Govt mulls importing 10% crude oil, petrol from US to save exports

ISLAMABAD: Pakistan authorities are seriously considering a proposal to import 10 percent of crude oil and petrol from the US to save its exports, which have increased up to $6 billion, a senior official at the Ministry of Energy told The News.

The US president has already imposed 29 percent tariffs on Pakistan in addition to the 10 percent baseline tariff. Like other countries, tariffs imposed against Pakistan have been suspended by the Trump administration for 90 days.

The trade deficit between Pakistan and the US stands at $3 billion, which is in favour of Pakistan, and the Trump administration has imposed the tariffs as per the trade imbalances with 180 countries. About 75 countries have agreed to negotiate with the Trump administration on tariffs to reduce the trade deficit of the USA with them to avoid the tariffs that would be effective after the expiration of 90 days.

To a question, the official said that the crude oil and petrol that will be imported from the US would be costly by $3 per barrel mainly because of transportation cost than the imports from UAE and Saudi Arabia. Since PSO is in a long-term contract with Kuwait Petroleum Company (KPC) for the import of diesel, the authorities have decided not to import diesel from the US. The increase by $3 per barrel would be absorbed by the government and when 10 percent import from the US would spread across the 100 percent consumers, the impact would be very negligible as it would cause an increase of 0.50 per liter.

“We have consulted with stakeholders like refineries and oil marketing companies (OMCs) and finalised the proposal to import 10 percent of crude and petrol from the US so that exports from the US to Pakistan would increase and the government would pitch this proposal in talks with the Trump administration when Pakistan delegation will reach Washington to negotiate the 29 percent tariffs.”

“The proposal to import 10 percent crude and petrol from the US would be tabled in ECC for approval.”

“We want to save our exports and also want to accommodate the US by increasing imports but in return want the abolishment of 29 percent tariffs. In addition, Pakistan can also import sophisticated machinery not produced in Pakistan, soybean, steel and iron and other items.”

“The US market is the biggest one for Pakistan and the government does not want to lose it. Apart from the 10 percent baseline tariff, the regional competitive economies like Bangladesh facing 37 percent, Vietnam 40 percent, Sri Lanka 44 percent and India 26 percent would also engage the US administration to accommodate US imports. However, the case of Beijing is quite different as China is facing a direct trade war with the USA. Trump has imposed 145 percent tariff on China. In return, China also imposed the same apart from banning Hollywood films.

Pakistan has made up its mind to reduce high tariffs on US imports, and soften non-tariff barrier (NBTs), customs, sanitary and phytosanitary barriers, and internet constraints.

The government delegation during talks would also assure the US administration on the compliance of intellectual property rights (IPRs) owing to which US companies have been braving huge losses for a long.