The Furniture Sector in Pakistan: Export performance and ... - TRTA i

In case of developing countries, imports often take place on lower than the bound rates these
are called applied rates which can be increased up to bound levels without consultation with
anyone.
Reduction of tariffs is an important aspect of trade liberalization. As a matter of fact rates of
tariffs have been constantly coming down since the GATT became operational in 1948.
Industrial countries’ tariffs in most of the traded items have fallen down to less than 4%. Such
a significant reduction in tariff barriers has been very helpful for increasing trade. However, as
stated above on many items of interest to developing countries, tariff rates remain relatively
high e.g. textiles and clothing.
Elimination of quantitative restrictions (Article Xl)
Member countries are required to eliminate quantitative restrictions on imports and exports.
There are, however, a number of exceptions to this rule. For example export restrictions can
be applied on export of goods to prevent or relieve critical shortages, Article XI-2 (a).
Implications for the furniture sector
Exports
Pakistani exports of furniture do not by and large, face significant non-tariff barriers in
industrial countries’ markets. They mainly face tariff barriers that have also substantially come
down. In other words, for the furniture sector of Pakistan the “market access” is not a problem
as such. This indicates a great scope for increasing export in this item provided we have the
right products at right prices.
Imports
• Combined effects of Articles II & Xl are that foreign furniture goods enjoy reasonable
access to Pakistan’s market though our tariffs are relatively high (25%).
• Pakistan’s exports have in fact better opportunities in markets of industrial countries on
account of their comparatively lower tariffs.
Transparency of Government regulations affecting trade (Article X)
Members are obliged to publish relevant laws, regulations, administrative rulings of general
application including those pertaining to the classification of the valuation of the products etc.
Governments are also required to disclose their policies and practices publically within the
country as well as by notifying the WTO. With a view to ensuring that members adhere to
their obligations, their trade policies are periodically examined through a surveillance
mechanism called the “Trade Policy Review Mechanism”. This examination of the trade
policy and results becoming a part of public domain also contribute to greater transparency.
Implications for the furniture sector
• Transparency in government regulations, in Pakistan and abroad, helps in smoother flow
of trade. It is “in essence due process guarantees and a partial shield against arbitrary
government action”.
62 International Trade Centre