Pakistan has been a member of the World Trade Organization (WTO) since 1 January 1995 and had been a member of its predecessor, the General Agreement on Tariffs and Trade (GATT), since 30 July 1948.

In terms of WTO plurilateral agreements, Pakistan is a signatory to the Trade Facilitation Agreement. Furthermore, there are reports that the country is actively considering joining WTO’s Information Technology Agreement and Government Procurement Agreement.

Pakistan is also party to the following WTO Agreements:

• the Agreement on Implementation of Article VI of the GATT 1994 (Anti-dumping);
• the Agreement on Subsidies and Countervailing Measures;
• the Agreement on Safeguards;
• the Understanding of the Interpretation of Article XVII of GATT 1994;
• the Agreement on Trade-Related Aspects of Intellectual Property Rights;
• the Agreement on Technical Barriers to Trade;
• the Agreement on Agriculture; and
• the General Agreement on Trade in Services (GATS).

To strengthen its economic relations, Pakistan has entered into a number of regional and preferential trade agreements with its regional and international partners, including the following:

• the Pakistan–Türkiye Trade in Goods Agreement;

• the Agreement between Pakistan and Uzbekistan on Transit Trade;
• the Trade and Investment Framework between Pakistan and USA;
• the Pak-Indonesia Preferential Trade Agreement;
• the Pakistan–Malaysia Free Trade Agreement and Economic Integration Agreement;
• the Mauritius–Pakistan Partial Scope Agreement;
• the China–Pakistan Free Trade Agreement and Economic Integration Agreement;
• the South Asian Free Trade Agreement (SAFTA);
• the SAFTA Accession of Afghanistan;
• the South Asian Association for Regional Co-operation Agreement on Trade in Services (SATIS);
• the South Asian Preferential Trade Arrangement;
• the Pakistan–Sri Lanka Free Trade Agreement;
• the Economic Cooperation Organization Trade Agreement;
• the Framework Agreement on the Trade Preferential System Among OIC Member States;
• the Global System of Trade Preferences among Developing Countries (GSTP);
• the Protocol on Trade Negotiations;
• the Preferential Trade Agreement among D-8 member states; and
• the Pakistan–Islamic Republic of Iran Partial Scope Agreement.

Of these agreements, the Framework Agreement on the Trade Preferential System Among OIC Member States, the Economic Cooperation Organization Trade Agreement and) the Preferential Trade Agreement among D-8 member states are currently not in force.

Please see 1.1 World Trade Organization Membership or Plurilateral Agreements regarding trade agreements that impose legally binding obligations on Pakistan.

Pakistan remains a beneficiary under the Generalised System of Preference schemes of Australia, Canada, Belarus, the European Union, Kazakhstan, Japan, New Zealand, Norway, the Russian Federation, Switzerland, Türkiye and the United States.

Pakistan has also maintained preferential tariffs under the GATT Protocol Relating to Trade Negotiations Among Developing Countries and the GSTP.

Pakistan is negotiating preferential trade agreements with Thailand, Afghanistan and Uzbekistan. The negotiations for these agreements are said to be at different stages.

In 2021, Pakistan and Uzbekistan agreed to a bilateral transit trade agreement, with the intent of connecting Uzbekistan and the Central Asian Republics (CARs) with the Arabian Sea, and giving Pakistan and other nations quicker access to the CAR markets, making this a significant milestone. It is anticipated that Pakistan will have access to all of Uzbekistan's neighbours for trans-shipment under the terms of the agreement. By enabling trans-shipment, border warehousing, the mutual recognition of identifying documents and visa facilitation, the agreement promotes regional integration.

Most recently, Pakistan has entered into a trade in goods agreement with Türkiye, with the objective of establishing preferential conditions relating to trade between the parties and providing a platform for further trade liberalisation and facilitation of trade between them.

The Strategic Trade Policy Framework (STPF) 2020–25, formulated by the Ministry of Commerce (MOC), intends to improve Pakistan's export competitiveness through a framework of interventions that have influence across all value chains. By addressing the persistent challenges related to policy fragmentation that have hampered the successful implementation of earlier Trade Policy Frameworks, the STPF seeks to make the execution of policies unidirectional. Overall, it strives to improve Pakistani businesses' capability to produce, distribute and sell goods and services as effectively as their competitors, or even more so.

The STPF is based on the following pillars:

• deeming exports a national priority and the primary driver of economic growth;
• the enhancement of exports via a collaborative and cohesive national effort engaging all relevant ministries, departments, government agencies and private sectors so as to ensure policy coherence;
• the introduction of strategic interventions in priority sectors under the "Make in Pakistan" initiative. These interventions have been identified in the Action Matrices; and
• the alignment of Trade Policy in tandem with the macro-economic framework and other national policies, such as Taxation, Revenue, Textiles & Industrial Policy, etc.

The Federal Board of Revenue (FBR) is responsible for administering and enforcing federal fiscal laws, including the Customs Act, 1969.

Pakistan Customs is a department of the FBR and is responsible for the administration and enforcement of the Customs Act, and delegated legislation made under it.

Pakistan does not have a legislative instrument similar to the Trade Barriers Regulation of the European Union or Section 301 of the US Trade Act of 1974. However, Pakistan seeks to counter negative foreign trade practices by adopting measures under its trade remedy laws, which have been enacted to give effect to the WTO Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade and the Agreement on Subsidies and Countervailing Measures; see 5. Anti-Dumping and Countervailing (AD/CVD) for more detail on these remedies.

Furthermore, under the auspices of the WTO’s Understanding on Rules and Procedures Governing the Settlement of Disputes (Dispute Settlement Understanding), the government of Pakistan can approach the Dispute Settlement Body to address negative impacts of trade practices in other member state jurisdictions directly affecting Pakistan.

In other instances, under a non-statutory mechanism, domestic businesses may approach the MOC regarding measures adopted by other jurisdictions that are adversely affecting Pakistani businesses, such as bans or restrictions on imports of certain Pakistani goods. The Ministry seeks redress against such bans through Pakistan’s trade representatives and other diplomats in the relevant jurisdiction(s).

The Pakistan Single Window (PSW) is currently being implemented in Pakistan, and aims to provide a digital portal to enable importers and exporters to interact with relevant government departments connected to trade. Previously, filings with such departments in connection with imports and exports had to be undertaken manually and required physical visits to their offices. PSW makes the import and export of goods into and out of Pakistan faster, easier and cheaper by providing a single standardised online form on which information relevant to customs declarations and up to 74 government departments, whose involvement depends on the nature of goods sought to be imported or exported, may be submitted. These include the State Bank of Pakistan (SBP), the Drug Regulatory Authority of Pakistan, the Department of Plant Protection, the Pakistan Standards and Quality Control Authority, the Animal Quarantine Department and the Federal Seed and Certification Department.

PSW is expected to merge with a larger National Single Window, further integrating other national organisations and reducing the time, expense and complexity of regulatory compliance.

Pakistan is implementing the Integrated Transit Trade Management System, which is aimed at updating its Border Crossing Points – specifically at Torkham and Chaman with Afghanistan, and at Wagha with India – with cutting-edge ICT equipment and physical infrastructure. In order to manage and regulate the facilities, the government of Pakistan has decided to create an organisation called the Pakistan Land Port Authority. The future expansion of this pilot project to additional border crossings and dry ports will serve to reduce border trade processing costs and times.

In addition, Pakistan Customs is currently in the process of implementing an effective central risk management system through a strategy of using centralised data and a wider array of risk rules in line with systems deployed by customs administrations in more developed jurisdictions.

The United Nations (Security Council) Act, 1948 empowers the federal government to issue notifications to give effect in Pakistan to resolutions of the United Nations Security Council (UNSC) and to decisions of respective Sanctions Committees created under such resolutions. These notifications are issued by the Ministry of Foreign Affairs and require implementation by the government departments and regulatory authorities concerned.

The procedure by which the property of a designated individual or entity is required to be frozen and/or seized in pursuance of a UNSC resolution on sanctions is set out in the United Nations Security Council (Freezing and Seizure) Order, 2019.

The Ministry of Foreign Affairs issues notifications under the United Nations (Security Council) Act, 1948 in order to give effect to sanction measures under UNSC resolutions. Such notifications form the legal basis for the imposition in Pakistan of such sanctionary measures, which include the freezing of assets, travel bans and arms embargoes on designated individuals and entities.

The Ministry of Interior publishes notifications of the specified individuals and entities under UNSC resolution 1373 (2001) in order to declare them as proscribed under the Anti-Terrorism Act, 1997.

Depending on the scope of the notification issued by the Ministry of Foreign Affairs under the United Nations (Security Council) Act, 1948 to give effect in Pakistan to sanctionary measures, the following kinds of sanctions are enforced by the government authorities set out below.

• Funds and financial assets: the SBP (the central bank) and the Securities and Exchange Commission of Pakistan (SECP), which regulates securities markets and the corporate sector, require entities regulated thereunder to freeze the funds and financial assets of designated individuals and entities, and to undertake due diligence and report compliance with sanctionary measures.
• Movable and immovable property: the Ministry of Interior, Home Departments of Provincial Governments, Provincial Excise Departments, Cantonment Boards and local authorities are required to identify the properties of designated individuals and entities, and to freeze and seize them.
• Raising funds online: the Pakistan Telecommunications Authority (the telecoms regulator) and the Cyber Crimes Wing of the Federal Investigation Agency are required to monitor the internet in order to prevent online fundraising by designated entities and individuals.
• Travel bans: the Ministry of Interior, the Federal Investigation Agency, the Directorate General of Immigration and Passports and the National Database and Registration Authority enforce travel bans.
• Arms embargo: these are enforced by the Ministry of Interior and the Home Departments of Provincial Governments by cancelling arms licences and seizing all arms from designated individuals and entities. Furthermore, Pakistan Customs is required to ensure that designated individuals and entities are unable to import or export arms.
• Sectoral restrictions on trade: these are enforced by the MOC, the Trade Development Authority and Pakistan Customs.

Designated individuals and entities as notified by committees established by UNSC sanctions resolutions are subject to sanctions under Pakistani law upon a notification being issued by the Ministry of Foreign Affairs or the Ministry of Interior, as the case may be.

The notifications in respect of designated individuals and entities sanctioned by committees established by UNSC sanctions resolutions are available on the website of the Ministry of Foreign Affairs. The notifications are issued upon any addition, deletion or amendment made by the relevant committee established by the UNSC sanctions resolution. The list of persons proscribed under the Anti-Terrorism Act, 1997, pursuant to UNSC resolution 1373 (2001) and otherwise, is available on the website of the National Counter Terrorism Authority.

Pakistan does not maintain comprehensive sanctions against countries or regions as a whole, but it does give effect to sanctions against designated individuals and entities from particular countries and regions in line with UNSC resolutions.

It may be noted, however, that Pakistan maintains trade restrictions with India and Israel. The Import Policy Order, 2022 prohibits the import of goods from or originating in India or Israel. In the case of India, this prohibition does not apply to therapeutic products regulated by the Drug Regulatory Authority of Pakistan (DRAP). Under the Export Policy Order, 2022, no goods are allowed to be exported to India from Pakistan, except therapeutic products regulated by DRAP. Pakistan similarly prohibits the export of products to Israel.

Pakistan does not maintain any other types of sanctions.

Pakistan does not apply secondary sanctions.        

Any individual found to be in violation of a measure taken against a designated individual or entity may be imprisoned for a term of up to ten years and penalised with a fine not exceeding PKR25 million, or both, under the Anti-Terrorism Act, 1997. For a legal person, a fine of up to PKR50 million may be imposed.

Pakistan law does not make provisions for licences that would authorise activities that are otherwise prohibited under Pakistani sanction laws.

However, in limited circumstances, a designated individual or entity who has been subject to an assets freeze may apply to the Ministry of Foreign Affairs or any agency designated by it for access to services, money or other property frozen or seized as may be necessary to meet certain kinds of subsistence and other expenses.

The sanctions laws and regulations are strictly enforced. The authorities do not need to demonstrate an intention of wrongdoing, but only non-compliance with any of the requirements.

Funds and Financial Assets

The SBP, SECP, Central Directorate of National Savings (CDNS) and Pakistan Post are required to freeze bank accounts, securities and insurance policies, etc, held by any designated individual or entity. These authorities are also required to share monthly reports on compliance with the focal point with the Ministry of Foreign Affairs. Additionally, the SBP and SECP require entities regulated by them to report details of frozen assets and other actions taken in compliance with the relevant sanction measures.

Movable and Immovable Property

The government department responsible for enforcing the freezing of other movable and immovable property depends on the nature of the asset held by a designated individual or entity. For instance, in the case of an immovable property such as a house or a plot of land, the relevant land registration authority will immediately freeze the title to such asset to prevent the sale or transfer thereof, and will convey the details of such asset to the relevant Home Department. Upon the receipt of such details, the Home Department will seize the asset in accordance with Article 15 of the United Nations Security Council (Freezing and Seizure) Order, 2019.

Similarly, in the case of a motor vehicle found to be held by a designated individual or entity, the relevant excise department will immediately freeze the title to such vehicle and convey the details thereof to the relevant Home Department, which may then proceed to seize the same in accordance with Article 14 of the United Nations Security Council (Freezing and Seizure) Order, 2019.

In this regard, the Ministry of Defence, Ministry of Interior and Home Departments of Provincial Governments are required to share monthly reports on compliance with the focal point with the Ministry of Foreign Affairs.

There are no laws in Pakistan that prohibit adherence to other jurisdictions’ sanctions.

Over the past 12 months, Pakistan has taken a host of measures with the aim of complying with requirements identified by the Financial Assistance Task Force (FATF) that would exclude Pakistan from its list of jurisdictions that are subject to increased monitoring (often referred to as the "Grey List"). These include:

• the introduction of amendments to the Anti-Money Laundering Act of 2010 for the imposition of harsher punishments for violations under the act;
• the enhancement of the role of the Federal Board of Revenue by, inter alia, widening its investigatory powers vis à vis tax evasion;
• increasing the role of the Federal Investigation Agency in countering alternative remittance systems;
• granting the SBP and the SECP additional powers to restrict the free movement of foreign currency, including an increase in the penalties to be imposed for foreign exchange violations; and
• stringent measures taken by the Ministry of Interior to clamp down on terrorist networks.

On 21 October 2022, Pakistan was officially excluded from the Grey List by FATF. Going forward, Pakistan is expected to continue to be proactive to ensure it remains compliant with international best practices in AML, CFT and sanctions enforcement.

The principal legislation is the Imports and Exports (Control) Act, 1950 (the "1950 Act"), under which the federal government is empowered to issue export policy orders prohibiting, restricting or otherwise controlling the export of specified goods.

The Export Policy Order, 2022 is currently in force. In practice, export policy orders are issued at intervals of one to three years, with each replacing the former. Any changes to export controls that are made during the currency of an export policy order are enacted through amendments.

The Export Policy Order seeks to:

• consolidate export controls under Pakistan’s sector-specific laws that impose restrictions or conditions on exports, such as the Export Control on Goods, Technologies, Material and Equipment related to Nuclear and Biological Weapons and their Delivery Systems Act, 2004, the Antiquities Act, 1975 and the Pakistan Animals Quarantine (Import and Export of Animal and Animal Products) Ordinance, 1979. Some of these laws give effect to international treaties to which Pakistan is party, such as the Convention on International Trade in Endangered Species of Wild Fauna and Flora and the Chemical Weapons Convention; and
• implement Pakistan’s export controls policy.

The MOC recommends trade policies to the Federal Cabinet for approval and then administers such policies.

Export controls imposed under subject-specific laws are administered by the government authorities named in those laws.

Pakistan Customs enforces export controls.

Under the Export Policy Order, all goods except those specified in Schedule I are allowed to be exported. Goods mentioned in Schedule II can be exported subject to the conditions specified therein.

A few commonly traded goods are mentioned in Schedule I, such as certain kinds of livestock, sugar, certain fertilisers and wheat. Most of the entries relate to restricted goods, such as fissionable material and antiquities.

The Export Policy Order provides that no goods are allowed to be exported to India, except therapeutic products regulated by the Drug Regulatory Authority of Pakistan.

The export controls issued under the 1950 Act apply to goods specified in the export policy orders and to persons within Pakistan.

Under the Customs Rules, 2001, any exporter found guilty of fiscal fraud may be blacklisted from access to the PSW and WeBOC (the Pakistan Customs portal).

Goods and technologies that are subject to regulatory controls under the Export Control on Goods, Technologies, Material and Equipment related to Nuclear and Biological Weapons and their Delivery Systems Act, 2004 were listed in a notification issued in 2005 (SRO 1078(I)/2005), which was revised in 2016 (SRO 1142(I)/2016).

Pakistan does not maintain any other non-list-based export controls.

Any person deemed to be in contravention of the Imports and Exports (Control) Act, 1950 or any order made thereunder, including the export policy order, shall be imprisoned for a term of up to one year, or fined up to PKR1 million, or both.

Furthermore, as per Section 156 of the Customs Act, any person who exports goods in violation of a prohibition or restriction on the export of such goods shall be punished with a penalty not exceeding twice the value of the goods, in addition to the goods being liable to confiscation.

Any penalties for violating export control provisions in sector-specific laws apply in addition to those applicable under the 1950 Act and the Customs Act.        

Certain goods listed in Schedule I of the Export Policy Order (see 4.4 Persons Subject to Export Controls) may be exported subject to the approval of the relevant government authority mentioned therein.

Violation of the export controls imposed under the 1950 Act and the Customs Act are strict liability offences and can be punished even if the violation is unintentional. The laws imposing export controls are applicable to all persons within Pakistan and to exports of goods from Pakistan.

The Customs Act requires an export declaration to be filed for all exports. The export authorisation or licence, if any, under which an export is made must be indicated on the export declaration.

In April 2022, Pakistan issued the Export Policy Order, 2022, repealing the Export Policy Order, 2020. The Export Policy Order, 2022, introduced a number of changes, including:

• the list of specified perishable goods exportable to Afghanistan and through Afghanistan to the Central Asian Republics against Pakistani currency was increased to include products such as rice, fish and meat; and
• the list of commodities subject to a minimum export price restriction was removed.

Pakistan is currently in the process of implementing PSW, which aims to simplify the process for export by creating a single platform through which applicable export processes and requirements may be fulfilled. For further detail, please see 2.4 Key Developments in Customs Measures.

The National Tariff Commission (the "Commission"), established under Section 3 of the National Tariff Commission Act, 2015, is empowered to determine anti-dumping measures on products imported into Pakistan pursuant to an investigation initiated and conducted in accordance with the provisions of the Anti-Dumping Duties Act, 2015 (ADD Act) and the Anti-Dumping Duties Rules, 2001.

In addition, the Commission is empowered to impose countervailing duties to offset subsidies in respect of goods imported to Pakistan under the Countervailing Duties Act, 2015 and the Countervailing Duties Rules, 2002.

The Commission also has the mandate of determining safeguard measures on products being imported into Pakistan in accordance with the Safeguard Measures Ordinance, 2002 and the Safeguards Measures Rules 2003, which may then be imposed by the federal government.

Pakistan Customs enforces anti-dumping duties, countervailing duties and safeguard measures that are imposed by the Commission.

Reviews with respect to the imposition of anti-dumping duties, countervailing duties and safeguard measures may be initiated by the Commission on its own initiative or upon a duly substantiated application filed by domestic companies.

Reviews with respect to the imposition of anti-dumping duties, countervailing duties and safeguard measures are conducted periodically in accordance with the timelines provided under the respective laws governing the same.

Any “interested party” may participate in the review proceedings. An interested party is a party having interest in the product under review, including exporters, foreign producers, trade or business associations of the product.

Anti-dumping and Countervailing Investigations

Broadly speaking, the process of an anti-dumping and countervailing investigation is as follows:

• filing of an application by the domestic industry;
• initiation of an investigation through a public notice;
• inquiries from the exporters/foreign or domestic producers/importers involved by the Commission through questionnaires;
• public hearing;
• confrontational meetings (if any requested);
• on-the-spot verification at the premises of the applicant(s) and the foreign or domestic exporters/producers involved;
• issuance of a preliminary determination;
• disclosure meetings;
• issuance of a statement of essential facts; and
• final determination.

The investigation would take approximately one year to complete and, once concluded, the Commission will issue its final determination by way of which it will either impose duties or terminate the investigation if it determines that the imposition of duties is not warranted.

Safeguard Investigations

Upon receipt of an application by the domestic industry or on its own initiative, the Commission issues a notice of the initiation of an investigation. In order to solicit views/comments of interested parties, a public hearing may also be held. After having collected all relevant evidence, the Commission carries out the necessary analysis and prepares its recommendation for imposing an appropriate safeguard measure against a specific product. This recommendation is forwarded to the federal government for consideration and imposition.

The Commission is required to conclude a safeguard investigation within four months of its initiation, which is extendable for a further period not exceeding two months.

A comprehensive report of the Commission’s findings under any investigation or review is promptly published on its website, and is also forwarded to interested parties.

There are currently no jurisdictions on which the Commission cannot or will not impose AD/CVD duties. Similarly, there are no jurisdictions on which the federal government cannot or will not impose safeguard measures.        

Anti-dumping Duties

Sunset review

A sunset review initiated under Section 58 of the ADD Act may be conducted before the expiry of the definitive anti-dumping duties, which are initially imposed for a period up to five years.

Changed circumstances review

Under Section 59 of the ADD Act, the Commission may review the need for the continued imposition of anti-dumping duty on its own initiative or, provided that a period of 24 months has elapsed since the imposition of a definitive anti-dumping duty, upon a written request submitted by any interested party, which contains positive information substantiating the occurrence of changed circumstances justifying the need for a review.

Newcomer review

If a product is subject to definitive anti-dumping duties, any exporter or foreign producer who did not export the product to Pakistan during the original period of investigation can request the determination of an individual dumping margin under Section 60(1) of the ADD Act. However, such exporter or producer has to show that it is not related to any of the exporters or producers in the exporting country who are subject to the anti-dumping duties levied on the investigated product.

Countervailing Duties

Expiry reviews

An expiry review initiated under Section 19 of the Countervailing Duties, 2015 (the CVD Act) may be conducted before the expiry of the countervailing duties, which are initially imposed for a period up to five years.

Interim reviews

Under Section 20 of the CVD Act, the Commission may review the need for the continued imposition of an anti-dumping duty on its own initiative or, provided that a period of 24 months has elapsed since the imposition of countervailing duties, upon a written request submitted by any interested party, which contains positive information substantiating the occurrence of changed circumstances justifying the need for a review.

Accelerated review

Any exporter whose exports are subject to a definitive countervailing duty but who was not individually investigated during an original investigation for reasons other than a refusal to co-operate with the Commission shall be entitled, upon request, to an accelerated review in order for the Commission to promptly establish an individual countervailing duty rate for that exporter, provided that such review shall be initiated after domestic producers have been given an opportunity to comment.

Safeguard Measures

Under Section 34 of the Safeguard Measures Ordinance, 2002, if the duration of a definitive safeguard measure exceeds three years, the Commission shall examine the situation through a review, which will include a scrutiny of the effects of the definitive safeguard measure on the domestic industry concerned and of the domestic industry’s progress in implementing its adjustment plan.

The process of reviewing such duties is similar to that of an investigation. For further detail, see 5.6 Investigation and Imposition of Duties and Safeguards.

Anti-dumping and Countervailing Duties

The initiation of an anti-dumping or countervailing investigation and the imposition of definitive or provisional duties thereunder may be reviewed before the Appellate Tribunal established under the ADD Act. The Appellate Tribunal is required to dispose of an appeal and pronounce its decision as expeditiously as possible, but no later than 45 days from the receipt of an appeal. A decision of the Appellate Tribunal is appealable before the High Court.

Safeguard Measures

Once a definite safeguard measure is imposed, it can be appealed through the Dispute Settlement Mechanism of the WTO by any affected country.

The Commission has recently imposed definitive anti-dumping duties on imports of, inter alia, the following:

• Polyester Filament Yarn (PFY) originating in and/or exported from the People’s Republic of China and Malaysia;
• Cold Rolled Coils/Sheets originating in and/or exported from the European Union, the Republic of Korea, Taiwan and Vietnam; and
• Polyester Staple Fiber originating in and/or exported from Taiwan, Indonesia and Thailand.

In addition, the Commission has recently reviewed and extended definitive anti-dumping duties on imports of, inter alia, the following:

• Galvanised Steel Coils/Sheets of thickness ranging from 0.15mm to 2.75mm originating in and/or exported from the People's Republic of China;

• Coated Bleached Paperboard/Folding Box Board with White Back originating in and/or exported from the People's Republic of China; and

• Cold Rolled Coils/Sheets imported from the People’s Republic of China and Ukraine.

Moreover, a number of investigations and reviews are currently the subject of litigation before various fora.

No significant changes to trade remedies laws and regulations are expected over the next 12 months in Pakistan. In terms of hot topics and issues, the Commission is currently conducting an investigation on Polyvinyl Chloride Resin Suspension Grade originating in and/or exported from the People's Republic of China, Taiwan, the Republic of Korea and the Kingdom of Thailand. The Commission is also reviewing definitive anti-dumping duties imposed on Sulphonic Acid Imported from the People’s Republic of China, the Republic of India, the Republic of Indonesia, the Islamic Republic of Iran, the Republic of Korea and Taiwan.

Pakistan has a liberal foreign investment regime, under which all sectors of the economy are open to foreign investment, except arms and ammunitions, consumable alcohol, currency and mint, high explosives, radioactive substances, and security printing. There are upper limits on investment by foreigners in newspapers (up to 25% subject to approval), broadcast media (49%) and airlines (49%) in Pakistan. There is no minimum level of foreign equity investment required in any sector. Foreign investments do not require government clearance, and the Foreign Private Investment (Promotion and Protection) Act of 1976 stipulates that foreign and local private investment must be treated equally.

To open a branch or liaison office in Pakistan, a foreign company must obtain approval from the Board of Investment (BOI) set up under the BOI Ordinance 2001. Foreign banks need permission from the central bank, SBP, to open a branch in Pakistan.

Furthermore, foreign shareholders and directors of Pakistani companies must receive security clearance from the Ministry of Interior, which may take between six and 24 months. Companies with foreign shareholders and directors (other than Indian nationals or those of Indian origin) may commence operations while such application for Ministry of Interior clearance is being processed.

By means of an order dated 9 September 1984 issued under the Foreigners Act, 1946, the federal government has directed that no foreigner shall acquire land or any interest in land or landed property without obtaining the previous permission of the federal government or the provincial government, depending on where the land is situated. A foreigner is defined as a person who is not a citizen of Pakistan. Such requirement does not apply to individual foreigners who have been issued with a Pakistan Origin Card.

The government agencies that administer and enforce investment security measures in Pakistan include:

• SECP;
• SBP;
• BOI;
• Home Departments of Provincial Governments; and
• the Ministry of Interior.

A number of industries (including aviation, banking, electric power, finance, insurance, oil and gas and pharmaceutical drugs) are governed by specific statutes that require licences to be obtained prior to engaging in any regulated activity. Both Pakistanis and foreigners require such licences.

Please see 6.1 Investment Security Mechanisms.

Any approval or clearance that required as listed in 6.1 Investment Security Mechanisms must be sought in writing.

There are no exemptions from the requirements set out in 6.1 Investment Security Mechanisms if they are applicable in any instance.

If security clearance required by foreign shareholders and directors of Pakistani companies is denied by the Ministry of Interior, the foreign shareholder and director urgently transfer shares or resign from office, as appropriate; see 6.1 Investment Security Mechanisms for further details.

A foreigner who contravenes the requirement of obtaining prior permission before acquiring land or an interest in land or landed property in Pakistan may be punished with imprisonment for up to five years and with a fine.

Unless BOI approval is obtained, a branch office of a foreign company will not be able to open a bank account in Pakistan.

The penalties for violating the foreign shareholding limits in broadcast media, newspapers and airlines (see 6.1 Investment Security Mechanisms) are set out in the statutes regulating those industries.

There are no fees specified for applications for prior permission for foreigners to acquire land or interest in land in Pakistan. Similarly, there are no fees specified for security clearance of foreign shareholders and directors of Pakistani companies.

In January 2022, the government of Pakistan issued a "National Security Policy", which is noteworthy as it emphasises the importance of economic development and reinforces the government’s pivot from geo-politics to geo-economics. As a result, it reinforces Pakistan’s liberal investment policy and its desire to leverage regional connectivity Pakistan priority towards export-led economic growth.

In addition, Pakistan developed a new model for Bilateral Investment Treaties (BITs) in 2021, which appears to be the first of its kind. The new model BIT has been developed as a benchmark for negotiating BITs in the future and, more particularly, against the backdrop of a history of investor-state arbitrations decided against Pakistan under the dispute resolution provisions in existing BITs.        

In furtherance of the policy objectives set out in the National Security Policy, governmental bodies are expected to enhance efforts to encourage foreign investment through export-oriented industrialisation. As a result, Pakistan is expected to build on already afforded incentives across various sectors to encourage foreign investment over the next 12 months.

In recent years, Pakistan has adopted a “Make in Pakistan” policy to encourage investment in manufacturing to enable export-oriented industrialisation. This has been necessitated by successive rounds of consumption-led economic growth over the years, which have led to unsustainable trade deficits.

In addition to duty and tax concessions, Pakistan also runs a number of broad-based and sector-specific incentive programmes that are both broad-based and sector-specific.

Pakistan continues to operate several schemes to support its export sector, including the Export Processing Zones Scheme, the Manufacturing Bond Scheme, the Duty and Tax Remission for Export Scheme, the Export Oriented Units and Small and Medium Enterprise Scheme, and the recently introduced Export Facilitation Scheme. Incentives offered under each scheme vary from tax and duty rebates to duty-free imports of inputs and plant and machinery to subsidised utility rates. Preferential export finance schemes are also operational.

Special Economic Zones

According to the Special Economic Zones Act of 2012, special economic zones (SEZs) may be established by the federal or provincial governments alone, in conjunction with the private sector through various forms of PPP, or solely through the private sector. The SEZ law offers several financial advantages, including a ten-year exemption from all income taxes and a one-time exemption from custom duties and taxes for all capital items imported into Pakistan for the creation, maintenance and operation of a SEZ (for both the developer and the zone firm).

As part of the China-Pakistan Economic Corridor (CPEC), which is the flagship project of China’s Belt and Road Initiative (BRI), multiple SEZs have been set up throughout Pakistan whilst numerous others are currently in the process of being established. These are open to all investors.

Special Technology Zones

Pakistan has also enacted the Special Technology Zones Act, 2021, which allows the authority set up thereunder to develop Special Technology Zones (STZs) across Pakistan, to provide special incentives to attract investors, builders and technology companies to partner with the government, and to provide a one-time facilitation to local and international companies in the STZs.

Ultimately, the authority aims to build knowledge ecosystems that will harness Pakistan's IT potential and set the country on the trajectory of an entrepreneurial, innovative and tech-driven future for shared prosperity and inclusive growth.

The incentives offered to STZs include exemption from income tax, customs duty and property tax for zone developers and zone businesses for a ten-year term. Sales taxes on goods and services, as well as on the import of machinery, equipment and raw materials for use in the zones, are not applied to zone developers or zone enterprises. For a period of ten years, venture funds participating in STZs are immune from tax on dividend income and capital gains.

In addition to the broad-based incentives identified above, sector-specific incentives include the following.

Textile

The Pakistani textile industry is one of its largest earners of foreign exchange and is, resultantly, the recipient of various tax and policy incentives aimed at encouraging further growth. The main incentives for the Pakistani textile sectors include:

• the supply of energy to export-oriented sectors of the textile industry at regionally competitive rates;
• export finance at 3% and concessional long-term financing;
• duty and sales tax-free import of machinery and equipment;
• duty-free access to China for Pakistani textile exports; and
• concessionary tariffs in the European Union under GSP+.

IT

In an attempt to encourage the development of the IT sector, Pakistan has introduced a number of incentives to support the IT industry, including:

• tax credit on the income of a start-up;
• income tax at 1% on exports of software, IT services and IT enabled services; and
• exporters of software are entitled to retain up to 35% of export earnings in foreign currency.

Food processing

Pakistan also maintains a number of incentives for its food processing sector, with the most notable being the provision of concessional customs duty on imports of capital goods for the livestock sector, for the handling, processing and storage of vegetables, fruit and other food, and for seafood processing.

Mobile manufacturing

Pakistan launched the Mobile Device Manufacturing Policy 2020 with the goal of encouraging the production of mobile devices. The policy permits the duty-free importation of plant, machinery and equipment needed for the production of mobile phones and of components for manufacturing mobile phones. The policy allows a 3% R&D allocation to manufacturers for mobile phone exports.

Automotive

Pakistan’s Automotive Development Policy 2016–21 (ADP) provided tax incentives for the establishment of manufacturing plants, leading to new manufacturers setting up plants in Pakistan. The Automotive Development and Export Policy for 2021–26 (AIDEP) was approved by the Cabinet in December 2021, under which the tariff structure and incentives provided within ADP are to continue until the expiry of the policy in 2026. Significantly, AIDEP seeks to promote the manufacture and import of electric and hybrid vehicles by reducing taxes and duties, and fixes export targets.

In line with the federal government’s “Make in Pakistan” agenda, the policy seeks to encourage the local manufacturing of parts by excluding low value-added parts from the scope of tax concessions, and also sets targets by which parts currently imported will have to be locally manufactured. The policy aims for 100% of motorcycle parts and 75% of car parts to be locally manufactured by 2026.

The Pakistan Standards and Quality Control Authority (PSQCA), established under the PSQCA Act 1996, remains the national standardising agency. It is responsible for formulating and implementing standards and for providing conformity/testing assessments and advising the government on standardisation policies, programmes and activities that promote industry efficiency and growth, as well as consumer safety and health.

The PSQCA standards are considered to be mandatory, and goods are required to have a certification mark issued by the PSQCA in order to be produced, stocked or sold domestically, and in order to ensure that domestic manufacturers and exporters to Pakistan must be registered with the PSQCA. Furthermore, Appendix N of the 2022 Import Policy Order includes 159 items that are subject to the compulsory certification mark licence scheme and that must fulfil Pakistani criteria for human safety and public health at the import stage.

While Pakistan maintains a host of sanitary and phytosanitary sanitary measures, these are generally not seen to be aimed at reducing imports and/or encouraging domestic production. However, in what was perceived as a measure to reduce imports, Pakistan issued a notification in 2019 prohibiting the import of processed food products without local language labelling and halal certification. These requirements were incorporated into the Import Policy Order 2020, and food products cannot be imported without labelling in English and Urdu and a halal certification logo.

The National Electric Power Regulatory Authority (NEPRA) is empowered under the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 to administer the rates and charges at which electric power services may be provided. In addition to affording protection to consumers from monopolistic and oligopolistic prices, NEPRA ensures that the sector acts in accordance with the economic and social policy objectives of the federal government, which often include the provision of electricity to export-oriented units at subsidised rates. An example of this includes the supply of energy to export-oriented sectors of the textile industry at regionally competitive rates.

Similarly, the Oil and Gas Regulatory Authority (OGRA) is empowered under the Oil and Gas Regulatory Authority Ordinance, 2002 to recommend the prices of petroleum products and the rates at which natural gas supply services may be provided to different classes of consumers for approval by the federal government. OGRA also ensures that consumers are provided protection from monopolistic and oligopolistic prices.

In April 2021, Pakistan notified the WTO that it did not have any state trading enterprises as defined by Article XVII:4(a) of the GATT 1994. Pakistan also noted that any state firms that already exist are not given any exclusive or special rights (including statutory or constitutional powers) allowing them to influence the level and/or direction of foreign trade.

The Public Procurement Regulatory Authority Ordinance 2002 and the related Public Procurement Rules 2004 continue to control government procurement. While neither contain nor provide for any “buy national/local” requirement, recent amendments to the Rules have allowed direct contracting with state-owned enterprises, in certain circumstances, without undertaking a conventional procurement process.

In March 2020, Pakistan passed the Geographical Indications (Registration and Protection) Act, 2020, which defines geographical indications as "such goods as agricultural goods, natural goods or manufactured goods originating or manufactured or produced in a territory or a region or locality as determined by the country, where a given quality, reputation or other characteristics of the goods or the ingredients or components, is essentially attributable to its geographical origin and in the case of manufactured goods one of the activities of either the production or processing or preparation of the goods concerned takes place in such territory, region or locality as the case may be". The Act establishes a Geographical Indications Registry (GIR), which is to be operated by the Trademarks Registry until a separate GIR is created. The Act also allows for a geographical indication of a foreign country to be registered in Pakistan, as long as it is registered in accordance with the local legislation in its country of origin.

The Act, read together with the Trade Mark Ordinance, 2001, provides for the seizure of infringing goods in relation to a geographical indication by the Collector of Customs at the time of import on the request of the relevant proprietor.

The Pakistan Customs Service under the FBR has been pursuing an ambitious reform and modernisation agenda over the past few years. These reforms have involved digitalisation of the customs processes and procedures, legal and tariff reforms, changes in the organisational set-up and the creation of specialised offices for different customs-related operations.

Pakistan is also in the process of enacting the Trade Dispute Resolution Act, which shall seek to provide for the establishment of a comprehensive regime for the swift and effective resolution of disputes relating to the export and import of goods and services, including import and export through e-commerce.