RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/193 
10 December 2007  
 
(07-5394) 
Trade Policy Review Body Original:   English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
PAKISTAN 
 
  
 
Pursuant to the Agreement Establishi ng 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 circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Pakistan. Pakistan WT/TPR/G/193 
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CONTENTS 
 
  Page 
I. INTRODUCTION                                                                                                           5  Recent Economic Performance  5 
 Fiscal Policy   6 
 Monetary Policy  
 7 
II. TRADE POLICY   7 
 Multilateral Liberalization  7 
 Regional and Bilateral Initiatives  9  Trade Policy Instruments 10 
III. KEY POLICY REFORMS 11 
 Telecommunication 12 
 Financial Sector  12 
 Taxation   12 
 Trade Facilitation  13 
 Competition and Regulatory Bodies 14 
 Protection of Intellectual Property Rights 15 
IV. CONCLUSION  15 
 
 
 Pakistan WT/TPR/G/193 
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I. INTRODUCTION 
1. This is Pakistan’s third trade policy review. Si nce the last review in 2002, extensive reforms 
have been carried out in almost all sectors of the economy. These reforms have helped in Pakistan 
being one of the faster growing economies in Asia. Both the size of economy and per capita income in 
dollar terms have almost doubled. GDP based on purchasing power parity has risen to about 
US$2,500, which is one of the highest in South Asia. Since 2001-02 Pakistan’s total trade has been showing a healthy annual increase of 18%. Pakistan ’s stock market has been one of the best 
performing in the world with the KSE - 100 Index growing more than 10 fold from 1,400 to 14,500 during the past 6 years.  
2. In terms of trade policy, Pakistan’s highest pr iority during this period has been the successful 
conclusion of the Doha Round. Pakistan believes th at an ambitious Round would greatly improve its 
economic well-being and enable it to meet the United Nations’ Millennium Development Goals. 
Nevertheless, it has also been pursuing bilate ral and multilateral market access opportunities. 
3. During the period under review, while all facets of economy underwent extensive reforms, the 
most stellar results were achieved in the areas of  telecommunication, finance, taxation and trade 
facilitation. The 2006 World Bank Doing Business Report ranks Pakistan as the top reformer in South 
Asia and 10
th out of 155 economies globally. 
Recent Economic Performance  
4. Since the last Trade Policy Review, Pakistan  has taken various measures to deregulate, 
privatise and liberalise the economy. Over the peri od 2001-02 to 2006-07, GDP has grown at a rate of 
over 6% annually.  Per capita inco me (at constant prices of 1999-2000) has increased from US$503 in 
2001-02 to US$925 in 2006-07. All sectors of the ec onomy have contributed to GDP growth. 
Agriculture sector has grown at an  average annual rate of around 3.3% . However, the growth rate has 
shown wide fluctuations due to changes in weat her conditions. Growth would have been higher 
without  drought conditions and limited water reservoirs. The rapid growth of GDP owes a great deal 
to the sharp growth in the manufacturing sector resulting from demand stimulus from higher incomes 
and relaxation of banking restric tion on consumer credit. Higher le vels of exports and investment 
have also contributed to this growth. The in crease in investment has not only increased productive 
capacity but has also improved competitiveness. The services sector has also grown rapidly at 7% 
annually;  this is mainly due to the financial and telecommunication sectors. 
5. The high growth has been accompanied by stru ctural transformation of economy.  The share 
of the industrial sector in GDP has increased from 23.7% to 25.8% (within industry, the share of 
manufacturing has increased from 15.9% to 19.1%), th at of services from 52.1% to 53.3%, while that 
of agriculture declined from 24.1% to 20.9%. 
6. The higher growth of GDP has helped in generating employment. The reduction in the 
unemployment rate together with a sharp increase in  remittances from just US$1 billion in 2001-02 to 
US$5.5 billion in 2006-07 has helped to alleviate poverty. The rate of unemployment has declined 
from 8.3% to 5.3% during the period under revi ew. Although income inequality has increased, it 
remains far less than in many other developing countries. the major focus on Poverty Reduction Strategy Program (PRSP-2) is now  on reducing income inequality. W ith an increase in  the allocation 
of resources to human resource development activitie s, Pakistan has graduated to a Medium Human 
Development country and ranked 134
th out of 177 in 2006 compared to 142nd out of 177 in 2002. 
7. The growth of GDP and employment, and consequent decline in poverty, has been due to 
prudent macroeconomic policies and structural reform s. Efforts are underway to sustain high growth. WT/TPR/G/193 Trade Policy Review 
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and to ensure that the deriving benefits reach the economically disadvantaged layers of the population. 
Challenges and strategies for realising this and ot her objectives are reflected in the Medium Term 
Development Framework: 2005-10 a nd the draft report of PRSP-2 circulated recently. The long run 
challenges and strategies have been outlined in Vision 2030.  
8. In order to further liberalize Pakistan's forei gn direct investment (F DI) regime, minimum FDI 
levels in social, agriculture and infrastructur e sectors have been reduced from US$0.5 million to 
US$0.3 million and in services, such as retailing and wholesaling, from US$0.3 million to US$0.15 million.  The maximum limit of foreign equity of 51% in life insurance was removed in September 2006. The number of countries with which Pakistan has signed bilate ral investment treaties 
has increased from 18 to 48. 
9. There has been a sharp increase in remittan ces, which increased from US$1 billion in 2001-02 
to US$5.5 billion in 2006-07;  as a result, the cu rrent account deficit was confined to US$7 billion 
(around 5% of GDP). Gross official reserves have grown from US$6.43 billion in 2001-2002 to US$16.4  billion by October  2007, which is equal to more than 6 months of imports. In the last 
financial year, one bank and an oil & gas company have successfully issued GDRs (global depository 
receipts) in the international market, which were heavily oversubscribed. Pakistan has also floated 
bonds in the international market, which received positive response, thus improving its international 
rating as an emerging economy.  
10. Pakistan’s total trade has increased from US$21.5 billion in 2001 to US$47.7  billion in 2007, 
a healthy annual increase of 18%. Various efforts ha ve been made to diversify the mix of exported 
products as well destinations, but there has been only a limited success. Since 2001-02, the share of 
manufactured products in imports as well as ex ports has increased whil e that of the semi-
manufacturing has declined. Imports remain concentr ated in fertilizer, petroleum products, machinery, 
transport equipment, edible oils , chemicals, and iron and steel. 
Fiscal Policy
 
11. The fiscal deficit fell from 4.3% of GDP in 2001- 02 to 2.4% in 2003-04 but since then it has 
increased to 4.3% in 2006-07 owing to massive expenditure on rehabilitation work on earthquake-
affected areas.  The underlying fiscal deficit is still 3.5% of GDP and is exp ected to be around 4.0% 
during the current year. The increase in the deficit in recent years has also been caused by a sharp 
increase in public sector development expenditure that has increased from 2.2% of GDP in 2002-03 to 
4.9% in 2006-07.  
12. Pakistan has enacted a Fiscal Responsibility Law (Fiscal Responsibility and Debt Limitation 
Act 2005) to restrain fiscal profligacy.  A Monetary and Fiscal Coordination Board has been set up to 
co-ordinate monetary and fiscal policies. The Act calls for zero revenue deficit by June 2008 and 
surpluses thereafter and cuts in the debt-to-GDP ra tios by 2.5 percentage points annually to reach a 
maximum of 60% by 2012-13.  However, the debt target was achieved in 2005/06 when it fell to 
57.2% and by June 2007 it had fallen further to 54.6 %. 
13. Since the last Review, persistent efforts have been made to rationalize tax rates, broaden the 
tax base, shift tax incidence from imports to consum ption and income, to improve the efficiency of 
tax administration and realize tax collection th rough enhanced voluntary compliance.  Various 
distortions in the tax system have been successf ully removed and the tax administration greatly 
restructured. Numerous concessionary notifications (SROs) have been rescinded and tax net has been 
considerably widened. Tariffs have  been rationalized and the sole purpose of tariff peaks, wherever 
existing, is to protect nascent industries. Excise ta x has been reduced significantly and is being used Pakistan WT/TPR/G/193 
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primarily for reduction of undesirable consumption.  Sales tax and direct taxes are the major tax 
earners. The tax revenue as a share of GDP had declined from 10.7% in 2001/02 to 10.1% in 2004-05 
but has now increased to 10.5%. The share of dir ect taxes and sales tax has increased from 34.8% and 
29.1% in 2000-01 to 37.3% and 30.4%, respectively, in 2006-07. 
14. With a view to improving public expenditure  effectiveness, Pakistan started budgetary 
reforms in March 2003 under the Medium Term Budgetary Framework (MTBF).  So far these 
reforms have been successfully implemented in six ministries and are being progressively extended to other ministries. Under the MTBF, tax and total revenues are projected to rise slightly to 12.2% and 15.3% of GDP, respectively, and public expenditure to 18.6 % in 2010/11.  
Monetary Policy 
 
15. The State Bank of Pakistan (SBP) is an aut onomous organisation responsible for monetary 
stability in the country. The SBP targets monetary aggregates using market-oriented instruments to meet investment, GDP growth and inflation targ ets. The money supply expanded rapidly in the 
2002-04 period due to rapid capital inflows (especially  the remittances) and the provision of consumer 
credit to stimulate demand.  However, monetary  policy was tightened when the inflation rate 
increased to 9.3% in 2004-05. From 2004 to 2007  tighter monetary policy was pursued to curb 
excessive demand and the monetary overhang. Howeve r, money supply increased sharply at the rate 
of 19.5% in 2006-07 mainly because of massive infl ows in the last quarter. The State Bank has taken 
various tightening measures, including slowing grow th of reserve money, reduction in the inter-bank 
liquidity through cash reserve requirement, reduction in the money for the export finance scheme and 
increase in the bank rate and open market operations. 
II. TRADE POLICY 
16. Being a founding member of GATT in 1947 and the WTO in 1995, Pakistan is a keen 
supporter of an open, transparent and rules-based multilateral trading system. Most of its trade is 
conducted on an MFN basis. However, it believes that  the current trading syst em suffers from several 
distortions that adversely affect trade opportun ities for developing countries. Through a successful 
and ambitious result in the Doha Development Agen da (DDA) negotiations, such imbalances can be 
minimized. If the DDA is completed at an early date , it would facilitate Pakistan and other developing 
countries' achieving Millennium Development Goals within the United Nation’s target date of 2015. 
Multilateral Liberalization
 
17. Pakistan is actively participating in all DDA ne gotiations, but its key interests lie in market 
access and rules areas.  Since 2003, it has taken part in all Ministerial level meetings. It has issued a 
large number of papers, either on its own, or in  collaboration with other countries. Its foremost 
objective in these negotiations is to ensure remova l of tariff peaks and high tariffs on products of 
export interest to Pakistan. To this end, Pakistan  has been an active player in the non-agricultural 
market access (NAMA) negotiations.  It believes that its proposal for reducing tariffs through 
application of a simple Swiss formula with two co efficients based on the current tariff averages of 
developed and developing count ries with adequate flexibilities for developing countries, could 
provide a fair solution for both sides. At the H ong Kong Ministerial Conference in December 2005, 
Pakistan’s pre-eminent and constructive role in the NAMA negotiations was fully recognized when its 
Commerce Minister was asked by the WTO members to be the NAMA facilitator. 
18. Pakistan believes that preference erosion is  a predictable and unavoidable outcome of 
multilateral trade liberalization negotiations. In  committing to the Doha Round, all Members, 
including all developing countries, committed to an eros ion of all kinds of preferences, reciprocal and WT/TPR/G/193 Trade Policy Review 
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non-reciprocal. Market access gains for all developing countries should not be held hostage by the 
present distortions. The gains of market access, whic h are the core of the development objectives of 
the Round, should be fair for all developing countri es. Pakistan also believes that modalities on 
market access in all areas of the negotiation should  not in any way allow developed countries to delay 
liberalization in their own markets. This would correspond to special and differential treatment in 
favour of developed countries a nd constitute prolonged discrimin ation among developing countries. 
Furthermore, all developing countries should have the right to benefit from the gains achieved in 
market access in all areas of negotiation. Any sp ecial treatment to prolong discrimination would not 
only contradict this basic right but be a serious br each of the mandate of the development objective of 
the Round, and of the very raison d'être  of multilateral trade negotiations. 
19. Given the role of agriculture in its economy, Pa kistan has a fundamental interest in further 
strengthening international rules governing agricu ltural trade and achieving far-reaching agricultural 
trade reform.  This could be achieved through early  elimination of all forms of export subsidies and 
the substantial reduction of trade-distorting do mestic support, which s hould go beyond paper-cuts, 
and substantial improvements in market access for agricultural products. With a view to achieving 
these objectives, Pakistan is closely working with  other countries in G20 and the Cairns Group and 
hosted Ministerial level meetings of these Groups in Pakistan to formulate and push the objectives of 
these Groups.  Pakistan is also a member of G33 as it believes that developing countries are unable to 
compete against dumping of subsidized food products and need to protect essential requirements through designating a limited number of agricultural products as Special Products. 
20. In services our interests lie in getting predictabl e market access in all four Modes of supply, 
particularly in Mode 4 and Mode 1. A number of pape rs have been tabled in Mode 4 jointly with other 
developing countries, seeking removal of barrier s to market entry like onerous qualification 
requirements and procedures, labour market tests, etc.   Papers have also been co-sponsored asking for 
balanced disciplines in domestic regulations for less burdensome qualification, licensing requirements 
and procedures in order to facilitate market access for service providers without compromising 
regulatory autonomy. Pakistan has been actively par ticipating in plurilateral and bilateral negotiations 
with regard to services and looks for ambitious results in this sector. 
21. Pakistan is also a strong supporter of the need for improvement and clarification of Rules 
governing the use of trade remedies and subsidies (inc luding fisheries subsidies).  It believes that most 
of trade remedy measures are being used for protecti onist purposes and need to be subjected to strong 
disciplines.  
22. Pakistan has been making a significant contribut ion to trade facilitation negotiations since the 
beginning.  It sponsored and co-s ponsored several documents in colla boration with developing as well 
as developed countries to clarify and improve the cu rrent rules. It also shared with other WTO 
members its national experience of computerized customs clearance, which has resulted in a major 
transformation of its clearance procedures.  
23. Pakistan is also an active participant in the negotiations for the improvement of the dispute 
settlement system, including issues like special and differential treatment for developing countries, 
greater transparency, alleviation of litigation costs,  enhanced rights for WTO Members as third parties 
and for clarifying current rules for amicus  participation. These reforms would enable developing and 
least developed members to better access the system for settlement of disputes, thereby lending 
further integrity to and strengthening of a rules-based multilateral discipline. 
24. As regards the development component of the Doha Round, Pakistan believes that 
development concerns are spread all over the DDA.  If an ambitious result is achieved in the DDA Pakistan WT/TPR/G/193 
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through removal of trade distorting agricultural subs idies and reduction of tariff peaks in Agriculture 
and NAMA, liberalization of Services in modes an d sectors of interest to developing countries and 
formulation of more transparent Rules on anti-dum ping and trade facilitation, an overall development 
package will emerge. Pakistan also supports eff ective operationalization of the remaining proposals 
on special and differential treatment provisions for developing countries in existing WTO Agreements 
presently under review. Pakistan also stands for early settlement of all remaining implementation 
issues in favour of developing countries. 
25. Pakistan believes that provision of Aid for Trad e and technical assistance would play a very 
significant role in implementing the results of Doha Round and improving supply side capacity in 
developing countries. 
Regional and Bilateral Initiatives  
26. While Pakistan fully believes in the multilatera l trading system, it is also cognizant of the 
proliferation of regional and bilateral Preferentia l Trading Arrangements.  Many such arrangements 
place Pakistani exporters at a disadvantage vis-à-vi s their competitors.  In order to counter these 
negative effects, Pakistan has b een actively involved in seeking su ch arrangements on bilateral or 
regional level. Since the last review, Pakistan has eith er finalized or is close to finalizing several such 
agreements. At the same time, it is exploring the possibility of such deals with many more economic 
blocks and countries. Pakistan believes that multilate ral and regional initiatives will lead to more trade 
creation and thus both initiatives would be mutually supportive. 
Regional Agreements 
27. In the context of regional arrangements, SAFTA  (South Asian Free Trade Area Agreement) 
among Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka has become operative since 1
st July 2006. 
28. The ECO Trade Agreement signed by Afghanistan , Iran, Pakistan and Turkey along with six 
Central Asian states in July 2003 has still not entered in  force for want of ratification. As a member of 
the D-8 Group of eight most populous developing Is lamic countries, Pakistan signed the Preferential 
Trade Agreement in 2006. Member states have not yet ratified the agreement.  
29. Pakistan is one of the 18 signatories to the Framework Agreement on the Trade Preferential 
System among OIC Member States, which came in to force in 2002. Under this arrangement, a 
preferential tariff scheme is being negotiated, and is li kely to conclude by January 2009. Pakistan also 
signed a Framework Agreement for negotiating an FTA with MERCOSUR (Argentina, Brazil, 
Paraguay and Uruguay) in July 2006, paving way for technical negotiations to commence soon. 
30. Pakistan is actively engaged in a dialogue  for negotiating a FTA with Gulf Cooperation 
Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia  and United Arab Emirat es). Negotiations have 
also started with EFTA (Iceland, Liechtenstein, Norway and Switzerland) for deepening of mutual 
trade and investment relations. 
31. Pakistan is also participating in the Sao Pa ulo Round of the GSTP (Globalized System of 
Trade Preferences among Developing Countries) la unched by the UNCTAD for enhancing South– 
South trade. WT/TPR/G/193 Trade Policy Review 
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Bilateral Initiatives 
32. Pakistan’s FTA with China covering goods as we ll as investments has become effective from 
1st July 2007.  Now most of Pakistan's exportable products, such as textiles, fruits and vegetables, 
gems & jewellery, engineering goods, leather produc ts, sports goods, surgi cal goods, marble products 
and industrial alcohol, can enter the Chinese markets at zero duty or concessionary duties.  The 
Pakistan – Sri Lanka FTA has been operational si nce June 2005, and the PTA with Iran has been 
operative since September 2006. 
33. Pakistan is working on a two-pronged strategy for deepening its trade relations with ASEAN 
countries.  The first is to have bilateral FTAs with major countries of the ASEAN like Indonesia, 
Malaysia, Singapore, Thailand and Vietnam; the second is to negotiate a bilateral agreement with the 
entire association on a 10+1 basis (i.e. one Non Member with the ten Members of ASEAN). FTA negotiations with Malaysia, covering trade in g oods, services, investment and customs cooperation 
have been successfully concluded, and the agreemen t is likely to enter into force this year. FTA 
negotiations with Indonesia and Singapore are maki ng good progress and are likel y to be concluded in 
the near future. While PTA negotiations are in pr ogress with Thailand and Vietnam, a joint study is 
being launched to examine the potential of long te rm partnership between Pakistan and ASEAN. 
Pakistan and Japan have recently agreed to launch a joint study on the potential for preferential trade 
agreement between the two countries. 
34. Improving market access conditions and institutional strengthening of trade relations with our 
major trading partners remain the long term po licy objectives and high priority agenda for the 
Government of Pakistan. In order to facilitate these negotiations with the EU, an institutional 
mechanism - the Sub-Group on Trade, under the aeg is of the Pakistan-EU Joint Commission - has 
recently been set-up. Pakistan, however, remains cogn izant of the fact that the GSP scheme of the EU 
is discriminatory as similarly placed countries are be ing treated differently on the basis of a closed 
list. With the United States, its single largest trad ing partner, Pakistan signed TIFA (Trade and 
Investment Framework Agreement) in 2003. Efforts are in hand to initiate a dialogue on a bilateral 
free trade deal. 
35. Pakistan has negotiated a PTA with Mauritius;  and is pursuing negotiations of FTAs with 
Egypt and Jordan. Besides, preferential market acce ss negotiations are also in hand with many other 
countries, including Afghanistan, Bangladesh, Bosnia, Kazakhstan, Kenya, Mexico, Morocco, 
Russian Federation, Serbia, Syria and Tajikistan. 
Trade Policy Instruments
 
36. The tariff remains Pakistan’s main trade policy instrument. The basic objective of tariff policy 
is not to limit imports or to generate revenues, but to  provide protection to infant industries. The tariff 
structure in Pakistan is designed to provide a leve l playing field to local industry by keeping the duty 
on raw materials at the minimum level. Virtually all tariffs (99.5%) are ad valorem.  There are 
28 different tariff rates which consist of 14 ad valorem and 14 specific rates. Although the specific 
rates are 14 in number, these are restricted to 44 tariff lines only. Similarly, while there are 14 different ad valorem  rates, the general scheme of tariff revolves around only 6 slabs including 
zero.  The other slabs involve only a few tariff lines. 
37. Maximum tariff, except for few products like auto motives and alcoholic beverages, has been 
reduced to 25% with simple average applied MFN rate in 2006/07 of 15.0% compared to 20.4% in 
2001/02. Presently, the simple average tariff is 14.5% , the import weighted average tariff 8% and the 
average effective rate 7.6%. Except for textiles a nd clothing where tariffs are bound at low applied Pakistan WT/TPR/G/193 
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rates, in most other cases applied rates are much lowe r than the bound rates. This is due to the fact 
that Pakistan has constantly been trying to bri ng down the applied tariff rates. Currently 388 tariff 
lines are duty free.   
38. Regulatory Duty (RD) is levied under compelli ng circumstances prevailing at a specific time 
and is automatically rescinded on the expiry of the respective financial year. This year, Customs Act 
was amended to ensure that the cumulative inci dence of customs duties does not exceed the rates 
agreed under any international commitment. The number of regulatory duties has considerably 
declined. 
39. The only import restrictions Pakistan maintain s are for health, safety, security, religious, 
cultural and environment reasons. Standards applied are in line with international requirements and 
are applied uniformly to imports and domestic goods. Since the last  Review, ban on imported iron and 
steel waste/scrap and cotton waste has been removed. Imports from India are allowed on the basis of a positive list of goods, which is ever expanding and subject to applied MFN or preferential tariffs 
under SAPTA and SAFTA Agreements. Imports from India are growing at a much faster pace than exports to India. 
40. There is only one state-owned corporation author ised to engage in im ports and exports (i.e. 
Trading Corporation of Pakistan), but it does not have monopoly on the import or export of any product. It normally intervenes to cope with domestic demands of essential commodities under the 
express decision of the Cabinet. A transparent sy stem of public bidding is observed before any 
imports or exports are made. 
Trade Remedy Measures 
41. There has been only one case of safeguards investigation (on footwear), which was 
terminated in August 2005. Pakistan has conduc ted 24 anti-dumping investigations and imposed 
duties in 19 cases. At present anti-dumping duties are in place on seven different products from eleven countries. 
Dispute Settlement 
42. Since the last Review, "Egypt- anti dumping duties on matches" was the only case where 
Pakistan invoked the DSU as Complainant, but before the composition of the Panel, the dispute was resolved to the satisfaction of both Parties. Howe ver, it has been involved as a third party in several 
cases, including the EC- India dispute on conditions for the granting of tariff preferences to developing countries, the US-Brazil dispute on s ubsidies for upland cotton, and the Turkey-US 
dispute on measures affecting the importation of rice. 
43. On 8th November 2006, Pakistan issued implem enting legislation on the "ICSID Convention" 
on the Settlement of Investment Disputes between St ates and Nationals of Other States. Before this, 
the "New York Convention" also entered into force in Pakistan on the 12 October 2005. Both these measures 
are major steps forward in demonstrating Pakistan's commitment to transparency in the resolution of 
international investment disputes. 
III. KEY POLICY REFORMS 
44. A broad set of reforms have been carried out  in almost all facets of economy. Economic 
philosophy has been reoriented towards de-regulations , liberalization and privatization. As a result of 
these reforms, the government’s role has been reduc ed to formulating policies, providing an enabling 
environment, and facilitating independent regulat ors. Almost all sectors of economy have been WT/TPR/G/193 Trade Policy Review 
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opened up with a level playing field for both domestic  and foreign investors. Key areas of reforms are 
highlighted below.  
Telecommunication  
45. Since the last Trade Policy Review, the telecom s ector has been totally transformed. In 2003, 
the new Telecom Deregulation Policy and in 2004 the Cellular Mobile Policy were announced to 
liberalize this sector.  These policies resulted in  large investments and new players entering the 
telecom market. Since July 2003, regulators have ha nded out more than 900 fixed, mobile, and long-
distance licenses to some 50 compan ies. Already teledensity has incr eased from 4% to about 45% of 
the population. The number of mobile subscriber s has increased from 8 million in 2003 to over 
70 million in 2007. This sector has become a major provider of skilled jobs as its exponential growth 
has resulted in creation of 80,000 jobs directly a nd 500,000 jobs indirectly . An unprecedented amount 
of foreign investment flowed into the sector. Th is success has been achieved due to the well thought-
out telecom policy, which was prepared after intensive discussions and debates involving all stakeholders. Besides deregulation, the governme nt provided several tax incentives to attract 
investments.  
46. The Universal Service Fund (USF) Company h as been established under the administrative 
control of Ministry of IT to pr ovide universal access to  telecom services and to increase the outreach 
of these services to rural communities. The USF na tion-wide target is coverage of 85% of the 
population by the end of 2010. Telecom reforms have been widely appreciated nationally and 
internationally. In recognition of these achievements, Pakistan has been awarded Government 
Leadership Award by the Global System of Mob ile Association (GSMA), and due to its best 
regulatory and policy reforms, Pakistan has been recognized by the ITU as a centre of excellence for 
policy and regulations. 
Financial Sector
 
47. The financial sector has also undergone major re forms. The control of pre-dominantly state 
owned banking system has been transformed to the private sector. The legislative framework and the 
State Bank supervisory capacity has been improve d substantially. More specifically, all the 
nationalized commercial banks, except one, have been  privatized. A number of regulatory measures 
have been put in place to ensure transparen t corporate governance. Minimum paid up capital 
requirements of the banks has been raised from Rs . 50 million to Rs. 2 billion. This led to several 
mergers and consolidation of banks. 
48. The foreign exchange regime has been further lib eralized.  The Pakistani corporate sector has 
been allowed to acquire equity abroad. Foreign regi stered investors can bring in and take back their 
capital, profits, dividends, remittances, royalties, etc.  free from any restriction. Restrictions imposed 
on banks to allow consumer financi ng have been removed. This resulted in a major stimulus to the 
domestic manufacture of consumer durables. New rec overy laws have been enforced to ensure the 
right of purchase and sale of mortgaged property with  or without intervention of the Courts to avoid 
delays in the recovery of defau lted loans. To provide access to cred it by small and medium enterprises 
(SME), a SME bank has been established. To ea se access of credit in rural areas, licensing and 
regulatory environments have been made  less stringent for micro financing. 
Taxation  
49. The highlights of tax reforms include:  reorgani zation of the Central Board of Revenue (now 
renamed Federal Board of Revenue); simplificati on of tax laws and procedures; introduction of 
universal self-assessment in all taxes; establis hment of Large Tax Payer units, Model Customs Pakistan WT/TPR/G/193 
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Collectorates, Regional Tax Offices and Tax Facilit ation Centres; promotion of a new tax culture 
based on voluntary compliance; emphasis on Human Resource Management: improved transparency; 
improved efficiency of tax administration throu gh capacity building and skills training and timely 
dissemination of information to all stakeholders. 
50. As regards income tax, the corporate rate stru cture, which varied substantially across banking, 
public and private companies, has been made uni form by lowering rates on banking and private 
companies to 35%. For individuals, the tax-free basi c threshold has been increased from Rs. 50,000 - 
60,000 in 2001-02 to Rs. 80,000 - 100,000. Similarl y for small companies, a low rate of 20% was 
introduced in 2005-06. 
51. As regards sales tax, a single uniform rate of 15% has been introduced, replacing different 
rates of 15%, 18%, 20% and 23% prevailing during 2001-2003. 
52. In the area of customs duty, Pakistan has c ontinued the policy of simplification of tariff 
structure. During the budget of 2007-08, a slab of  zero has been created for duty free imports. The 
number of concessionary notifications (SROs) has been  reduced substantially. Pakistan also continued 
the policy of autonomous liberalization and bound mo re than 3,000 tariff lines to increase the scope of 
tariff binding to 98.7%. All compulsory local content conditions commonly referred to as 
indigenization/deletion programs have been abolishe d. This includes the deletion program for auto 
sector, abolished on 1 July 2006.  
Trade Facilitation  
53. During the period under Review, Pakistan has st arted working on three major initiatives. One 
of these relates to improving Customs Clearance Systems, another relates to placing all international 
trade-related procedures on a par with best interna tional practices, and the third is the medium term 
transport master plan for up-grading of infrastructure and services to improve trade logistics.  
54. With a view to reducing transaction time and the cost for trade, Pakistan has continued to 
reform its trade and customs procedures.  A single Administrative Document (SAD) replaced 10 documents in 2003. Various laws and procedures were modified in 2004 to make them compliant 
with the revised Kyoto convention. Pakistan h as also committed itself to the WCO Framework of 
Standards and for facilitation of international trade in  a secure environment. Pakistan has entered into 
partnership with US Customs & Border Protection and has established an Integrated Cargo Container 
Control terminal (IC3) at Port Qasim, which affords real time viewing of the results of scanning containers destined for USA besides allowing si multaneous results of radioactivity checks. 
55. For improving customs clearance procedures, wo rk began in 2002 on a new fully automated 
programme known as Pakistan Customs Computerized  System (PaCCS). PaCCS as an integrated, 
web-enabled, paperless, real-time system launche d in 2005 is successfully working for Customs 
clearance.  Almost 25% of imports and 38% of expor ts are now cleared through this system. Work is 
in progress to roll it out in all ports (including  inland ports) and to c over all goods exported or 
imported. The roll out envisages an automated nation-wide commercial community single window 
system called PACCS (Pakistan Commercial Community  System) for integration of all stakeholders 
engaged in international trade (along with its domestic linkages). It is expected to be rolled out at all 
Customs stations including Ports, Airports, Dry ports across the country by the end of 2008. This initiative will be implemented through a public-private  partnership (PPP) and e nvisions integrating all 
stakeholders involved in international trade and the logistic supply chain.  
56. With the implementation of PaCCS, steps to cl ear vessels have been reduced from 26 to one. 
Previously, 34 signatures and 62 verifications were  required to clear a consignment; these have now WT/TPR/G/193 Trade Policy Review 
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been replaced with a single electronic declarati on. Clearance time for any consignment has been 
reduced from 7-10 days to less than a few hours. Under this system, physical cargo inspection rates have been lowered from 100% to 4% (2% for ex ports) and port dwell times reduced from 11 to 
4 days. With the effective implementation of PaCCS and other administrative measures, Pakistan 
Customs compliance to the revised Kyoto Conventi on has increased substantially. PaCCS alone has 
contributed to compliance of 26 standards of the General Annex and overall general compliance level 
has risen to a very high level. 
57. The second initiative commenced in August 2001 and involved setting up the National Trade 
and Transport Facilitation Committee (NTTFC). This  is a World Bank funded Trade and Transport 
Facilitation Project (TTFP) with technical assist ance from UNCTAD. The work of this Committee 
covers all Ministries relating to trade, transport and finance. It covers public sector organizations 
dealing with finance, customs, trade and trans port and also private sector trade bodies representing 
commerce and industry, transport, finance and insuran ce. This project is also working on the principle 
of public/private partnership. The Committee conduc ts reviews of trade and transport procedures and 
coordinates efforts of concerned organizations in the area of facilitation of international trade and 
transport. The Committee also promotes adoption of  standard trade and transport terminology and 
international codes for trade and transport legislation in order to bring them up to par with the best in 
the world.  
58. The latest major initiative is the National Trade Corridor Improvement Program (NTCIP) 
approved in August 2005.   This is a medium-term tr ansport master plan for the country systematically 
covering infrastructure and services that support trade l ogistics. This is a holistic and integrated plan  
which encompasses public and private sectors, services  and infrastructure, reforms and investments 
and various other sectors responsible for the desire d level of performance of the corridor i.e. 
(highways, road transport, ports and shipping, civi l aviation, railways, customs and trade logistics). 
This initiative is expected to substantially reduce the cost of doing business in Pakistan and to 
enhance export competitiveness, accelerate industr ialization and sustain the high economic growth 
achieved in recent years. 
59. Pakistan’s geographical location on the wo rld map finds it surrounded by landlocked 
countries like Afghanistan and the Central Asian St ates. Transit trade takes on immense importance 
demanding smooth and quick flows across borders in wh ich Pakistan has a key role to play. The age 
old Transit Trade Agreement with Afghanistan is be ing revised and new transit trade agreements, like 
the Transit Trade Framework Agreement with EC O countries and a Quadrilateral Agreement with 
China, Kazakhstan, Kyrgyzstan, are being made ope rative to enhance transit trade traffic through the 
region in synchronization with the spirit of WTO (GATT Article V). 
60. All these measures for trade facilitation have been taken by Pakistan with a view to promoting 
and enhancing legitimate trade in a secure and safe environment. 
Competition and Regulatory Bodies
 
61. A new competition law has been enacted and the Monopoly Control Authority working since 
the sixties has been replaced w ith the Competition Commission. This is one of the key "second 
generation" initiatives. It will prohibit abuse of ma rket dominance, certain types of anti-competitive 
agreements, deceptive market practices, and merg ers or undertakings that substantially reduce 
competition. Various independent regulatory bodi es have been formed to regulate utilities.  
62. To ensure healthy competitive markets, inde pendent regulatory bodies have been established 
or strengthened. These include regulators for energy , the environment, tourism, legal, maritime Pakistan WT/TPR/G/193 
 Page 15 
 
 
transport, engineering, architectural, accounting a nd higher education services. The postal sector is in 
the process of acquiring one to have balanced re gulations for structured and properly sequenced 
development of the sector. In the health sector, the Pakistan Medical and Dental Council is also introducing changes in its regulations. 
Protection of Intellectual Property Rights
 
63. Pakistan has upgraded its regime for the protection of intellectual property rights (IPRs) in 
line with its commitments in the agreement on Tr ade Related Intellectual Property rights (TRIPS). 
This includes strengthened protection of intell ectual property rights and enhanced enforcement 
mechanisms. An integrated umbrella in the form of "Intellectual Property Organization of Pakistan" 
has been established for dealing with all aspects of IPRs.  
64. In terms of legislation, Pakistan is a memb er of the Paris and Berne Conventions.  New 
legislation was introduced to meet internationa l obligations on copyrights, industrial designs, 
integrated circuits, patents and trademarks. Sp ecifically, it promulgated the "Registered Layout-
Designs of Integrated Circuits Ordinance, 2000",  "Patents Ordinance 2001 as amended by Patents 
Amendment ordinance 2002",   and "Patent Rules 2003" . In July 2004, Pakistan acceded to the Paris 
Convention for the protection of industrial property and issued the Trade Mark Rules 2004 the same 
year. Draft laws on Plant Breeders Rights and Geog raphical Indications are in the final stages for 
legislation. 
65. To enhanced enforcement and surveillance mech anisms of IPR, several steps have been 
taken. The civil and criminal remedies provided by  the law with implementation mechanisms through 
police, federal investigation agency and border cont rol agencies (customs etc) have shown a marked 
improvement in recent years. Enforcement Committe es among relevant agencies in several cities and 
"anti-piracy" cells at major international airports ex ist to effectively interdic t pirated goods e.g. in the 
case of anti-piracy cells by inspecting all exports  of compact discs, DVDs, etc. These substantial 
improvements in IPR protection, and especially enfo rcement, are well recognized internationally.  
IV. CONCLUSION 
66. Pakistan has come a long way from the days of tightly regulated economy, when the public 
sector owned and controlled banks, insurance, telecommunications, utilities, and industries. The 
challenge now is to continue on this  reform path and fully embrace 21st century business principles of 
openness, competition, and quality.  Pakistan will continue to pursue trade liberalization goals 
multilaterally, regionally/bilaterally and unilaterally. In particular, it needs to prepare itself for the 
opportunities that may be arising through the Doha  Round and other such market access opportunities. 
67. With its financial position being more stable now , Pakistan needs to give more attention to 
enhancing the educationa l and skill levels needed to export value-added and high technology goods 
and services. At the same time, it needs to further improve its infrastructure to reduce costs associated 
with international trade. With th ese changes, there is no reason why Pa kistan should not soon be able 
to join the ranks of more successful countries when  it next presents its trade policies for review in 
6 years time. 
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