Tariff rationalisation is crucial for Pakistan’s economic transformation, promoting export
competitiveness, industrial efficiency, and trade integration. Pakistan’s overdependence on high
tariffs as a source of revenue has resulted in an anti-export bias, increasing the cost of
production, deterring foreign investment, and constraining participation in global value chains.
The existing tariff structure is complex, with embedded costs like Regulatory Duties (RDs) and
Additional Customs Duties (ACDs), which distort the market and promote smuggling.
Empirical evidence indicates that tariff rationalisation can strongly enhance export-oriented
sectors, induce investment, and support economic diversification. Pakistan’s untapped export
potential of $24 billion, especially in textiles, agriculture, and high-value sectors, could be
tapped through reducing tariffs on raw materials, simplifying tariff regimes, and switching to
direct taxation.
The main policy suggestions are cutting tariffs on raw materials, removing hidden tariffs,
enhancing institutional capacity, making trade agreements more robust, and promoting export-
oriented industrialisation. Tariff rationalisation is not just a budgetary measure but a strategic
imperative for raising industrial productivity, lowering trade distortions, and unleashing
sustainable economic growth. By bringing its tariff policies with global best practices, Pakistan
can increase its international trade competitiveness and achieve long-term economic resilience.
Skip to content
Skip to footer
