Duty on imports
PAKISTAN’S interim government is reportedly contemplating the imposition of ‘prohibitive’ regulatory duties on luxury and non-essential imports. The idea is to shrink the trade gap and restrict dollar outflows. The plan is said to have been debated in the military-backed SIFC and is part of a broader strategy to curb the rapid depletion of our foreign exchange reserves that have dropped below $8bn. A report in this paper suggests that the new regime will cover at least 30pc more products than the 860 or so that had come under regulatory duties in August last year. Many items under consideration pertain to essential intermediary material for industry as well as cooking oil. We have seen governments take similar decisions previously, but without much success. Such import restrictions work in economies that have strong border controls in place to thwart the influx of inbound shipments through illegal means, and that display zero tolerance, officially and socially, for smuggled goods. Pakistan is not among them. The measure will only increase smuggling and result in a bigger loss of revenue for the exchequer, unless the government takes strict action to prevent smuggled goods from entering the country and reaching the markets.
Any effective anti-smuggling plan calls for stringent punishments for both sellers and buyers beyond reinforcing border controls. The proposed strategy may prove counterproductive if the government actually places regulatory duties on intermediary raw industrial material and basic food ingredients like edible oil. We have recently seen the consequences of a ban on imports, which proved to be disastrous for the productive and export sectors of the economy, despite bringing short-term advantage in terms of a reduction in the trade deficit. Besides, the application of such curbs on imports for saving forex reserves betrays a lack of confidence over claims of massive investment and other inflows from the Gulf nations. Why curb imports if we are about to receive billions of dollars in the next six months?
Published in Dawn, September 12th, 2023
Status unclear
EVER since the president made it known that recent amendments to the Army Act and Official Secrets Act were enacted without his assent, the legal status of both laws has been open to question. Given the state’s refusal to acknowledge the issue and the president’s inability or unwillingness to take action after his startling disclosure, it seems the Supreme Court will ultimately decide whether or not presidential assent can be ‘deemed’ to have been given in this case. The amendments in question, bulldozed through parliament by the PDM government despite allies’ and civil society’s vocal protests, have far-reaching implications. Through the amendments, the movers of the bills sought to cede considerable new powers to the Pakistani military and the army chief, including powers to retaliate more forcibly against critics and suppress dissent, as well as the power to control armed forces personnel’s professional and political decisions even after their career in the forces had ended. Other provisions had given blanket cover to the armed forces’ ‘extracurricular’ activities, as long as they could be argued to be in relation to national development or strategic interests.
The Supreme Court registrar had returned an earlier petition against the amendments on technical grounds, but two recent petitions, filed by the Sindh Bar Council and PTI chief Imran Khan, seem to mount a more serious challenge. Both petitions have argued that the amendments should be struck down on the grounds that the two bills through which they were enacted never received presidential assent. They have also argued for the amended laws to be suspended while the court deliberates this matter, considering that they allow the state to aggressively encroach on a slew of civil rights. It is regrettable that the president himself has chosen to remain quiet despite being responsible for much of the confusion surrounding the laws. Meanwhile, separate challenges against the trial of civilians in military courts are also pending before the apex court, but the Supreme Court is unlikely to issue any judgements anytime soon owing to the impending change of guard at the institution. Until the new chief justice is sworn in and sets these matters for deliberation, the apex court should issue an interim injunction suspending the application of the assailed laws to prevent any grave injustice. Fundamental rights should not remain in jeopardy until the judiciary sets its house in order.
Published in Dawn, September 12th, 2023
G20 summit
SEVERAL noteworthy developments occurred at the just concluded G20 summit in New Delhi, reflecting the rapid state of flux the international order is experiencing.
The grouping of the world’s 19 top economies, along with the EU, just admitted the African Union, while Xi Jinping was conspicuous by his absence, sending an unsubtle message to the host nation as well as Western members of the bloc. Vladimir Putin also stayed away.
Though the official declaration denounced the use of force and violation of the territorial sovereignty of any state, there was no express criticism of the Russian invasion of Ukraine, a compromise solution that was reportedly reached to bridge the wide geopolitical differences between members of the grouping.
Another major announcement was the launch of the India-Middle East-Europe Economic Corridor, a massive scheme described as a modern ‘Spice Route’ designed to link India with Europe, via the Arabian Peninsula.
Termed a “real big deal” by Joe Biden, the project is being seen as a rival to China’s Belt and Road Initiative that involves transcontinental transportation, energy and data linkages.
From the aforesaid details, it appears that the G20, as well as the G7, are trying to transform themselves from West-led old boys’ clubs to more ‘inclusive’ organisations ready to invite more states from the Global South.
The expansion of BRICS and the SCO may have played a role in these changed priorities, which is why the AU has been courted as a partner. Geo-economics and geopolitics are also at play, with the Spice Route taking an aim at the BRI and the Russia-led International North-South Transport Corridor.
Despite being a G20 member, Beijing was not invited to join the new project linking India and Europe. The scheme will also come in handy by connecting Israel with the Arab states.
The building of multiple transcontinental energy and trade corridors is not necessarily a bad thing, as competition can be healthy, while developing states can prosper by attracting investment and serving as conduits in these expansive networks.
Where Pakistan is concerned, due to our internal issues, we are largely spectators rather than active players in these transnational geo-economic networks.
Unfortunately, we have not even fully utilised the potential that CPEC, a BRI project, was supposed to bring.
Pakistan must also realise that despite India’s atrocious human rights record in held Kashmir, the West, as well as our Muslim brothers, seem least concerned and are eager to do business with Delhi. The sad reality is that in the international arena, economic heft overshadows morality.
Therefore, if we want to be part of these global trade networks, and if we want our voice heard where issues such as Kashmir are concerned, we need to first address our internal inadequacies.
Published in Dawn, September 12th, 2023