Trade, cooperation policies in time of pandemic
Pakistan should not limit exemption from taxes on life-saving goods to 3 months
PHOTO: REUTERS
ISLAMABAD:
COVID-19 (coronavirus) is an unprecedented catastrophe of modern time. Governments all over the world are looking at all sorts of options and policy tools to meet this challenge.
Pakistan’s government has recently taken many reasonable steps, including adjustment of fiscal and monetary policies to combat this. Still, considering the magnitude of the problem, a lot more will need to be done.
This article points out some other areas where policy decisions are urgently needed.
First, looking at the trade policies, the government has exempted medical and other health care equipment from import taxes initially for a period of three months. It is not likely that within this short period, the objectives will be met, considering that there is an acute shortage of these goods and many countries have imposed export bans.
Importers face severe constraints while entering into any purchase contracts. In case there is any delay, punitive tariffs and other import taxes will be applicable when the goods arrive.
There are very few countries that are usually taxing life-saving medical instruments. Most countries are members of the World Trade Organisation (WTO) Agreement on Information Technology, which was updated in 2015 to include advanced medical equipment.
Under the agreement, the member countries allow duty-free imports. Pakistan should consider becoming part of this global alliance. Still, if it is not possible immediately, it should not limit the exemption from taxes on life-saving goods to only three months.
In the context of COVID-19, the most urgent problem is the lack of ventilators, which are currently the only option to save lives.
Due to high cost and unavailability at present, groups of local volunteers including engineers, doctors and biomedical professionals are working round the clock to make affordable ventilators and related accessories.
They could take cue from the efforts of an Irish team that has recently developed a 3D-printed mechanically operated ventilator prototype. It is an open-source ventilator implying that anyone can make use of this model to make their own.
Pakistani entrepreneurs may find themselves disadvantaged by the fact that currently the import of 3D printers is not allowed in Pakistan. 3D printers are being used in various countries to meet high demand for reusable plastic facemasks and protective gears for health workers.
These printers build almost anything, including body parts, physiotherapy goods and hospitals.
Even before the current crisis, they were spearheading the digital industrial revolution. Maintaining a ban on their import does not make any sense. We need them urgently to produce mass-customised health care and other products.
Import of insecticides
Another related and foremost issue is last week’s federal cabinet decision to reject a proposal from the Ministry of Commerce to allow the import of insecticides from India even on a one-time basis to control the imminent threat of the spread of dengue fever.
Punjab government’s health care department made the proposal. There is no realisation that just last year there were about 45,000 confirmed cases of dengue fever, including 75 deaths in the country.
If dengue spreads as widely as it did last year, the casualties could be even more than anticipated from the coronavirus.
Since the mosquito that causes dengue fever starts laying eggs in early summer, there is very little time for taking preventive measures. It is hard to imagine the doomsday scenario resulting from the combined havoc from dengue and coronavirus.
Considering the social, economic and political implications of COVID-19, all national stakeholders must adequately be represented in the decision-making process. What we are still missing is a cross-functional COVID-19 response team representing all the three sectors.
There is also a need for frequent virtual meetings of the Council of Common Interests (CCI) to avoid any misunderstanding and ensure a coordinated effort.
In case essential supplies from one part of the country fail to reach another, it can give rise to severe law and order situation.
Global cooperation
As at the national level, cooperation is proving to be a challenge at the international level. Over 50 countries (including Pakistan) have applied new trade restrictions on medical supplies, and the trend is continuing.
But there are some bright spots as well. China is one of the few countries, which having overcome its adversity is now extending material and technical assistance to many other countries including Pakistan.
Many countries are also forming regional forums and funds to fight the crisis. South Asian countries have set up the Saarc Corona Emergency Fund. India has made an initial contribution of $10 million while all other countries have also made their contributions ranging from $5 million from Sri Lanka to $1 million by Afghanistan and $100,000 by Bhutan.
Pakistan is the only country, which is so far staying apart from this regional initiative. The country’s policymakers must realise the importance of cooperation, whether domestic or international.
The writer is the senior fellow at Pakistan Institute of Development Economics and
ex-ambassador to WTO
Published in The Express Tribune, March 30th, 2020.
COVID-19 (coronavirus) is an unprecedented catastrophe of modern time. Governments all over the world are looking at all sorts of options and policy tools to meet this challenge.
Pakistan’s government has recently taken many reasonable steps, including adjustment of fiscal and monetary policies to combat this. Still, considering the magnitude of the problem, a lot more will need to be done.
This article points out some other areas where policy decisions are urgently needed.
First, looking at the trade policies, the government has exempted medical and other health care equipment from import taxes initially for a period of three months. It is not likely that within this short period, the objectives will be met, considering that there is an acute shortage of these goods and many countries have imposed export bans.
Importers face severe constraints while entering into any purchase contracts. In case there is any delay, punitive tariffs and other import taxes will be applicable when the goods arrive.
There are very few countries that are usually taxing life-saving medical instruments. Most countries are members of the World Trade Organisation (WTO) Agreement on Information Technology, which was updated in 2015 to include advanced medical equipment.
Under the agreement, the member countries allow duty-free imports. Pakistan should consider becoming part of this global alliance. Still, if it is not possible immediately, it should not limit the exemption from taxes on life-saving goods to only three months.
In the context of COVID-19, the most urgent problem is the lack of ventilators, which are currently the only option to save lives.
Due to high cost and unavailability at present, groups of local volunteers including engineers, doctors and biomedical professionals are working round the clock to make affordable ventilators and related accessories.
They could take cue from the efforts of an Irish team that has recently developed a 3D-printed mechanically operated ventilator prototype. It is an open-source ventilator implying that anyone can make use of this model to make their own.
Pakistani entrepreneurs may find themselves disadvantaged by the fact that currently the import of 3D printers is not allowed in Pakistan. 3D printers are being used in various countries to meet high demand for reusable plastic facemasks and protective gears for health workers.
These printers build almost anything, including body parts, physiotherapy goods and hospitals.
Even before the current crisis, they were spearheading the digital industrial revolution. Maintaining a ban on their import does not make any sense. We need them urgently to produce mass-customised health care and other products.
Import of insecticides
Another related and foremost issue is last week’s federal cabinet decision to reject a proposal from the Ministry of Commerce to allow the import of insecticides from India even on a one-time basis to control the imminent threat of the spread of dengue fever.
Punjab government’s health care department made the proposal. There is no realisation that just last year there were about 45,000 confirmed cases of dengue fever, including 75 deaths in the country.
If dengue spreads as widely as it did last year, the casualties could be even more than anticipated from the coronavirus.
Since the mosquito that causes dengue fever starts laying eggs in early summer, there is very little time for taking preventive measures. It is hard to imagine the doomsday scenario resulting from the combined havoc from dengue and coronavirus.
Considering the social, economic and political implications of COVID-19, all national stakeholders must adequately be represented in the decision-making process. What we are still missing is a cross-functional COVID-19 response team representing all the three sectors.
There is also a need for frequent virtual meetings of the Council of Common Interests (CCI) to avoid any misunderstanding and ensure a coordinated effort.
In case essential supplies from one part of the country fail to reach another, it can give rise to severe law and order situation.
Global cooperation
As at the national level, cooperation is proving to be a challenge at the international level. Over 50 countries (including Pakistan) have applied new trade restrictions on medical supplies, and the trend is continuing.
But there are some bright spots as well. China is one of the few countries, which having overcome its adversity is now extending material and technical assistance to many other countries including Pakistan.
Many countries are also forming regional forums and funds to fight the crisis. South Asian countries have set up the Saarc Corona Emergency Fund. India has made an initial contribution of $10 million while all other countries have also made their contributions ranging from $5 million from Sri Lanka to $1 million by Afghanistan and $100,000 by Bhutan.
Pakistan is the only country, which is so far staying apart from this regional initiative. The country’s policymakers must realise the importance of cooperation, whether domestic or international.
The writer is the senior fellow at Pakistan Institute of Development Economics and
ex-ambassador to WTO
Published in The Express Tribune, March 30th, 2020.