Govt mulls expanding import ban list

ISLAMABAD: The government has been exploring options to curb imports further in the coming 2022-23 budget with proposals under consideration to slap a ban on more luxury goods and also add more items to regulatory duty (RD) list.

Federal Board of Revenue (FBR) chairman and its members were preparing a list of items to add to the existing number of banned items for compressing increasing imports. The ban would likely stay in place for a couple of months to meet the requirements of the World Trade Organization (WTO).

“The prime minister has given instructions to Ministry of Commerce, FBR, and other budget makers to identify items for purpose of banning and slapping RDs in a bid to decrease import bills. Number of items that will be added to the RD list or banned list have not been decided yet,” said a senior official while talking to The News on Monday.

Government previously banned 38 items, but later had to issue a clarification while withdrawing some items for the list. This task requires a lot of spadework because it might create distortions in the economy, added the official sources.

Ministry of Finance and the Planning Commission were deliberating on curtailing the trade deficit in the coming budget by envisaging to fix an export target of $32 billion, with imports in the range of $65 billion. Imports in the outgoing fiscal year have been estimated to stand at $71 billion.

“We are trying to curtail imports by $6 billion in the coming budget, so we are planning to bring down imports to $65 billion from $71 billion,” an official with insight told The News. Budget makers expect to save $3 billion on imports of Covid-19 vaccines in the coming fiscal, with additional savings of $2 billion on account of reduced shipping costs and rents.

“The government is considering measures to curtail imports by $1 billion through different tariff and nontariff barriers,” the official said. However, the World Bank projects that energy and commodity pricing in the international market was another risk for import-dependent countries as average oil prices and food commodities might continue on the higher side in the first six months of the current fiscal year.

The government conducted a study in the recent past for considering different measures for curtailing import bills in the wake of the ban when it was found that import elasticity would not allow any major reduction with imposition of taxation measures. Following the finds of the study, the government finally slapped ban on import of luxury and nonessential items.

It was being deliberated that imposition of import ban was a short-term phenomenon because it requires approval of WTO as under Article XII it states notwithstanding the provision of paragraph 1 of Article XI any contracting party in order to safeguard its external financial position and its balance of payment, could restrict the quantity or value of merchandise permitted to be imported.

Currently, around 600 items were listed in the FBR issued SROs, imposing regulatory duty in the range of 5 to 10 percent on June 30, 2021 but there were certain items where the RD was imposed in the range of 30 to 50 percent.

Regulatory duty on potatoes and citrus fruits either fresh or dried was 25 percent; on papayas it was 45 percent, apricots, cherries, peaches (including nectarines), plums and sloes, fresh 35 percent; sour cherries, peaches, including nectarines 45 percent; sauces and preparations, mixed condiments and mixed seasoning, mustard flour and meal and prepared mustard 50 percent and dog or cat food, put up for retail sale at rate of 50 percent etc. In another SRO, the FBR also slapped regulatory duty on another 700 items. So currently the FBR was imposing regulatory duty on around 1,200 to 1,300 items.