Pakistan’s chronically inward‑looking trade regime is finally set for a long‑needed overhaul. Prime Minister Shehbaz Sharif’s newly approved roadmap promises to cut the average customs tariff almost in half—from 19 per cent to 9.5 per cent within five years—while collapsing five duty slabs into four and trimming peak rates from 20 per cent to 15 per cent. Equally significant, decades‑old protective walls for automobiles, steel, textiles, chemicals and other sectors will be dismantled. If implemented faithfully, these measures can transform the economy from import‑substitution to export‑promotion.
Lowering the cost of imported inputs is essential for firms that wish to climb global value chains. At present, steep duties on raw materials and intermediate goods drive up production costs, erode competitiveness and entrench an anti‑export bias. Small wonder Pakistan’s export‑to‑GDP ratio languishes in single digits while regional peers race ahead. The planned reforms—coupled with the elimination of a maze of regulatory and additional duties—should inject transparency, predictability and scale into supply chains. Government estimates of a US $5 billion export boost may be conservative if firms seize the opportunity to diversify into higher‑value manufacturing.
Predictably, vested interests warn that cheaper imports will trigger a balance‑of‑payments crisis by widening the trade gap. The fear is overstated. Tariffs are a blunt revenue instrument that account for barely a tenth of the Federal Board of Revenue’s intake; their developmental costs far outweigh their fiscal convenience. Experience shows that when inputs become affordable, competitive industries expand output, capture new markets and generate export earnings that offset the initial import surge. Countries from Vietnam to Bangladesh have followed precisely this arc.
Yet tariff liberalisation alone cannot carry the weight of Pakistan’s export renaissance. Two complementary actions are indispensable. First, resolve chronic structural bottlenecks: unreliable energy, inadequate logistics, cumbersome border procedures and regulatory overreach. Without inexpensive power and efficient ports, tariff cuts will only lower factory‑gate prices on paper. Second, align the exchange‑rate and rebate regimes with the new trade philosophy. A realistic rupee, rapid GST refunds and targeted duty drawbacks must work in tandem to incentivise exporters.
The roadmap is therefore a necessary but not sufficient condition for success. Its credibility will hinge on three tests: insulation from ad‑hoc reversals, rigorous monitoring of revenue shortfalls, and transparent dialogue with industry to prevent rent‑seeking relapses. Parliament should embed tariff policy in a medium‑term legal framework so that political transitions do not derail reform momentum.
For three decades, Pakistan has flirted with liberalisation without crossing the Rubicon; the results are evident in stagnant market shares and missed industrial upgrades. This time the stakes are existential. If Islamabad follows through, it can finally pivot from a tariff‑coddled enclave to an outward‑oriented, job‑creating economy. Failure, conversely, would condemn another generation to slow growth and perpetual crisis. The choice is clear; the government must stay the course.
