WORLD TRADE WT/BOP/N/31/Add.1
31October 1997
ORGANIZATION(97-4788)
Original: English Committee onBalance-of-Payments Restrictions
NOTIFICATION UNDER PARAGRAPH 9OFTHE UNDERSTANDING
ONTHE BALANCE-OF-PAYMENTS PROVISIONS OFTHE
GENERAL AGREEMENT ONTARIFFS AND TRADE 1994
Addendum
Thefollowing communication wasreceived from thePermanent Mission ofPakistan on
28October 1997.
____________________
./.WT/BOP/N/31/Add.1
Page2
NOTE ADDRESSING PROCEDURAL REQUIREMENTS CONTAINED
INPARAGRAPH 1OFTHE UNDERSTANDING ON
BALANCE-OF-PAYMENTS PROVISIONS OFGATT 1994
There areonlyfifteen heads ofclassification ontheNegative Listinthe1997 import policy
order ofPakistan whose imports have notbeen allowed forthebalance ofpayments reasons.
Nevertheless, imports ofanumber ofproducts within eachofthese heads arepermissible; forexample
under sub-heading 52.0, only52.08 to52.12 areonthenegative listwhile imports ofalltheremaining
products under thisheading arefreely importable. Besides, within eachofthese sub-headings like
(52.08) anumber ofproducts havebeenexcluded under Market Access Agreements withUSA and
theEuropean Union. Consequently, theproducts restricted forBOPreasons areatpresent veryfew
innumerical terms.
Thefactthatonlyaveryfewproducts areonthenegative listforBOPreasons, isindicative
ofPakistan 'scommitment tothemarket oriented policies overtheadministrative measures. Itneeds
tobeunderscored thatdespite ourextremely fragile balance ofpayments situation, Pakistan has
significantly reduced overtime thenumber ofimport items onthenegative listalong withthedownward
adjustment inthetariff rates.
Pakistan believes thattheoretically exchange rateisanideal policy instrument totackle the
balance ofpayments problems andthattariffs should bepreferred overthenon-tariff barriers. However,
duetovarious market imperfections which arethehallmarks ofthedeveloping economies likePakistan,
thepricebased measures havestrong limitations asamode ofcontaining thegeneral levelofimports.
While itremains ourlongtermpolicy objective todoaway withthequantitative restrictions
oncertain categories ofimports, yetduetosevere balance ofpayments difficulties including the
precariously lowlevelofourliquid foreign exchange reserves, itisnotfeasible todosointheshort
run.Thisisbecause theitems onthecurrent negative listare"high fashion" and"expensive" textile
products usedbyricher sections ofthesociety. Thedemand fortheseproducts isinelastic bydefinition
andassuchprice based measures would notbeeffective incontaining thedemand fortheproducts
inquestion. Itneeds tobenoted further thatunder agreements withIMF, themaximum rateofduty
cannot exceed 45percent. Therefore, Pakistan isconstrained tosupplement thepricebased measures
withnon-price instruments tocontain itsgeneral levelofimports untilitsbalance ofpayments situation
improves.
Itisonaccount oftheabove reasons thatPakistan finds itdifficult toannounce thephaseout
schedule inthecourse ofthecurrent consultations. Nevertheless, weremain committed toannounce
thephaseout planforimport restrictions assoonasthecountry 'sbalance ofpayments situation would
sopermit.