Pakistan’s national tariff policy has come under scrutiny after industrialist Amir Ullah Wala questioned whether the government is making a fair comparison between the country’s import duties and those of other regional economies.
Speaking at the 39th International Conference and Annual Meeting of the Pakistan Society of Development Economists, Wala argued that the government is comparing different categories of duties when claiming that Pakistan has higher import tariffs than neighbouring countries.
He said the government’s reported tariff rate of 18.54% for Pakistan includes additional customs duties and regulatory duties, while the figures used for India, Bangladesh and other regional economies are based only on customs duties.
The difference in calculation methods, he argued, makes the comparison misleading and could influence decisions about Pakistan’s future trade and industrial policies.
Pakistan’s Tariff Rate Compared With Regional Economies
According to World Trade Organization (WTO) data cited by Wala, Pakistan’s simple average applied customs tariff stood at 10.3% in 2023.
The corresponding rates were reportedly higher in India and Bangladesh, at 17% and 14.1%, respectively.
Wala argued that these figures challenge the impression created by the government’s national tariff policy that Pakistan’s import duties are substantially higher than those of regional competitors.
The government’s reported figure of 18.54% consists of three components:
- Customs duty: 10.3%
- Additional customs duty: 3.65%
- Regulatory duty: 4.57%
Together, these charges produce the overall figure cited in the national tariff policy.
Wala maintained that including additional and regulatory duties in Pakistan’s rate while relying on customs-duty figures for other countries does not provide a like-for-like comparison.
Commerce Ministry Defends Its Figures
A Commerce Ministry spokesperson said the 18.54% figure represents Pakistan’s overall average import duties.
The spokesperson also explained that the WTO does not include para-tariffs when calculating simple average tariff rates in its tariff profile reports. However, the interpretation and application of the term can vary.
The distinction is important because different methods of calculating import duties can produce different results. A comparison based solely on customs tariffs may show a different picture from one that also includes additional customs and regulatory duties.
The debate therefore centres not only on the figures themselves but also on which categories of charges should be included when comparing Pakistan’s trade regime with those of other countries.
Former Tariff Commission Chief Questions the Method
Dr. Rubina Athar, a former chairperson of the National Tariff Commission who was involved in preparing the tariff policy, also acknowledged differences in the definitions used for Pakistan and other economies.
She said the duty categories included in the comparisons were not uniform.
Athar further noted that Pakistan’s reported tariff rate of around 18.5% does not include other taxes imposed at the import stage, such as sales tax and withholding tax.
This distinction highlights the complexity of measuring the total cost faced by importers. Customs duties and other taxes can affect the final cost of imported goods, but they are separate categories and should be identified clearly when comparing countries.
Dr. Manzoor Ahmad, a member of the Tariff Policy Board, said the figures presented by Wala and Athar were both valid within their respective contexts.
His remarks suggest that the disagreement may partly reflect differences in the purpose and methodology of the calculations rather than a simple dispute over arithmetic.
Government Plans Major Tariff Reductions by 2030
Under Pakistan’s national tariff policy, the government aims to reduce the import duty rate from 20.1% to 9.7% by 2030.
The plan is intended to reduce import protection by approximately 52%, with the broader objective of improving competitiveness and changing the structure of the country’s trade regime.
However, the proposed reductions have raised concerns among industrial groups, which argue that tariff changes could affect domestic manufacturers and businesses operating in an already challenging economic environment.
The debate over tariff calculations is therefore significant for future policy decisions. The way import duties are measured can influence how policymakers assess Pakistan’s competitiveness and determine the pace and scale of tariff reforms.
High Import Duties Not the Only Export Challenge
Wala also challenged the argument that Pakistan’s weak export performance can be attributed primarily to high import tariffs.
He identified several other factors that he believes are affecting the country’s ability to compete in international markets.
These include security and geographic challenges, limited access to markets in Africa, Central Asia and South America, high electricity costs, elevated interest rates and comparatively high taxes.
According to Wala, these structural issues also need attention if Pakistan wants to strengthen its export performance.
His argument suggests that tariff reductions alone may not be sufficient to improve exports unless businesses also receive support through lower production costs, better market access and a more competitive operating environment.
Why the Tariff Debate Matters
Import duties can influence the cost of imported raw materials, machinery and finished products. Changes in tariff policy can therefore affect domestic manufacturers, importers, consumers and exporters in different ways.
Lower duties on industrial inputs may help some businesses reduce production costs, while changes to protection on finished goods can increase competitive pressure on local manufacturers.
For this reason, comparisons between countries need to use consistent definitions and clearly identify the charges being measured.
The latest debate highlights the importance of transparent calculations in economic policymaking. While the government is pursuing a plan to reduce import protection by 2030, industrialists are questioning whether the figures used to justify the reforms accurately reflect Pakistan’s position relative to regional competitors.
Ultimately, a fair assessment requires comparable data across countries, alongside a broader examination of the costs and structural challenges affecting Pakistan’s export sector.
Also read: IMF Approves Electricity Tariff Reduction for Pakistan
