions for state-owned
firms and registration requirements for private sector companies were to be eliminated.
122. Since 1970, the Monopoly Control Authority (MCA), an independent statutory quasi-judicial
body has monitored, conducted enquiries, assessed, and made recommendations on cases of undueconcentration of economic power, unreasonable monopoly power, and unreasonably restrictive trade
practices;  these forms of barriers or distortions to competition are prohibited by the law.
178  Since the
previous Review, the MCA has examined dealings between associated undertakings (the granting of
loans/advances without charging mark-up/intere st or other concessional treatment mainly in
spinning/cotton/jute/textile firms, banks), monopoly power cases (mergers in the batteries and tobacco
sectors), single-firm monopoly cases (caustic soda, liquid chlorine), restrictive agreements (chemicals,
electric fluorescent tubes and bulbs), and mergers (including ex post monitoring in the cases ofchemicals, pharmaceuticals).  The MCA has also carried out investigations to determine the reasons
for price increases (in the cases of cement and sugar for example), as well as regular monitoring of the
prices of 17 essential items.  In 1997-98, out of the 343 cases investigated (29% less than in 1996-97),
40 apparently contravened the provisions of the Monopolies and Restrictive Trade Practices (Control
and Prevention) Ordinance of 1970.  In 1998/99 the MCA investigated 265 cases of undueconcentration of economic power and 103 cases of unreasonable monopoly power;  it also made an
order breaking up the cartel of cement manufacturers.
123. Pakistan participates in the activities of the WTO Working Group on the Interaction between
Trade and Competition Policy, where it has expressed views on issues such as the role of competition
policy in promoting global welfare;  the effect of anti-dumping rules and strengthened intellectualproperty regulations on competition (particularly for textiles);  and flexibility in the design and
administration of competition law and policy.
179  At regional level, it has proposed the inclusion of
competition policy in the SAARC negotiations to enhance economic cooperation and encourage trade
liberalization in the region.180
                                                     
175 GATT (1995).
176 Monopoly Control Authority (1997) and (1998).
177 U.S. Commercial Service (1999a).
178 Monopoly Control Authority (1997) and (1998).
179 WTO documents WT/WGTCP/M/5, 25 September 1998;  WT/WGTCP/M/6, 16 November 1998.
180 Monopoly Control Authority (1997) and (1998).Pakistan WT/TPR/S/95
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(b) Consumer policy
124. Following the passing of the 1995 Consumer Pr otection Act, model (enforcement) legislation
was prepared and sent to provincial governments for adoption and implementation.
(iv) Intellectual property rights
125. Since its previous Trade Policy Review, Pakistan has become increasingly aware of the
critical linkage between improved protection of intellectual property rights (IPRs) and investment.181
It has also recognized the need for improvements  in this area as well as its importance to the
development of its nascent information technology (IT) industry (Chapter IV (4)), and for consumer
protection.
International treaties
126. Despite its longstanding participation in the World Intellectual Property
Organization (WIPO), Pakistan seems to have relativ ely few international commitments in this area as
it has been party to only one of the 21 treaties administered by WIPO and the Universal copyright
Convention.182  Pakistan has decided to join the Paris Convention for the Protection of Industrial
Property.  Therefore, Pakistan's acceptance of the WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) constitutes a major step in the expansion of Pakistan'scommitments in this area.
WTO commitments
127. Since 2000/01, legislation on patents, trade marks, lay-out designs of integrated circuits, and
copyrights has been passed so as to ensure compliance with TRIPS commitments.  It also seems that
the authorities have been revising the IPR legi slation in accordance with the TRIMs Agreement.
183
Pakistan has participated actively in the work of the WTO Council for Trade-Related Aspects of
Intellectual Property Rights by, inter alia,  making submissions or expressing views on several matters
(e.g. review and negotiation of specific TRIPS provisions including geographical indications, the
scope and modalities for non-violation complaints)184;  its implementing legislation was to be
reviewed by this Council in November 2001.185
Enforcement action
128. Despite regulatory initiatives and steps to strengthen enforcement (including raids on
pirated-video rental shops and computer software outlets), intellectual property piracy remains
widespread.  This has led to criticism over ineffective law enforcement (particularly copyrights),
including a slow moving judiciary with a tendency toward non-deterrent penalties.186  At the time of
                                                     
181 GATT (1995), Vol. II, p. 63;  Ministry of Science and Technology (2000);  and USTR (2000a).
182 Pakistan is a party to the Convention Establishing the World Intellectual Property Organization (as
of 1977), the Berne Convention for the Protection of Literary and Artistic Works (as of 1948), and the UniversalCopyright Convention (as of 1954, although it has not acceded to its 1971 Paris Revision).
183 U.S. Commercial Service (1999a).
184 WTO documents IP/C/W/141, 29 April 1999, WT/GC/W/208, 17 June 1 999, WT/GC/W/354,
11 October 1999, WT/GC/W/355, 11 October 1999, and IP/C/M/26, 24 May 2000.
185 WTO document JOB(00)/4860 Council for TRIPS, 8 August 2000.
186 Notwithstanding these efforts, Pakistan's status under "Special 301" of the amended 1974 (1988)
Trade Act has remained on the "watch list" since 1989 (USTR, 2000b and 2000a);  and U.S. CommercialService (1999a).WT/TPR/S/95 Trade Policy Review
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completion of this report, the authorities indicated that IPRs rules on border measures had been drawn
up and are to be implemented by the Central Board of Revenue.
Regional and bilateral cooperation
129. A bilateral Treaty of Friendship, Commerce, and Navigation with the United States has
guaranteed national treatment for patent, trade mark, and other forms of industrial property rights to
U.S. right-holders.  Efforts to negotiate a comprehensive bilateral intellectual property rightsagreement, proposed by the United States, stalled in 1995.
187
(a) Industrial property
Patents and designs
130. Under the Patent Ordinance 2000 and Industr ial Designs Ordinance 2000, patent protection
has been set at 20 years;  protection of registered industrial designs is set at ten years with thepossibility of two additional ten-year extensions.  Patent protection covers both the process and the
product except for pharmaceuticals and agri-chemicals, for which only process patent is provided.
However, a mailbox provision has been made to receive patent applications for pharmaceuticals and
agri-chemicals as from 1 January 2005;  such patent applicants are to have exclusive marketing rights
provided that they have similar rights (i.e. patent, marketing) in the market of another WTO Memberand marketing approval in Pakistan.  At the time of completion of this Report, rules were being
framed to implement the Patent Ordinance 2000, Industrial Designs Ordinance 2000, and the Lay-out
Design of Integrated Circuits Ordinance 2000.
131. Compulsory licences may now be granted in cases of public interest (i.e. national security,
nutrition, health, development of vital sectors) and anti-competitive or insufficient patent exploitation,
as well as in cases where an invention claimed in a later patent (involving an important technological
advance of considerable economic importance) cannot be exploited without infringing an earlierpatent.
188  Equal rights are provided to foreigners and nationals including the exclusive right to make,
sell, and use the invention as well as authorizing others to do so. Pakistan has entered into
arrangements giving priority to patents, and reciprocity, with several Commonwealth countries,
including the United Kingdom.189  Priority may be claimed provided the patent application is filed
within 12 months from filing in a convention country;  all WTO Members are convention countries.
132. Registration/granting of patents and designs are administered by the Patents Office of the
Ministry of Industries and Production.  The patent owner, and his exclusive the licensee, may file a
suit to enforce these rights which are generally heard in the Court of the District Judge with the
possibility of appeals to both the High and Supreme Courts.190  As patent infringement is not a
criminal offence in Pakistan, remedies include injunctions (permanent and interlocutory), damages,and costs, but do not extend to imprisonment;  there is no plan to provide criminal penalties as
stipulated under TRIPS Article 61.
                                                     
187 U.S. Commercial Service (1999a).
188 Reverdin & Manda (2000), p. 4232, (Sections 23 and 32 of the 1911 Patents and Designs Act 1911).
189 Reverdin & Manda (2000), p. 4232.
190 The procedures for patent infringement are go verned by the Civil Procedure Code, 1908.  The
licensee can be joined in the proceedings as co-pla intiff (Meller, 1999).  U.S. Commercial Service (1999a).Pakistan WT/TPR/S/95
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Trade marks
133. Under the Trademark Ordinance 2001, protection is afforded for seven years from the date of
application and may be renewed for an additional period of ten years.  Protection covers devices,
brands, headings, labels, tickets, names, signatures, words, letters, and numerals, provided that they
are used in relation to goods.  Under the new legislation, trade mark protection for services is in force.
Trade marks may expire if not used;  any third party may request their cancellation after a period offive years and one month of non-use.
191  Registration is handled by the Trade Mark Registry of the
Ministry of Commerce.  At present, the normal pe riod of the registration process is two to two and a
half years.  Reportedly, there have been instances of trade mark infringement involving a range of
products, from toys to industrial machinery, as well as allegations that Pakistan's drug labelling rules
may violate the provisions of the TRIPS Agreement on trade marks.192
134. Geographical indications are protected under the Trademark Ordinance 2001.
Trade secrets
135. Trade secrets are protected under common law and the Trademark Ordinance 2001
(Section 67).
(b) Copyright and related rights
136. Pakistan's copyright legislation was last amended in 2000;  the authorities indicated that
copyright legislation now complies with TRIPS requirements.193  It protects artistic, literary,
cinematographic and recorded works;  audiovisual, phonograms, performance and broadcasts;  rental
rights for computers and sound recording, extendin g also to foreign works.  Copyrights for any
literary, dramatic, musical, or artistic work published within the lifetime of the author subsists for a
period of 50 years;  in case of posthumous work, copyrights subsist for 50 years following first
publication.194  At present, domestic provisions lack restrictions on reproduction and compulsory
licences, and a "clear point of attachment" for foreign sound recordings.195  The present legislation
provides for criminal penalties of up to three years imprisonment and fines of up to US$1,800 (current
exchange rate), but it does not expressly allow for civil ex parte  search orders against end-user
piracy196;  ex parte  search order is at the discretion of the court.
137. Efforts are being made to improve the regulatory framework and make it TRIPS consistent,
including amendments to the Motion Picture Ordinance.197  Furthermore, the authorities have been
working to supplement existing software protection with a new Ordinance for Protection of Software,
aimed at piracy protection for software developed in Pakistan or part of which is developed in
Pakistan.198
                                                     
191 Reverdin & Manda (2000), pp. 4235-4236.
192 These drug labelling rules were introduced in Au gust 1994 and have been argued to incorrectly
imply total interchangeability among products by diluting quality and safety differences (USTR, 2000a).
193 U.S. Commercial Service (1999a), "Copyright Ordinance 1962 or Ordinance XXXIV of 1962".
194 International Intellectual Property Alliance (2000).
195 Other areas deemed TRIPS incompatible include ov erly broad exceptions to copyright and a lack of
full retroactive protection for works (International Intellectual Property Alliance, 2000).
196 International Intellectual Property Alliance (2000) .
197 International Intellectual Property Alliance (2000).
198 Pakistan Software Export Board online information, "Draft Protection for Software
Ordinance, 2000" [Online].  Available at:  http://www.pseb.org/ dswlaw.htm [4 October 2000].WT/TPR/S/95 Trade Policy Review
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138. Piracy rates for computer software, motion pictures on video, sound recordings, textile
designs, and books (especially computer, business, and medical texts) seem to be of particular
concern.  For example, five known compact-disc production plants (of which two are properly
registered) are believed to threaten seriously the domestic legitimate market and convert the domestic
enforcement problem into an international export-piracy issue.199  Tens of thousands of video outlets
in Pakistan deal almost exclusively and openly in home- and foreign-produced pirated products.According to a recent study by Business Software Alliance, Pakistan registered the world's
11
th highest piracy rate (share of pirated retail sales to total software sales), although this rate
represented a decline, from 95% (1994) to 83% (1999).200  However, in 1999, retail revenue from
pirated software was 73.4% higher than in 1994.
139. Steps are being taken to strengthen enforcement, with a particular focus on combatting
motion picture and software piracy, but their efficiency is affected by alleged difficulties of the
judicial system.201  Special anti-piracy police task forces have been set up in Pakistan's three major
cities of Karachi, Lahore, and Islamabad.202  Regarding motion picture piracy, in 1999 raids on
518 video outlets were conducted, resulting in the seizure of 24,527 pirated video cassettes,
7,285 pirate VCDs and 96 VCRs.203  Consequently, an increasing number of video outlets are taking
steps to offer legitimate products with the level of video piracy dropping over the years from
100% (1995) to approximately 60% (1999).204  Raids conducted on a large number of computer
software outlets have often resulted in the arrest of the computer shop personnel.205  Enforcement
efforts do not appear to have been extended to the music market, where overall piracy rates are
estimated at 90% with the piracy of international and Indian repertoire standing at virtually 100%.206
(v) Other measures
140. Pakistan is facing numerous problems of environmental pollution and degradation of natural
resources (e.g. industrial and vehicle air pollution, deforestation, desertification, waterlogging, and
salinity).207  By 1998/99 only 20%-25% of solid waste was collected and disposed;  only 3% of
industrial waste is treated while the rest is discharged into rivers, lakes;  sea- and water-borne diseases
accounted for 20%-30% of all hospital cases.
141. Pakistan subscribes to most major environment-related agreements, and measures were taken
to fulfil commitments in this context.208  The Pakistan Environmental Protection Council (PEPC) and
                                                     
199 International Intellectual Property Alliance (2000).
200 The Business Software Alliance represents leading US software and computer technology
companies (e.g. Compaq, Digital, IBM, Intel, Apple, Microsoft, Novell, Lotus).  Business Software
Alliance (2000).
201 Reportedly, cases brought to court are seriously backlogged due to delays caused by inefficient
procedures, the significant documentation needed to support prosecutions, and the regular non-availability ofjudges, witnesses or defendants.  In 1998, out of 429 cases bro ught to the courts only 84 were decided
(International Intellectual Property Alliance, 2000).
202 USTR (2000a).
203 International Intellectual Property Alliance (2000).
204 International Intellectual Property Alliance (2000).
205 In 1998 and 1999, the police conducted more than 30 raids on resellers of business software in
Karachi, Peshawar, Lahore, Islamabad, Rawalpindi, and Quetta (International Intellectual PropertyAlliance, 2000), p. 335.
206 International Intellectual Property Alliance (2000).
207 Planning Commission (1998), pp. 51-53;  and Planning Commission (2000), pp. 55-58.
208 These include the Convention on International Trade in Endangered Species of Wild Fauna and
Flora (ratified on 20 April 1976), the Convention on the Conservation of Migratory Species of Wild Animals(1 December 1987), the Vienna Convention for the Protection of the Ozone Layer (18 December 1992), thePakistan WT/TPR/S/95
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the Pakistan Environmental Protection Agency (PEPA) are responsible for formulation of national
environmental policies and programmes.209  The PEPA is responsible for the development and
implementation of environmental standards and fo r monitoring compliance with those standards210,
while the PEPC approves the National Environmental Quality Standards (NEQS).211  NEQS for
municipal and liquid industrial effl uent and industrial gaseous emissions, motor vehicle exhaust, and
noise have been in force since August 1993.212  Further efforts were made by, inter alia,  passing the
1997 Environmental Protection Act, strengthening the institutional setting, raising public awareness
and reafforestation projects (supported by the World Bank and the Global Environment Facility Trust
Fund (GEF)).213  By mid 2000 the Pakistan Environmental Protection Council had explored
methodologies for the implementation of envir onmental legislation, a longstanding problem214;  the
institutional structure was reinforced.  Under the 1997 Environmental Protection Act, it has becomemandatory for private and public project proponents  to submit their plans for Initial Environmental
Examination or Environmental Impact Assessment reports for clearance by the authorities.  Pakistan
has participated in the work of the WTO Committee on Trade and Environment where it expressed its
views on matters such as environmental standards, eco-labelling, and "win-win" situations.
215
142. In the context of efforts to eliminate child labour, between 1999 and 2001 an annual amount
of US$300,000 is being provided to the Carpet Manufacturers Association to carry out a programme
to curb child labour and bonded labour in collaboration with the International Labour Office.216
Similar projects are under way in other export sectors such as soccer balls and surgical instruments.The Ministry of Labour has formulated an action plan for the elimination of child labour from
hazardous and other occupations.  The Child Care Foundation was also provided with a core fund of
PRs 20 million (about US$387,000) to initiate a programme for rehabilitation of child workers.
                                                                                                                                                                    
Montreal Protocol on Substances that Deplete the Ozone Layer (18 December 1992), the Basel Convention on
the Control of Transboundary Movement of Hazardous Wastes and their Disposal (26 July 1994), the
Convention on Biological  Diversity (26 July 1994), and the United Nations Framework Convention on Climate
Change (1 June 1994) as well as the New International Conventions and Protocol in the field of Environmentand Development under process (Prior Informed Cons ent Procedures for certain Hazardous Chemical and
Pesticides in International Trade, Persistent Organic Pollutants, Protocol on Biosafety).  Ministry ofEnvironment online information.  Available at:  http://www.environment.gov.pk/ [25 July, 2000]).
209 Ministry of Environment online information.
210 U.S. Commercial Service (1999a).
211 Ministry of Environment online information.
212 Board of Investment online information.  Available at:  http://www.pakboi.gov.pk/ [20 July 2000].
213 Planning Commission (1998), pp. 51-53;  and Planning Commission (2000), pp. 55-58.
214 Specific areas of concern prior to 1998 included the inability of provincial environmental protection
agencies to design cost-effective strategies for the enforcement of National Environmental Quality Standards
and the absence of a pollution control system at the national level (International Monetary Fund online
information.  Available at:  http://www.imf.org/external/np/pfp/pakistan/index.htm [1 August 2000]).
215 WTO documents WT/CTE/M/11, 22 August 1996, WT/CTE/M/14, 25 June 1997, and
WT/CTE/M/17, 9 April 1998.
216 Central Board of Revenue (1999b).