RESTRICTED  
  
WT/TPR/G/424  
23 February 2022  
(22-1737) Page: 1/20 
Trade Policy Review Body   Original: English  
 
TRADE POLICY REVIEW  
REPORT BY  
PAKISTAN  
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the 
Marrakesh Agreement Establishing the World Trade Organization), the policy statement by Pakistan  
is attached.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on Pakistan . WT/TPR/G/424 • Pakistan  
 
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  Contents  
1   INTRODUCTION AND OVERVIEW ................................ ................................ ................  3 
2   ECONOMIC AND TRADE ENVIRONMENT  ................................ ................................ ...... 5 
2.1   Pakistan's economy  ................................ ................................ ................................ .... 5 
2.2   Trade and external balances  ................................ ................................ ........................  6 
2.3   Investment  ................................ ................................ ................................ ................  6 
2.4   Fiscal balances and debt  ................................ ................................ ..............................  7 
2.5   Regional context ................................ ................................ ................................ .........  7 
3   ECONOMIC AND TRADE POLICIES  ................................ ................................ ..............  8 
3.1   Strategic Trade Policy Framework 2020 -25 ................................ ................................ .... 8 
3.2   National Tariff Policy (2019 -24) ................................ ................................ ....................  8 
3.3   Trade Facilitation and Promotion measures  ................................ ................................ .... 9 
3.4   Bilateral and Regional Trade Arrangements  ................................ ................................ .. 11 
3.5   Fiscal reforms  ................................ ................................ ................................ ..........  12 
3.6   Investment Policy and Investment Climate reforms  ................................ ......................  12 
3.7   Infrastructure  ................................ ................................ ................................ ..........  13 
3.8   Skills development  ................................ ................................ ................................ ... 15 
3.9   Intellectual Property  ................................ ................................ ................................ . 15 
3.10   Sectoral policies  ................................ ................................ ................................ ..... 15 
3.11   COVID -19 Policy R esponse  ................................ ................................ .......................  17 
3.12   Sustainable Development and Social Protection  ................................ ..........................  18 
4   MULTILATERALISM  ................................ ................................ ................................ .. 19 
5   WAY FORWAR D ................................ ................................ ................................ ........  19 
 
 
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  1  INTRODUCTION AND OVERVIEW  
1.1.  Pakistan's fifth Trade Policy Review comes at a time when the economy is recovering from 
a global pandemic. In 2020, while the world output shrunk by nearly 3.5%, Pakistan's effective 
COVID -19 response measures helped mitigate its impact on the economy. Pakistan's economy 
contracted by less than half a  percent during FY2019/20 and rebounded rapidly to near 4% growth 
in FY2021. By population size, Pakistan is the 5th largest country (about 220  million) in the world 
and has so far successfully avoided morbidity/mortality rates experienced by some comparable 
countries due to the pandemic.  
1.2.  Several reforms and policy measures were implemented during the review period to improve 
investment climate and to liberalize trade:  
i. To simplify and reduce tariffs and align the tariff structure with trade policy objectives rather 
than fiscal objectives, Pakistan is implementing a National Tariff  Policy (NTP) 2019 -24. In the 
first two years, tariffs were rationalized on more than 85% of the tariff lines. Nine -tenths of all 
tariff lines are now covered in five tariff slabs. Average applied tariff has decreased from over 
14% to almost 12% in the las t seven years. Despite recent surge in imports, the tariff 
rationalization drive will continue during the implementation period of the NTP. New institutional 
arrangements for tariff policymaking are expected to drive this momentum, going forward.  
ii. To facili tate trade, Pakistan has implemented 86.1% of its WTO Trade Facilitation Agreement 
(TFA) commitments. Measures to improve trade facilitation, inter alia , include the establishment 
of Pakistan Single Window (PSW) that brings numerous departments and agencie s on a single 
platform to streamline trade regulatory requirements, Web -based One Customs (WeBOC) 
electronic system, pre -arrival processing and capacity enhancement of Pakistan Customs 
officials.  
iii. Under the Integrated Transit Trade Management System (ITTMS) , Pakistan is working towards 
modernization of border crossing points (BCPs) including Torkham and Chaman (with 
Afghanistan) and Wagha (with India) to shorten port dwell time. Under this project, the 
Government of Pakistan is establishing Pakistan Land Por t Authority to regulate and support the 
infrastructure being built while also focusing on the modernization of dry ports and off -dock 
terminals. The project is pivotal in improving competitiveness, regional value chain integration, 
connectivity and export enhancement.  
iv. To help improve domestic competitiveness, Pakistan has undertaken several measures 
including:  
• Initiated regulatory reforms through Pakistan Regulatory Modernization Initiative 
(PRMI) to remove outdated regulations and make the necessary regula tions more 
business friendly;  
• Initiated and updated several sectoral policies, including Pakistan's first e -Commerce 
policy, Auto Policy, National Electric Vehicle Policy, Small and Medium Enterprises 
(SME) Policy and entrepreneurship schemes for the youth ; 
• Initiated an ambitious national program me for skills and technical development to 
support productivity improvements and employability, which includes the 
development and standardization of technical and vocational qualifications, 
accreditation of institu tes, skills development and apprenticeship training.  
v. To improve the Intellectual Property environment, the Parliament has passed the Geographical 
Indications (GI) Law; Pakistan joined the Madrid system of international registration 
Trademarks, and revised national IP laws to incorporate international good practices.  
vi. To strengthen economic relations in the region, Pakistan has concluded Phase -II of 
China -Pakistan FTA; entered into a Strategic Economic framework with Turkey and launched 
preferential trade agr eements negotiations with Thailand, Turkey, Afghanistan and Uzbekistan, 
in addition to reviewing the one existing with Indonesia. Pakistan also signed a bilateral Transit 
Trade Agreement with Uzbekistan and is in the process of renegotiating Afghanistan Pa kistan WT/TPR/G/424 • Pakistan  
 
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  Transit Trade Agreement (APPTA). With the aim of enhancing regional trade, Pakistan is actively 
engaged with Kazakhstan, Kyrgyz Republic and Tajikistan on Transit Trade Agreements and 
assessing barriers to trade. In addition, major regional connecti vity and logistics infrastructure 
works are well underway in Pakistan under the China -Pakistan Economic Corridor (CPEC), a part 
of the Belt and Road Initiative.  
vii. To improve price and financial stability, and to increase predictability in domestic markets in  line 
with best international practices, the Parliament is considering amendments to the State Bank 
of Pakistan (SBP) Act that will strengthen the autonomy and governance of the central bank.  
viii. To make the policy environment stable, predictable and non -distortionary, the process of issuing 
Statutory Regulatory Orders (SROs), which previously allowed the Federal Board of Revenue 
discretionary administrative level authority to make ad hoc changes, has been revised. The 
Federal Board of Revenue cannot issue regu latory orders pertaining to financial matters by its 
own unless approval is solicited from the competent authority i.e., the Federal Government in 
majority of the cases. Matters to the extent of import duties are now reviewed by the newly 
instituted Tariff  Policy Board and approved by the Cabinet or the Parliament, as the case may 
be. 
ix. While the economy is gearing towards a more sustainable growth model, there remain internal 
and external risks that can dampen the effectiveness of government's efforts:  
a. Pakistan continues to be impacted by the ongoing COVID -19 driven economic crisis. 
Growth is rebounding world over, but the surge in demand combined with continued supply 
chain and labor market disruptions has led to an uptick in global inflation. Moreover, a 
surge in global energy prices along with depreciation of the Pak Rupee has contributed to 
a surge in domestic prices. Uncertainty remains high because of various reasons including 
new variants of the virus.  
b. Historically, the situation in Afghan istan has had multiple spillover effects on Pakistan and 
its economy due to many reasons including a long and porous border that the two countries 
share:  
• The consequent security issues have had substantial financial and economic 
implications for Pakistan, as resources are deployed to respond to security threats. 
Security concerns also impact the investment climate, particularly for foreign 
investors, and have dampened investment in Pakistan for the last many decades;  
• The recent suspension of aid flows, free zing of central bank reserves and international 
sanctions on Afghanistan has meant that Afghans' access to foreign currency is limited 
and is being met informally through Pakistan, which has added to the substantial 
pressure on the Pakistani rupee;  
• Faced w ith drought and with the exit of NATO led forces, Afghanistan's already 
vulnerable population is facing a humanitarian crisis. Formal and informal movements 
of foodstuff from Pakistan are adding to inflationary pressure on basic food items in 
Pakistan. In addition, Pakistan is meeting the needs of the 3  million Afghan refugees 
that have sought shelter in Pakistan over the last few decades, putting considerable 
strain on its limited financial resources.  
c. Pakistan has been facing a balance of payments crisis a nd is in an IMF program me 
(Extended Fund Facility – its 22nd program me) since July  2019. Pakistan has successfully 
completed the first reviews under the program me, while staff level agreement on the 6th 
review has also been reached. Pakistan is undertaking  measures to break out of the 
structural problems that have led to boom -bust cycles of growth and repeated 
macroeconomic stress over the decades.  
d. Fiscal fundamentals remain chronically imbalanced, driven primarily by persistent losses 
by state owned enterp rises and a low tax -to-GDP ratio. These pressures are currently 
exacerbated by COVID -19-related social protection expenditures, and those related to 
dealing with the Afghanistan war and its aftershocks. A youth bulge dominates Pakistan's WT/TPR/G/424 • Pakistan  
 
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  population, and th e Government is gearing to leverage it positively by investing in skills 
development and job creation. These, and other socioeconomic program mes can 
exacerbate the fiscal stress.  
1.3.  These challenges mean that Pakistan's fiscal and external balances remain und er persistent 
pressure and there is limited space to pursue the broader objectives of trade and tariff policies more 
aggressively. As a result, while Pakistan remains committed to a long -term agenda of trade 
liberalization and domestic competitiveness, the  ambitions are moderated by its immediate priorities 
to alleviate poverty, create employment, stabilize prices and address macro -economic imbalances.  
2  ECONOMIC AND TRADE ENVIRONMENT  
2.1  Pakistan's economy  
2.1.  Pakistan's economy has shown remarkable resilience since  the pandemic hit the country. While 
manufacturing was hit hard and contracted by 7% as export destinations went in a lockdown, it 
rebounded with a sharp recovery in FY2021. Overall, Pakistan's GDP growth has averaged just 
under  4% in the period under revi ew (Table 1 ). 
Table 1 Real GDP growth rate, 2014 -21 
Sector/industry  FY14  FY15  FY16  FY17  FY18  FY19F FY20R FY21P 
Agricultural sector  2.50 2.13 0.15 2.18 4.00 0.56 3.31 2.77 
Industrial sector  4.53 5.18 5.69 4.55 4.61 -1.56 -3.77 3.57 
1. Mining and quarrying  1.40 4.97 6.19 -0.60 7.80 1.20 -8.28 -6.49 
2. Manufacturing  5.65 3.88 3.69 5.83 5.43 -0.69 -7.39 8.71 
3. Electricity generation 
and gas distribution  -0.74 13.48  9.39 -2.69 -17.21  13.57  22.40  -22.96  
4. Construction  5.96 7.26 13.68  8.95 10.83  -15.50  5.46 8.34 
Services sectors  4.46 4.36 5.72 6.47 6.35 3.79 -0.55 4.43 
GDP growth rate  4.05 4.06 4.56 5.22 5.53 2.08 -0.47 3.94 
F Final.  
R Revised.  
P Provisional.  
Source:  Pakistan Bureau of Statistics.  
Figure 1 Share of GDP components , 2015 -21 
(%) 
 
Source:  Pakistan Bureau of Statistics.  
2.2.  The services' sector continues to grow faster than agriculture and manufacturing, contributing 
over 60% to GDP. The contraction in the industrial sector is a cause for concern, as it signals early 
de-industrialization. Consequently, recent economic and trade policies are geared towards rebooting 
industrialization. There are early signs of growth in construction, cement,  textile, automobile and 
power sectors.  
21% 19% 19% 19% 19% 19% 19%21% 21% 21% 21% 20% 19% 19%59% 59% 60% 60% 61% 61% 62%
FY15 FY16 FY17 FY18 FY19 FY20 FY21
Agricultural sector Industrial sector Services sectorFigure 1  Share of GDP components (%)
Source:   Pakistan Bureau of Statistics.WT/TPR/G/424 • Pakistan  
 
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  2.2  Trade and external balances  
2.3.  Pakistan's exports of goods reached USD  25.3 billion in FY2020/21, while exports of services 
were valued at USD  5.9 billion. Garments and textiles make up around 61% of Pakistan's goods 
exports, while agricultural products make up another 19%. Exports are relatively unsophisticated 
and low value -added, and therefore exhibit low responsiveness to global economic growth. 
Encouragingly, latest data shows that Pakistan is moving on a trajectory  of higher -value exports. 
This trend needs to be strengthened and accelerated. Pakistan intends to solidify these gains, for 
example by utilizing the European Union GSP+ scheme for a wider range of products.  
2.4.  The value of imported goods and services – USD 54 billion and USD  7.8 billion respectively – 
is more than twice that of exports. The two largest import categories are fuel (representing 29% of 
the import bill), followed by capital and transport (22% of the import bill), both of which are critical 
inputs  into the productive sectors of the economy. Pakistan's dependency on imports of imported 
fuel, raw materials and capital goods has meant that episodes of high domestic growth have led to 
large expansions in imports without a commensurate increase in expor ts, leading to current account 
deficits.  
2.5.  With exports insufficient to cover the imports bill, Pakistan has depended on the high and 
growing inflow of remittances, valued at USD  29.3 billion in 2021, and on official and private 
financing to pay for imports.  This leaves Pakistan vulnerable to external shocks that influence these 
flows, such as energy (oil and gas) and commodity prices.  
2.6.  In addition, high inflows of remittances and Afghanistan war related funds have kept the 
exchange rate high and contributed t o low international competitiveness for Pakistani products. 
Historically,  exchange rate was also kept inflexible and overvalued as a policy decision, leading to 
high consumption of imports and underdevelopment of the export sector. To break out of the cycl e, 
the exchange rate has now been allowed to be more responsive to market forces. Consequently, the 
Pakistani rupee has depreciated 30% in the last three years. In addition, some of the demand for 
foreign exchange in Afghanistan is currently being met info rmally through Pakistan, adding pressure 
on the rupee that was already in sharp decline.  
2.7.  Without the stability of a strong export sector, Pakistan is subjected to frequent balance of 
payments crisis. In July  2019, Pakistan entered an IMF program me (Extended Fund Facility) to 
address the balance of payments crisis. There are ongoing negotiations with the IMF on the 
resumption of this program me following a COVID -19 related pause.  
Figure 2 Exports, imports and BOP, 2013 -21 
 
Source:  Pakistan Bureau of Statistics.  
2.3  Investment  
2.8.  FDI inflows to Pakistan (USD  1.86 billion in 2021) are largely stagnant and focused on power, 
oil and gas and financial sectors. While Pakistan has an attractive market size, the poor security 
situation, par tly resulting from the Afghan war, low energy availability, high regulatory compliance 
burdens and low productivity have contributed to low investment. During the review period Pakistan 
has made substantial improvements in the supply of electricity and is continuing to work on 
transmission losses and pricing. Work on regulatory compliances and productivity is also well 
010203040
020406080
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Exports Imports Trade deficit (RHS)Figure 2  Exports, Imports and BOP, 2013 -21
Source:   Pakistan Bureau of Statistics.
USD billionUSD billionWT/TPR/G/424 • Pakistan  
 
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  underway, which will help in attracting FDI subject to improvements in the pandemic situation and 
stability in Afghanistan.  
Figure 3 Net FDI  2021, sectoral breakdown  
 
Source:  Pakistan Bureau of Statistics.  
2.4  Fiscal balances and debt  
2.9.  As with the current account balance, Pakistan's fiscal balance also remains chronically 
imbalanced, driven primarily by persistent losses b y state owned enterprises and low tax -to-GDP 
ratio. These pressures are currently exacerbated by COVID -19-related social protection 
expenditures, and those related to dealing with the Afghanistan war and its aftershocks. Against the 
backdrop of these chall enges, the fiscal performance remained satisfactory due to the Government 's 
efforts at fiscal consolidation, prudent expenditure management and effective resource mobilization. 
The fiscal deficit was contained at 8.1% of GDP in FY2020 against 9.0% of GDP r ecorded in FY2019.  
2.10.   The fiscal and external deficits, unprecedented COVID -19 related situation and exchange rate 
depreciation have had an adverse impact on Pakistan's debt burden. The gross debt to GDP ratio in 
Pakistan has increased from 72.1% in FY2018 to  83.5% in FY2021 after peaking at 87.6% in FY2020.  
2.5  Regional context  
2.11.   Pakistan shares borders with Afghanistan and Iran on the west, India in the east, and China 
on the north; (with the Arabian Sea in the south). Collectively these countries account for 28.5 % of 
world trade and 22% of world GDP. Yet the region remains one of the least integrated in the world 
as political challenges i.e., Afghan wars, global sanctions against Iran, and disputes between 
Pakistan and India have so far impeded effective economic cooperation.  
2.12.   The most pronounced challenge among these have been the wars in Afghanistan and their 
spillovers. The wars have led to intermittent waves of refugees from Afghanistan1, a number that is 
increasing following the recent NATO exit from Afghanist an. Furthermore, two decades of increased 
terrorist attacks in Pakistan have had economic and security implications. Pakistan's own resources 
were diverted to countering these impacts, and the risky investment climate has led to capital flight, 
and comprom ised Pakistan's ability to attract investment and grow its trade with Afghanistan and 
Central Asia. Pakistan has also had to deal with informal trade, influx of drugs and weapons into the 
country, law and order deterioration in border areas and leakage of foreign currency.  
2.13.   On the western border, Iran has been under global sanctions since 1979. These international 
sanctions led to an absence of payment infrastructure between Pakistan and Iran. In this context, 
Pakistan's long border with Iran is also problem atic, as it enables more informal than formal trade.  
2.14.   On the east, Pakistan shares a border with India - the world's 6th largest economy with an 
import market of about USD  600 billion. There is a large trade potential between the two countries, 
which has no t so far been realized due to various reasons. Apart from bilateral trade regional 
integration in South Asia has also been impeded, including the efficacy of South Asian FTA (SAFTA).  
 
1 Since late 1970s Pakistan has hosted a large number of Afghan refugees; hovering around 3 million.  
49%
13%13%8%6%6%6%
Power
Oil & gas explorations
Financial business
Trade
 Electrical machinery
Communications
All otherFigure 4 Net FDI 2021, sectoral breakdown
Source: Pakistan Bureau of Statistics.WT/TPR/G/424 • Pakistan  
 
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  2.15.   While Pakistan is located in a region that is facing political and securi ty challenges, it is 
explicitly moving towards a policy of geoeconomics: leveraging its location and market size for 
economic gain, prioritizing economic security, and promoting peaceful resolution of outstanding 
political issues.  
2.16.   The Afghan war has now ended and while the situation remains fluid, there is hope that this 
will improve stability and regional trade. Moreover, Pakistan is engaged in efforts to leverage its 
strategic location, which provides the shortest port access to A fghanistan, Central Asia and 
Western  China,  to improve regional integration, including through energy trade.  
3  ECONOMIC AND TRADE POLICIES  
3.1.  Pakistan has undertaken several reforms and policy measures to address the structural issues 
that have been outlined ab ove, to improve domestic competitiveness, reindustrialize the economy 
and build a stronger export base. At the same time, there has been a strong focus on social 
protection and creation of employment to provide for and leverage Pakistan's large and young 
population, and to help in recovery from the global pandemic.  
3.1  Strategic Trade Policy Framework 2020 -25 
3.2.  The Strategic Trade Policy Framework (STPF) 2020 -25 aims to enhance Pakistan's export 
competitiveness and transform Pakistan from a factor -driven to an ef ficiency -driven economy, 
integrated into the regional and global value chains. Four critical enablers have been identified that 
would help achieve the STPF objectives: (i) Competitiveness Enhancement; (ii) Trade Related 
Investment; (iii) Integration into G lobal Value Chains; and iv) Export Ecosystem.  
3.3.  The framework identifies eighteen priority sectors, including both traditional sectors and new 
developmental sectors, based on international demand trends and the corresponding capacities and 
capabilities of di fferent export sectors of Pakistan. The guiding principle is to focus most of the efforts 
in sectors that promise greater export opportunities and larger returns, allow diversification into 
non-traditional markets, and increase the share of exports in medi um-to-high technological content 
products.  
3.4.  With an emphasis on export diversification, priority sectors road mapping developed by the 
Revenue Mobilization, Investment and Trade (ReMIT) program me, with the assistance of the 
International Trade Centre (ITC),  is in its final stages. Sectoral Councils for stakeholder 
consultations, among other things, under STPF are also being established in this regard.  
3.5.  The STPF  2020-25 gives strategic direction to other trade related initiatives such as national 
tariff policy , trans shipment, gender mainstreaming, and export -oriented entrepreneurship 
development, compliance with international standards, economic infrastructure development, 
domestic commerce and service sector. To ensure effective and timely implementation, the 
Government has formed National Export Development Board chaired by the Prime Minister to provide 
strategic guidance to increase export competitiveness and review trade policy implementation 
progress under the STPF.  
3.2  National Tariff Policy (2019 -24) 
3.6.  The National Tariff Policy (NTP), approved by the Federal Cabinet in October  2019, aims to 
liberalize and simplify the tariff regime during its implementation period. The basic objective of 
the NTP is to use tariff as an instrument of trade policy rather than merely fiscal considerations. The 
objectives of the NT P are to:  
• Improve competitiveness of manufacturing sector through tariff rationalization;  
• Increase employment opportunities by attracting investment in the manufacturing sector;  
• Reduce distortions in the domestic price structure;  
• Removing anomalies in the tariff structure which is causing distortions between sectors 
and with -in the value chains.  WT/TPR/G/424 • Pakistan  
 
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  3.7.  Major institutional changes include establishment of the National Tariff Board, housed in the 
Ministry of Commerce (MoC) and technically supported by the newly set up Tariff Policy Center 
(TPC). The TPC is performing a key role in conducting research and analysis for reform proposals 
and helping build consensus on reform amongst stakeholders. Simultaneously, a Tariff Policy Wing 
has been constituted in the MoC to ste er the reform program me through government institutions 
and platforms.  
3.8.  In the first two years of the implementation of NTP, tariffs have been rationalized on more 
than 85% of the tariff lines. Nine -tenths of all tariff lines are now covered in five tariff slabs. Average 
applied tariff has decreased from over 14% to about 12% in the last seven years. Despite the recent 
surge in imports, the tariff rationalization drive will continue during the implementation period of 
the NTP, till 2024.  
3.9.  To make the policy e nvironment predictable and non -distortionary, the process of issuing 
Statutory Regulatory Orders (SROs), which previously allowed the Federal Board of Revenue 
discretionary power to make ad hoc changes to taxes, regulatory duties and procedures, has been 
changed. Presently, decisions regarding imposition or removal of import duties are taken by the 
Federal Cabinet and in certain cases by the Parliament on the recommendations of the Tariff Policy 
Board.  
3.3  Trade Facilitation and Promotion measures  
3.10.   Pakistan has made substantial efforts to improve border management and facilitate trade 
during the review period, which has resulted in an improvement in the World Bank Trading Across 
Borders ranking from 169th in 2016 to 111th in 2020.  
3.11.   Since Pakistan has joined the Tr ade Facilitation Agreement in 2015, it has implemented 86.1% 
of its TFA commitments.2 This includes Temporary admission of goods and inward -outward 
processing, electronic payments, risk management -based clearance and audits and uniform 
documentation proce dures. The Trade & Transport Facilitation Unit will focus next on advance 
rulings, improvement in average release times, enhancing cooperation amongst various 
border  agencies, Authorized Economic Operator (AEO), and implementation of Pakistan Single 
Window  (PSW).  
3.12.   PSW will become a single -digital -window interaction between private sector and government 
agencies. It will be implemented in a phased manner starting with PSW Lite, slated for deployment 
in March  2022, bringing numerous agencies and departments on  a single platform to streamline 
import, export, and transit regulatory requirements. Eventually, PSW will become part of a larger 
National Single Window that will further integrate other national agencies leading to an additional 
reduction in time, cost, and complexity of regulatory compliance.  
3.13.   Pakistan relies on customs cooperation to reduce regulatory compliance at the border. This 
includes signed MOUs for customs cooperation with Afghanistan, Turkey, India, UAE, US and 
Islamic  Republic of Iran  through e lectronic data interchange for faster clearance, reduced 
misdeclaration and better risk management. In addition, such agreements are also being finalized 
with Republic of Korea , ASEAN countries, Kingdom of Saudi Arabia, Russian Federation, and 
European Uni on. Similar cooperation under China -Pakistan FTA Phase II has led to reduction of 
discrepancy in China -Pakistan trade data.  
3.14.   To counter the issues of smuggling of goods and contraband, and regulate the movement of 
people, Pakistan's borders are being fenced . Following the completion of this fence, all cross -border 
movements will be regulated via sixteen designated crossing points that are being developed for 
monitoring and documentation across borders.  
3.15.   In order to curb smuggling of goods and contraband, the Government has rationalized tariffs 
of smuggling prone items and invested in improved capacity at border crossings. The Federal Board 
of Revenue's capacity building measures included: (1) equipment -procurement and 
staff-recruitment under Bo rder Management Initiative, (2) awareness campaigns, (3) special 
budgetary allocations, (4)  additional security checks on appointment of officers, (5) linking clearance 
 
2 Category A (25.6%), Category B (40.3%), Category C (20.2%).  WT/TPR/G/424 • Pakistan  
 
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  of goods to provision of foreign invoice and (6) extending advance rulings. These measu res, apart 
from plugging leakages, will also facilitate transshipment in the country by reducing release times.  
3.16.   In order to promote regional integration, Pakistan is implementing the Integrated Transit 
Trade Management System (ITTMS), which is modernizing its Border Crossing Points (BCPs) - with 
state-of-the-art ICT equipment, and physical infrastructure - namely Torkham, Chaman (with 
Afghanistan) and Wahga (with India). In order to manage and regulate the facilities the Government 
has decided to create an organization called Pakistan Land Port Authority (PLPA). This pilot project 
will eventually be expanded to other border crossings and dry ports, helping reduce costs and 
processing time for border trade.  
3.17.   Pakistan and China have had historical relations and  have built on this to strengthen Pakistan's 
domestic and regional trade infrastructure under China Pakistan Economic Corridor (CPEC)  - a 
flagship initiative of China's Belt and Road Initiative. Initiated in 2015, CPEC comprises improved 
road, rail and air  transportation, port and SEZs development, energy and fiber -optic cable networks, 
in addition to industrial, agricultural and academic cooperation. This ambitious initiative aims to 
promote not just the bilateral relationship between the two countries but  is also expected to 
contribute to broader regional integration.  
3.18.   On its border with India, apart from the ITTMS pilot project at Wagha crossing, Pakistan has 
also opened a visa -free border crossing at Kartarpur Corridor3 that would help increase 
people -to-people contact that would hopefully evolve into greater economic cooperation in the 
future.  
3.19.   The period under review saw improved operationalization of multiple projects in Gwadar –an 
upcoming deep -sea port –with installation of three new quay cranes, star t of desalination plant, and 
initiation of construction of East -Bay Expressway, Gwadar Airport, and power plants. This 
development complements the Pakistan Uzbekistan Transit Agreement to allow Gwadar to realize its 
potential as a transit trade hub for Chi nese, Central Asian, Afghan and Iranian transit cargo. This 
cargo will be transported efficiently under the ambit of National Freight and Logistics Policy 2020.  
3.20.   The National Freight and Logistics Policy 2020 aims to lower inefficiencies in Pakistan's 
logistics and transport landscape. Key policy actions include creation of Pakistan Courier and 
Logistics Regulatory Authority (PCLRA), e -Commerce infrastructure, Custom -Data-Exchange with 
Afghanistan and integrating multi -modal transport logistics into WeBoC so ftware. In addition, during 
the review period, Pakistan has introduced incentives for toll -manufacturing that would help Pakistan 
better integrate with Global Value Chains.  
3.21.   Pakistan has seen progress in acceding to the Revised Kyoto Convention, ATA Carnet 
Convention, COTIF (Convention on International Carriage by Rail) and TIR. Pakistan acceded to TIR 
convention in July  2015, with the first transit -shipments reaching Uzbekistan in May  2021. 
Experience from operating TIR convention with Uzbekistan will help Pakistan extend this facility to 
its other regional partners.  
3.22.   Pakistan has also planned a border markets initiative aimed at promoting livelihoods of locals 
in border areas impacted by the anti -smuggling initiatives. A total of 15 border markets would be 
established along Pakistan's border with Afghanistan and Iran. Initially, three pilot -markets have 
been operationalized on the border with Iran. These markets will allow trade of goods on 
concessionary tariffs rates and therefore become a source of income a nd affordable products for the 
locals.  
3.23.   Apart from regular customs procedures, Sanitary and Phyto -sanitary (SPS) standards are 
another major hurdle faced by Pakistani agricultural exporters. In order to reduce the burden of SPS 
related measures, a product f ocused Agriculture Wing was created at the Ministry of Commerce. In 
the immediate term, scanning of consignments for presence of COVID -19 is ensuring regular and 
safe agri -trade consignments.  
 
3 This initiative was undertaken by the Government of Pakistan to grant pilgrims from India visa -free 
access limited to a holy site located just across the border inside Pakistan.  WT/TPR/G/424 • Pakistan  
 
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  3.24.   For long -term SPS compliances, Pakistan took a two -pronged appro ach of 
developing  domestic ability and improving cooperation with foreign partner -authorities in potential 
markets. Pakistan improved its ability to meet SPS standards for mango and meat exports by 
approving EU -Standard Mango Hot Water Treatment Plants; Me at processing facilities recognition 
by Malaysia  & China and making progress on Halal meat certifications. In addition, Pakistan is 
currently negotiating Mutual Recognition Arrangements (MRAs) with China and Thailand on 
agricultural products. Pharma sector  saw similar gains as the period under review witnessed 
Pakistan's first WHO accreditation of drugs.  
3.25.   Pakistan is creating a brand identity through the "Emerging Pakistan" initiative, information 
collection and dissemination. This is done through a large ne twork of Trade and Investment Officers 
(TIOs) all over the world who are tasked with becoming a bridge between foreign and Pakistani firms 
and authorities and answering specific trader queries and issues. In addition, several seminars and 
exhibitions were organized with the aim to disseminate information on trade and investment issues.  
3.26.   Pakistan has also undertaken targeted initiatives such as the 'Look Africa Initiative', aimed at 
tapping into the emerging African market via trade diplomacy, institutional l inkages, and investment 
promotion. Improved efforts at trade diplomacy include exhibitions, trade delegations, Africa based 
TIOs and Look Africa Trade Forums in major Pakistani export clusters. Institutional linkages comprise 
expanding commercial section r each, investment promotion, Joint Working Groups, setup of 
banking  & transport channels and contacts between the Pakistani and African business communities. 
Pakistan is also initiating negotiations on bilateral and multilateral trade agreements for market 
access in Africa.  
3.4  Bilateral and Regional Trade Arrangements  
3.27.   Pakistan is focused on improving economic integration with regional countries under the 
Government's vision of prioritizing geo -economies and leveraging Pakistan's position and 
endowments for the economic benefits of Pakistan and the region.  
3.28.   Pakistan successfully concluded negotiations for Phase II of China -Pakistan FTA, which 
became operational in January  2020 and led to mutual reduction in 75% tariff lines for both 
countries. Pakistan has been al lowed immediate zero -rated market access on 313 Chinese tariff lines 
in which Pakistan enjoys highly competitive advantage and export potential. The FTA also covered 
cooperation on customs' procedures and Electronic Data Exchange, which in turn has reduced  
misdeclaration of imports and helped Pakistan Customs plug revenue leakages. As a result, trade 
and investment between the two countries has increased.  
3.29.   Pakistan signed a bilateral Transit Trade Agreement with Uzbekistan in 2021. This was an 
important mile stone since it will connect Uzbekistan and Central Asian Republics (CARs) with the 
Arabian Sea and also provide Pakistan and other countries with shorter access to CAR markets. 
Under the agreement, Pakistan is expected to have transshipment access to all o f Uzbekistan's 
neighbors. The agreement facilitates regional integration by allowing transshipment, border 
warehousing, mutual recognition of identification documents and visa -facilitation.  
3.30.   To enhance bilateral trade with the region, Pakistan is negotiatin g Preferential 
Trade  Agreements with Afghanistan and Uzbekistan.  
3.31.   Pakistan and Afghanistan are in the process of renegotiating the Afghanistan Pakistan Transit 
Trade Agreement (APPTA) to simplify the transit and customs procedures leading to reduction in 
cost and time for the traders.  
3.32.   Pakistan is engaged with Turkey to transform their historical ties into a strategic economic 
partnership, by signing a landmark Strategic Economic Framework (SEF) in 2020, which contains 
a 71-point plan of action, as the "roadm ap for deepening economic cooperation" covering, inter alia , 
promotion of trade, commerce, industries, science and technology, industrial collaboration, tourism, 
health and education sectors. The Joint Working Group on Trade and Investment under the SEF 
contains more than 15 items relating to enhancement of bilateral trade and investment including 
conclusion of the preferential market access arrangement, elimination of Non -Tariff Barriers, 
developing linkages between companies of both countries, cooperation  in e-commerce and other 
areas.  WT/TPR/G/424 • Pakistan  
 
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  3.33.   Pakistan is committed to increasing its engagement with the ASEAN countries. Pakistan signed 
comprehensive Free Trade Agreement (FTA) with Malaysia in 2007 and Preferential Trade Agreement 
(PTA) with Indonesia that became op erational in 2013. Pakistan engaged Indonesia to review 
the PTA and enhance its scope to better achieve the overall aim of increasing bilateral trade. The 
engagement resulted in additional concessions on certain tariff lines of Pakistan's export interest. 
Both countries decided to further deepen the agreement and have started negotiations on 
Pakistan -Indonesia FTA since 2019. Pakistan is also well underway with negotiating an FTA with 
Thailand.  
3.34.   Pakistan sees itself as a regional hub of energy trade in the f uture and is a partner in 
Turkmenistan -Afghanistan -Pakistan -India (TAPI) pipeline and Central -Asia South -Asia (CASA -1000) 
projects. TAPI is expected to transport 33  billion cubic feet of gas every year to South Asia, while 
the CASA -1000 power project aims to sell excess hydroelectric power from Kyrgyzstan and Tajikistan 
to Afghanistan and Pakistan. In both projects, Afghanistan and Pakistan are sharing the costs in 
order to alleviate their energy and power shortages, and the resultant trade imbalances arisi ng from 
inelastic energy imports.  
3.35.   To better utilize its trade potential with Iran, Pakistan signed a PTA in 2004. In addition, the 
comprehensive Pak -Iran cooperation also includes Iran -Pakistan gas pipeline and supply of over 
90 MW of electricity to Pakist an through the Tanavir interconnection. These initiatives are in addition 
to the border markets mentioned earlier.  
3.5  Fiscal reforms  
3.36.   Pakistan is currently in its 22nd IMF program me, under which it is taking stabilization measures 
following standard IMF prescr iptions including reforming tax through improved documentation 
efforts, automation, business registration, anti -smuggling efforts, risk management based financial 
scrutiny and electronic data exchange between trading partners.  
3.37.   Pakistan has rationalized exp enditure by bringing down tax exemptions, improving debt 
portfolio and introducing budgetary reforms. These fiscal reforms are showing results as the fiscal 
deficit has decreased to 7.1% in FY2021 despite significant challenges due to COVID -19 led 
recessio n. Pakistan's primary deficit ( the difference between the current year's fiscal deficit and 
interest payment on previous borrowings ) has improved from -1.8% in FY2019 to -1.4% in FY2021.  
3.38.   In order to address the relatively high debt to GDP ratio, Pakistan h as undertaken prudent 
debt management policies, such as diversification of debt instruments and investor base, facilitation 
of investment for non -residents and creation of a Central Debt Management Office which have 
increased the maturity profile of the pu blic debt and lowered the Gross Financing Need (GFN) of the 
country.  
3.6  Investment Policy and Investment Climate reforms  
3.39.   One of the pillars of the investment regime in Pakistan is creating an environment 
characterized by ease of doing business and investment facilitation. Pakistan has made good 
progress in reducing the cost of doing business. Some of the important steps incl ude improvement 
in the time required to register companies, get construction permits, register commercial property 
and get commercial electricity connections. Tax rates for small firms have been reduced, and tax 
administration made easier and quicker. WeBO C Customs software has reduced time for processing 
exports and imports.  
3.40.   Pakistan has launched the Pakistan Regulatory Modernization Initiative (PRMI) in FY2020/21 
to streamline the regulatory landscape. PRMI will deliver a comprehensive inventory and mappi ng 
of regulations, including a parallel, optional legal framework. This framework mandates eliminating 
all Registrations, Licenses, Certificates and Other permits (RLCOs) that are not legally backed, are 
unnecessary, unjustified, and non -business friendly.  The remaining necessary RLCOs will be 
simplified and streamlined to make them more business friendly. In parallel, capacity building of 
public sector officials for undertaking regulatory reforms is also being undertaken.  
3.41.   Pakistan follows a liberal investm ent and facilitation regime to enhance foreign and domestic 
investors' confidence in the country. It is making efforts to realize the country's untapped potential WT/TPR/G/424 • Pakistan  
 
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  by creating effective Special Economic Zones alongside the China Pakistan Economic Corridor 
(CPEC), offering incentives, infrastructure and investor facilitation services.  
3.42.   Under the Investment Policy, Pakistan offers uniform treatment to local and foreign 
investments, up to 100% foreign ownership and 100% repatriation investment, profits and divid ends 
in most of the sectors. Foreign companies are allowed to use borrowing facilities both from local and 
foreign banks with no upper limit and minimum requirement on the share of foreign equity and 
set up branch and liaison offices. Pakistan offers a fac ilitative business visa regime while offering 
30-days single entry business visa -on-arrival facility for 66 countries.  
3.43.   In terms of business services, Pakistan allows online registration for foreign firms and also 
entitles business entities to sell shares, transfer ownership and de -register. To improve turnaround 
time, application processing procedures have been made time bound at seven weeks. In terms of 
basic infrastructure services, the pioneer industries are provided incentives at par with Special 
Econom ic Zones (SEZs) and are entitled to lease land without limitation. Similarly, no limitation is 
imposed on the transfer of any land held by a foreign investor and there is no restriction on foreign 
real estate developers.  
3.44.   A Special Economic Zones Act was pa ssed in 2012 and then updated in 2016 with the objective 
of creating industrial clusters and infrastructure to meet the competitiveness requirements of 
investors and provide incentives at par with comparable countries. Under the Act, utilities and land 
connectivity is ensured by law alongside provision of duty and tax exemptions. Firms are allowed 
captive power generation and are provided seamless services through a single window facility. SEZs 
can be developed by private sector, public sector or through a public -private partnership. So far 
nine SEZs have been notified along with CPEC and four of them are being developed on priority 
basis.  
3.45.   To minimize regulatory risks of money laundering and terrorism financing, Pakistan 
took several legislative actions incl uding the United Nations Security Council (UNSC) Amendment 
Bill, 2020 and Mutual Legal Assistance Act 2020 that laid the legal justification for 
Government -to-Government cooperation against illegal financial transactions and action against 
internationally banned individuals and organizations. Meanwhile Anti -Money Laundering 
(Amendment) Bill 2019, Benami Transactions (Prohibition) Rules 2019, Benami Transactions 
Ordinance 2019 and Anti -Terrorism Act Amendment Bill, 2020 further bolstered punishments for 
illegal financial transactions. Pakistan has now met almost all of the international standards for 
minimizing the risks of money laundering and terrorism financing.  
3.46.   During the review period, the State Bank of Pakistan introduced a new framework to ease 
investm ent exit rules for venture capital firms and foreign direct investors (October  2020). In 
addition, to attract investment in fintech and startups through holding companies, allow residents 
to acquire sweat equity and support exporters to establish a presenc e abroad, the State Bank has 
allowed trading through Special Convertible Rupee Accounts and Roshan Digital Accounts. Licensed 
Private Fund Management Companies are now allowed to provide private equity and venture capital 
fund management services to non -resident investors.  
3.7  Infrastructure  
3.47.   Pakistan has taken several initiatives to improve its infrastructure. Chinese investment, in 
particular, has been instrumental in helping improve Pakistan's energy and transport infrastructure 
under CPEC, amongst many other  sectors. Initiated in 2013, the CPEC project has four key areas 
including Gwadar Port, energy & transport infrastructure, and industrial cooperation. The long -term 
collaboration includes, (i) 4,668 km of multi -modal transport, (ii) development of nine SEZ s, 
(iii) 820 km of fiber optic cables, (iv) 13,189 MW of Energy Projects, (v) 4 rail -based mass -transit 
projects and Gwadar Free Zone, (vi) people to people exchange, (vii) multilateral cooperation, 
(viii) industrial knowledge transfer, and (ix) academic c ooperation.  
3.48.   During the period under review, Pakistan has also successfully resolved its longstanding issue 
of electricity supply. Energy shortage crippled Pakistan's economy during the initial part of the period 
under review leading to an annual GDP loss o f 4-7%.4 With a combination of multilateral and other 
 
4 Government of Pakistan Vi sion 2025.  WT/TPR/G/424 • Pakistan  
 
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  initiatives, Pakistan successfully added 14,949  MW of installed generation capacity in the period 
under review.  
3.49.   The focus now is on reducing the costs, transmission losses and environmental impact of 
energy generation. For this, Pakistan has developed an Alternate and Renewable Energy Policy 2019 
(ARE-2019) that aims to procure 30% grid -capacity from Alternate Renewable Energy technologies 
by 2030. Moreover, the Distributed Gene ration and Net Metering Regulations 2015 allows 
households and businesses to sell electricity to the grid from on -site solar installation. This was 
followed by Alternate and Renewable Energy Board Certification Regulations, 2018 which certified 
distributed  energy service providers and established quality standards.  
3.50.   Simultaneously Pakistan has taken steps to improve energy efficiency and to lower Pakistan's 
carbon footprint by setting energy standards for home appliances and creating labs for measuring 
energ y efficiency.  
3.51.   Pakistan is expected to supply South Asia with gas from energy -rich Iran and Central Asia. To 
prepare itself, Pakistan has taken several initiatives. Domestically, it has prepared itself for gas 
imports by investing in LNG Floating Storage Re gasification Unit (FSRU) terminals, signing long -term 
supply agreements with Qatar and construction of North -South 1100 -km long gas -pipeline. 
Moreover, oil transport will be facilitated via continued investment and development of White Oil 
Pipeline. Bilate rally, Pakistan is engaged with Iran, Afghanistan, Russia, China and India in Gas 
pipeline and electricity transmission infrastructure projects under TAPI, IP and CASA -1000 projects.  
3.52.   To facilitate maritime transport, Pakistan has started a Fleet Developmen t Program (FDP) and 
Capacity Expansion at Karachi Port Trust, Port Qasim Authority (Karachi) and Gwadar. Apart from 
investment of more than USD  40 million in Gwadar Port, Phase -I of Gwadar Free Trade Zone has 
been completed with registrations of more than 30 enterprises. Construction work on Phase -II of 
Gwadar Free Trade Zone has also been initiated. Finally, the 700 km long Gwadar -Nawabshah gas 
pipeline is expected to improve Gwadar's integration into Pakistan's energy infrastructure.  
3.53.   Pakistani sea ports w ill eventually be connected to Pakistan's regional partners in the north 
via railroad. However, Railway's share of total freight carriage has failed to grow significantly. To 
improve this, Pakistan has begun railway reform with the goal of improving reliab ility, speed and 
reach of freight services. Under the CPEC portfolio, upgradation of existing and new railway tracks 
is being carried out. Work on the rail line -upgradation of ML -1 has started on fast track, which will 
result in a doubling of the entire tr ack from Karachi to Peshawar. Hevellian dry port is also being 
constructed for harboring the cargoes. Other railway projects include mass transit systems in 
provincial capitals namely Karachi, Lahore, Peshawar, and Quetta.  
3.54.   The National Transport Policy of Pakistan  (2018) – complemented by Pakistan Railway 
Strategic Plan (2018) and National Aviation Policy 2019 – has laid a clear framework for development 
of road, rail, air, pipelines, Inland Waterway, multimodal, urban, and rural transport. The policy 
recog nizes that Pakistan's underdeveloped logistics industry does not provide a competitive cost 
structure. To support investment in cost -reducing infrastructure, the policy focused on the 
life-cycle-asset -management approach, building resilient infrastructure,  environmentally sensitive 
development, and formalization of coordination mechanisms.  
3.55.   Pakistan, Afghanistan and Uzbekistan have signed a roadmap for the multi -billion -dollar 
Mazar -i-Sharif -Kabul -Peshawar railway track project in February  2021. Meanwhile, a n 
Islamabad -Tehran -Istanbul freight train service, which had been inaugurated in 2009 but had gone 
out of service, has been re -inaugurated in December  2021 with a weekly service. Both measures 
are intended to support regional connectivity.  
3.56.   In addition, Pak istan plans to invest in d eveloping Air Cargo Village Facilities and Cold Chain 
facilities, implement e -commerce cargo facilitation centers, use Electronic Data Interchange, utilize 
vacant -land, and operationalize transport capacity augmentation of the air  space.5 These 
 
5 Performance -Based Navigation (PBN), Air Traffic Flow Management (ATFM), Flexible Use of 
Airspace  (FUA) and Controller -Pilot Data Link Communications (CPDLC).  WT/TPR/G/424 • Pakistan  
 
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  investments would be facilitated via Public -Private -Partnerships, budgetary allocations, and 
engagement with regional and multilateral partners.6 
3.8  Skills development  
3.57.   Pakistan recognizes the importance of skills to accommodate the 1.5  millio n young people 
that are expected to enter the Pakistani job market every year up till 2040. This surge in youth can 
yield a 'demographic dividend' by spurring economic growth if they are skilled and have access to 
high value jobs. Productive employment for  this youth is imperative not just to alleviate poverty and 
provide a boost to the economy, but also to prevent potential social disruptions. This will be a huge 
challenge. Currently, Pakistan is ranked 125th of out 140 countries on skills in the World Eco nomic 
Forum's Global Competitiveness Index (last available 2019) and 154th on the Human Development 
Index.  
3.58.   In order to equip the youth to play a productive role in the economy, Pakistan's Human 
Capital, National Vocational and Technical Training Commission  (NAVTTC) has formulated a National 
Skills for All strategy in consultation with all key stakeholders with the aim to improve governance, 
provide more and better -quality training opportunities and remove policy fragmentation. The Skills 
for All program me implemented by NAVTTC is one of the largest interventions in Technical and 
Vocational Training (TVET) sector of the country and includes development & standardization of TVET 
Qualifications, accreditation of TVET institutes and teaching, skills development and apprenticeship 
training, establishment of business incubation centers and Smart Tech Labs for virtual skill 
development program mes. 
3.9  Intellectual Property  
3.59.   Keeping in view the importance of a vibrant intellectual regime for attracting foreign direct 
investment and to secure the legitimate rights of the innovators under TRIP S, Pakistan has taken 
several measures to strengthen intellectual property protection. As a result, significant growth was 
witnessed in the number of IP applications, with ov er 100,000 IP applications received in the period 
under review.  
3.60.   To help establish a system for protecting indigenous products in international markets, 
IPO-Pakistan finalized Geographical Indications (GI) Law. Subsequently Geographical Indications 
(Protect ion and Registration) Act, 2020 was passed by the Parliament in March  2020, GI Rules were 
notified and a GI Registry will be established. A wide range of products have been protected under 
the GI Act and can be introduced in the international market as nat ional brands of Pakistan.  
3.61.   Pakistan joined the Madrid international trademark system in February  2021. With the 
accession to the protocol, local brand owners in Pakistan can protect their trademarks in more 
than 100 countries by filing a single internationa l application and paying a single set of fees at 
World  Intellectual Property Organization (WIPO) via IPO -Pakistan. Similarly, foreign business can 
now be protected in Pakistan.  
3.62.   IPO Pakistan has started the revision of national IP laws and streamlining of t he associated 
legal processes. Currently, the amendments are under submission to the Federal Government for 
approval.  
3.63.   IPO-Pakistan has expanded the number of regional offices and launching an interactive web 
portal for providing information and e -services.  In addition, Technology Innovation Support 
Centers  (TISCs) have been created across the country at leading universities, R&D institutions and 
chambers of commerce to promote indigenous applied research protected by IP laws in the country.  
3.10  Sectoral policie s 
3.64.   Pakistan has initiated and updated several sectoral policies, including Pakistan's first 
e-Commerce policy, Auto Policy, National Electric Vehicle Policy, Mobile Device Manufacturing Policy, 
Small and Medium Enterprises (SME) Policy and entrepreneurship schemes for the youth.  
 
6 World Bank, Asian Development Bank, USAID, and Korean Exim Bank.  WT/TPR/G/424 • Pakistan  
 
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  3.65.   Pakistan's federal cabinet approved the e -Commerce Policy Framework in 2019. The policy 
has led to fast -tracking of reforms to increase digital payments and cross border e -commerce. 
Pakistan is now included in the Amazon's seller lis t, allowing Pakistani SMEs and Women 
Entrepreneurs to sell their goods in the global market.  
3.66.   The framework provides guidelines on key components of e -Commerce including regulatory 
environment, financial inclusion and digitization through payment infrastruc ture, consumer 
protection, taxation, telecom infrastructure, and logistics. A National e -Commerce Council, chaired 
by the Commerce Minister and comprising high -level public and private representatives, has been 
established to monitor the implementation of the policy.  
3.67.   The National Payment Strategy (2019) improves regulations for facilitation of digital payments 
as a part of National Financial Inclusion Strategy (2015) and the e -Commerce Policy Framework 
(2019). This includes regulatory reform for branchless banking, fintech, electronic money 
institutions, and quick response (QR) code harmonization for contactless payments.  
3.68.   State Bank of Pakistan (SBP) Regulations for Electronic Money Institutions (EMIs), issued 
in 2019, have enabled a number of fintech startu ps to start operations. SBP has also released the 
Exposure Draft of Digital Bank Regulatory Framework that will facilitate an uptake of digital 
payments through wider access, lower fees, higher rates on deposits and easier criteria for account 
opening.  
3.69.   SBP has also implemented Raast  - which is Pakistan's first instant payment mechanism that 
will enable end -to-end digital payments among individuals, businesses and government entities 
instantaneously with real time settlement.  
3.70.   Pakistan Customs has developed a  separate module in WeBOC for Business -to-Consumer 
(B2C) e -commerce exports from Pakistan. The new system will facilitate documentation and allow 
commercial banks to register e -commerce traders in WeBOC. The State Bank of Pakistan has also 
issued new regul atory framework that reduces regulatory burden for cross -border movement of 
money.  
3.71.   In order to improve logistics for e -commerce, Pakistan Post has launched its first mobile 
application and export parcel service "EMS Plus" which facilitates small businesses  to send their 
consignments / parcels abroad to any destination within 72 hours. Moreover, Pakistan Post has also 
set up "Pak Post Shop", an e -commerce initiative with hosting products from more than 
550 companies. The lower delivery charges, shorter cash on delivery (COD) payback cycles (usually 
around 10 days on average), and greater coverage automatically pushes several SMEs to gravitate 
towards the services offered by Pakistan Post.  
3.72.   The National Small and Medium Enterprise ( SME) Policy was approved in D ecember  2021 to 
address core SME issues such as access to finance, business development services, market access 
and regulatory burden. A cohesive strategic framework for business facilitation has also been 
developed to support holistic implementation of th e Policy.  
3.73.   Small and Medium Enterprises Development Authority (SMEDA) has launched SMEDA One 
Window (SOW) to provide solutions to start -ups and SMEs such as business idea validation, business 
registration and support for corporate branding, and trademark an d copyright processing.  
3.74.   State Bank of Pakistan has introduced an innovative initiative, "SME Asaan7 Finance" in 
August  2021 to enable SMEs to borrow up to Rs 10  million from banks without collateral. Under the 
scheme SBP will provide refinance to interest ed banks and will cover partial risk. SBP has also 
introduced schemes providing medium to long term financing for modernization of SMEs existing 
units or for setting up of new SME units. Similarly, short term financing is available for the working 
capital financing needs of SMEs.  
3.75.   Pakistan is also working to ease the regulatory and financial burden of taxation on SMEs. 
FBR has announced special tax regime for manufacturing sector SMEs from 1  July 2021 in which tax 
 
7 "Easy".  WT/TPR/G/424 • Pakistan  
 
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  rates have been lowered for small firms. In addition, FBR has simplified the tax return form for small 
firms.  
3.76.   A new Automotive Industry Development and Export Plan 2021 -2026 was announced in 
July 2021 to incentivize the production of cars with engine sizes below 1000cc, and electric and 
hybrid vehic les and to improve the competitiveness of the auto sector. Under the policy, duties on 
imported parts and sales tax on small vehicles have been reduced. The federal cabinet has also 
approved the National Electric Vehicle Policy in 2020, which targets 30% o f vehicles to be electric 
by 2030.  
3.77.   In June  2020, the federal cabinet approved a Mobile Device Manufacturing Policy to incentivize 
local assemblers by, inter alia , removing duties on mobile device parts, removing fixed income tax 
on manufacturing devices, removing sales taxes on local devices and providing R&D allowance to 
local manufacturers. As a result, some globally renowned mobile companies have started 
manufacturing in Pakistan and smart mobile phones are also being exported.  
3.78.   There have been several initiatives to encourage entrepreneurship amongst the youth. These 
include Kamyab Jawan8 Youth Entrepreneurship Scheme (PMKJ -YES) under which the Government 
has disbursed PKR  10,487 (USD  60 million) till May  2021 to the youth for bus inesses. The 
"Kamyab  Pakistan" program me for small loans for businesses, farmers, households, and technical 
training, and the Bureau of Emigration and Overseas Employment that has registered 
6,933  aspirants up till June  2021 for overseas employment in diff erent countries.  
3.11  COVID -19 Policy Response  
3.79.   Pakistan's effective COVID -19 response has helped keep COVID -19 related fatalities Pakistan 
low, with minimal disruption to economic activity. Consequently, Pakistan has been ranked in the 
top three, amongst 50 cou ntries, for return to pre -pandemic situation by the Economist Magazine's 
Global Normalcy Index9 in July and November  2021. The Government is continuing all efforts to the 
fight the pandemic, which is still raging across the world.  
3.80.   National Command and Ope ration Center (NCOC) was established as a nerve center to 
synergize and articulate a unified national effort against COVID -19. Pakistan adopted a smart 
lockdown strategy, where virus containment was built on a model of testing, tracking and 
quarantining. A  technology platform was set up to help identify and isolate hotspots, use of 
aggressive social messaging allowing Pakistan to control the virus effectively to avoid a heavy toll 
on both the population and the economy.  
3.81.   NCOC also ensured quick and efficient supply chain management of critical items such as 
personal protective equipment, ventilators and diagnostic equipment that helped save lives of many 
patients and medical professionals. Similarly, vaccines were procured and administered effectivel y 
with 156  million vaccines doses administered across Pakistan, as of 1  January  2022.10 
3.82.   The Government took decisive policy actions to mitigate the socio -economic impact of 
COVID -19 and introduced a stimulus package of PKR  1.24 trillion (USD  7.8 billion) w hich included 
relief to daily wagers, cash transfers to low -income families, accelerated tax refunds to the export 
industry, financial support to SMEs and utility stores and relief in fuel prices among others. Pakistan's 
Ehsaas11 program me leveraged the ex isting social protection data, infrastructure and digital 
capabilities to roll out one of the largest cash transfer program mes in the world.  
3.83.   Pakistan formulated an action plan to gradually open -up industry to minimize the impact on 
the economy. Firms with confirmed orders were facilitated to remain operational throughout the 
lockdown. To address the concern of business communities, high -level consultations with top 
exporters and business chambers were convened. Trade and Investment Officers stationed in 
Pakistan Missions abroad were issued directions to reach out to the concerned importers of Pakistani 
 
8 "Succe ssful youth".  
9 Measures Current activity relative to pre -pandemic level.  
10 Viewed at: https://ncoc.gov.pk/ . 
11 Urdu word for "feeling", "to care about".  WT/TPR/G/424 • Pakistan  
 
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  products in cases where cancellation of orders was feared. The measures resulted in the industry 
and businesses retaining many vulnerable jobs.  
3.84.   The State Bank  of Pakistan (central bank) took a number of policy measures to mitigate the 
negative effects of COVID -19 on the economy: (i) It reduced the policy rate by a cumulative 
625 basis points from 13.25% to 7% from mid -March to June  2020; (ii) it introduced a re finance 
scheme at  3% end user rate for the medical sector, which enabled medical facilities to enhance their 
capacities such as building COVID -19 specific isolation wards and purchasing medical 
equipment;  (iii) reduced the end user mark -up rates on Tempora ry Economic Refinance Facility 
(TERF) from 7% to 5%; (iv) introduced the Loan Extension and Restructuring Package of State Bank 
of Pakistan (Debt Relief Scheme) to facilitate borrowers in restructuring and deferment of their loans 
to preserve the solvency of the borrowers and enable them to combat the temporary economic 
disruptions; (v) Introduced SBP Rozgar12 scheme to prevent layoff by financing wages and salaries 
of employees for six months.  
3.85.   At the multilateral level, including at the WTO, Pakistan is at  the forefront for demanding a 
waiver from certain TRIPS obligations to diffuse production capabilities globally and make 
equitable  access possible for all, to vaccines, diagnostics and therapeutics in order to fight the 
COVID -19 pandemic.  
3.12  Sustainable Deve lopment and Social Protection  
3.86.   Pakistan remains committed to achieve the two aligned objectives of sustainable development 
and social protection. The country has affirmed its commitment to the 2030 Agenda for Sustainable 
Development by adopting the Sustaina ble Development Goals (SDGs) as its own national 
development agenda through a unanimous National Assembly Resolution in 2016. Similarly, social 
protection has a central role in government's agenda in mitigating the effects of economic and social 
shocks, cl imate change and natural disasters.  
3.87.   To make progress on "No Poverty" by 2030 pertaining to SDG Agenda -I, Pakistan introduced 
multiple program mes of social safety nets specifically Ehsaas  Program, Benazir Income Support 
Program (BISP), and Pakistan Poverty Alleviation Fund (PPAF). Ehsaas  Emergency Cash has been 
recognized by the World Bank as among the top four social protection interventions globally in terms 
of number of people covered. Other program mes of social uplift of marginalized people include 
National Poverty Graduation Program (NPGP) and Employees Old -Age Benefits Institution (EOBI).  
3.88.   The country has achieved substantial progress on SDG Goal -3 (Good Health and Wellbeing) 
by giving priority to strengthen health sector to further address the issues li ke 
pandemic  with landmark health care initiatives including Sehat Sahulat13 Program, National Health 
Vision 2016 -2025 and Ehsaas  Program, Family Planning and Primary Healthcare Program (FP&PHC).  
3.89.   On gender mainstreaming, SDG  5 "Achieve gender equality and e mpower all women and girls" 
has been given special attention as many interventions have been introduced to 
empower  women  on both social and financial fronts. Several legislations have been promulgated 
during 2020 -21 i.e.,  Zainab Alert, Response & Recovery Act, 2020, The Khyber Pakhtunkhwa 
Domestic Violence Against Women (Prevention & Protection) Act 2021 to protect and empower 
women.14 
3.90.   On Climate Action pertaining to the SDG -13, Pakistan has undertaken aggressive afforestation 
under the Ten Billion Tree Tsu nami Program, amongst other initiatives, including in green energy 
mentioned earlier.  
3.91.   Pakistan has also taken several proactive measures to better manage the impact of climate 
change. These include Glacial Lake Outburst Flood Risk reduction measures, impro vement in water 
monitoring capacity and Sustainable Forest management unit among others. Pakistan has instituted 
Climate Resilient Urban Human Settlements Unit to help its cities better contend with climate change. 
 
12 "livelihood".  
13 "health facility".  
14 Source: State Bank of Pakis tan (ii) M/o Planning, Development & SPI.  WT/TPR/G/424 • Pakistan  
 
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  Similarly, the National Ozone Unit will h elp the country limit its ozone emissions. Pakistan has 
approved the Climate Change Act 2017 with the aim of systemizing climate resilient initiatives.  
3.92.   The Government is fully committed to follow the sustainable path of development as reflected 
in the init iatives and interventions. The country aims to further strengthen its social safety nets by 
increasing the coverage and scope of its social protection system.  
4  MULTILATERALISM  
4.1.  Being the founding member of GATT  1947 and WTO, Pakistan fully recognizes the imp ortance 
of sustainable and inclusive economic growth under the umbrella of the Multilateral Trading System.  
4.2.  Pakistan reiterates that efforts should be made to permeate the benefits of the trade 
liberalization to the developing and least developed countries . Pakistan strongly defends the treaty 
embedded right of developing countries to avail of Special and Differential Treatment (SDT). Pakistan 
values SDT as a fundamental pillar of the WTO's ethos without which it is difficult to maintain and 
implement a fai r and equitable multilateral trading system and allow the necessary policy space to 
developing countries and enhance the development of their domestic industries which is critical to 
their economic growth.  
4.3.  Pakistan has been very active in the WTO's respons e to pandemic negotiations and has argued 
for a holistic approach cutting across sectors of the economy, rather than just confined to health. 
Pakistan has argued for instituting a response for future preparedness of members and for policy 
flexibilities wit hin the WTO for that purpose, as well as enhancing food security measures, 
transparency, and addressing the challenges posed by IP laws in the enhancement and global 
diffusion of production of critical medical products.  
4.4.  The TRIPS Council has provided an op portunity for Pakistan to advocate and negotiate for an 
equitable access to the urgent and necessary medical diagnostics, vaccines and therapeutics to fight 
the current pandemic. Pakistan believes that the WTO must be part of a global public response to 
the pandemic since anything less will not be effective or efficient.  
4.5.  Pakistan relies heavily on agriculture for the livelihoods of a large part of its population 
of 220 million people15, for food security and development and is actively engaged in finding 
solutions for a meaningful reform on the trade distorting subsidies as well as an effective mechanism 
to ensure food security in the negotiations under the Agreement on Agriculture.  
4.6.  Pakistan further believes that active participation in the multilateral syst em at the WTO is 
extremely important in generating new ideas and creating an organization that is responsive to 
emerging challenges. To this effect, Pakistan has been taking a leadership role in various committees 
at the WTO to contribute to an inclusive m ultilateralism.  
4.7.  Pakistan views the relevance of the WTO in the emerging global context to be closely linked 
with its ability to respond to new challenges and global issues. To this end, Pakistan has consistently 
supported the prioritization of the resoluti on of the Appellate Body impasse to restore its full 
functioning. At the same time, Pakistan has maintained that the reform process should seek to 
maintain and strengthen, and not dilute or diminish the core principles on which the multilateral 
system stan ds. This includes the fundamental principles of non -discrimination, consensus -based 
decision making, effective special and differential treatment for developing countries, and 
transparency at all levels and in all endeavors of the organization.  
5  WAY FORWARD  
5.1.  Pakistan has so far posted remarkable economic recovery during a testing phase of global 
economic upheaval from the pandemic and geo -political developments in the region.  
5.2.  In the near term, Pakistan is facing some serious challenges that influence f iscal space and the 
ability to pursue an ambitious trade and investment agenda. These include the costs associated with 
 
15 Viewed at: http://www.finance.gov.pk/survey/chapters_21/02 -Agriculture.pdf . WT/TPR/G/424 • Pakistan  
 
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  the Afghan war and the recent NATO exit, the global COVID -19 pandemic and severe balance of 
payments and fiscal imbalances.  
5.3.  Despite thes e challenges, Pakistan is determined to deregulate markets, remove distortions 
and create a conducive environment for investment for its growing economy, offering access to a 
large and growing middle class to potential investors and trading partners.  
5.4.  Pakistan is demonstrating its commitment to promoting international trade through world -class 
infrastructure investments and an increasingly open policy environment. Pakistan's consistent move 
towards regional connectivity marks a shift in its priorities and st rategy.  
5.5.  To develop longer -term trade and economic strategies that are aligned with Pakistan's 
ambitions and global commitments, Pakistan is initiating program mes to provide research support 
to the Ministry of Commerce (MoC). The Lahore School of Economics has recently been selected as 
a WTO Chair and is expected to collaborate with the Ministry of Commerce to provide research and 
training to support the Ministry's trade policy decision making. This will also help Pakistan plug int o 
the global network of WTO Chairs to deepen its understanding of trade and development and reflect 
it in policy making and implementation. Similarly, the Tariff Policy Center is now performing a key 
role in conducting research and analysis for reform prop osals and bringing stakeholders together.  
 
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