Customs duty on 4,610 products reduced for SAFTA members

Customs duty (CD) on a total of 4,610 products have been reduced for SAFTA (South Asian Free Trade Area) member-countries under an agreement to bring down the tariff rates to the range between zero and five per cent by 2016.
The Customs wing of the National Board of Revenue (NBR) issued a Statutory Regulatory Order (SRO) recently by reducing the CD on import products under the SAFTA list for the calendar years 2013 and 2014.
With the recent SRO, importers having SAFTA Rules of Origin Certificate (ROO) will be able to enjoy a reduced duty on import of the products from member- countries.
The reduced rates of CD will be considered effective retrospectively for products imported in January-December periods of both 2013 and 2014.  
The SAFTA is a regional co-operation agreement signed among the member-countries of the SAARC that comprises Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, Sri Lanka and Afghanistan. The main objective of the agreement is to strengthen intra-SAARC trade cooperation.
The agreement was signed on January 06, 2004 at the 12th SAARC Summit in Islamabad and it entered into force on January 01, 2006.
The agreement outlines a 10-year schedule for trade liberalisation, which aims at reducing and eliminating customs duties on cross-border trade.
According to the schedule, customs duties on all products should be lowered and the rate should not be above 5.0 per cent. The cut was aimed to enhance trade facilities among the SAARC member-countries.
With issuance of the latest SRO, dated December 17, 2014, the CD on basic raw materials and capital machinery has been lowered to 2.025 per cent and 1.35 per cent for 2013 and 2014 respectively.
The base-rate of the products was 6.0 per cent that was reduced to 2.7 per cent in phases earlier up to l 2012 for SAFTA countries.
The CD on intermediate goods, raw materials and chemicals has been set at 6.2625 per cent for 2013 and 5.175 per cent for 2014, from 7.35 per cent in 2012.
However, the base rate of CD was 13 per cent for the products in 2006.
The CD on finished and luxury goods, that fall under the higher slab of duty, has been lowered to 11.5625 per cent and 9.375 per cent for 2013 and 2014 respectively. The CD rate was 13.75 per cent in 2012 coming down gradually from the base rate of 25 per cent.
A senior official said as per the agreement, SAARC member-countries would reduce the customs duties for their member-countries every year that would continue until 2016.
Importers and exporters will enjoy the reduced rates in the SAFTA member-countries while other countries will have to pay duty at normal rates for the products, he said.
The official said, before issuance of the SRO, importers were paying CDs at the last reduced rate in 2012 for import of products.
He said importers, having SAFTA ROO certificate, would be able to claim refund of the paid taxes after the SRO was published.
The list of products under reduced CD for 2015 has already been prepared and is awaiting consent of the Law Ministry, he added.  
The official, however, expressed his doubt over significant outcome from the SAFTA as non-tariff barriers are high among major countries.
He said the SAFTA list does not contain major cross-border trade products of the SAARC countries.   
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