Page 18 - November/December-2019

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US-China agree to a trade deal

The US-China trade war has de-escalated with an world markets, while some US-based businesses
agreement between the two countries and the first are not happy with the deal. In a statement the
phase of a new trade deal has been reached National Council of Textile Organizations (NCTO)
between the two giants. According to the new said, “The announcement reduces tariffs on finished
agreement, the scheduled tariffs by both sides to products at the same time it keeps tariffs in place
be enforced in December has been called-off. on key inputs that aren’t made in the U.S. such as
certain dyes, chemicals, and textile machinery. We
The phase one of the deal includes phasing out of believe a wiser approach would be to maintain
tariffs on Chinese goods. While the first phase will penalty duties on finished Chinese products while
leave 25% tariffs on $250 billion in imports from reducing 301 duties on key inputs that are used by
China in place and cut the existing duties on $120 US manufacturers”.
billion in products to 7.5%. China will also debate to
not impose tariffs on American goods and accord- “As domestic textile companies fight to compete
ing to the deal, China will increase purchase of with China and their illegal trade practices, it is
agriculture products from the US. important that US manufacturers should be the first
to see penalty duties removed on inputs not made
The move has eased the growing tensions in the in the United States,” the NCTO added.
Govt assures APTMA of quick resolution

to power tariff issue

A priority meeting will be held with the prime he argues will raise costs and the industry will lose
minister on the issue of the power tariff adjustments any competitive advantage it could garner despite
to the export sector, assured Abdul Razak Dawood, the set tariff of 7.5 cents/kWh already being higher
the prime minister’s advisor on commerce, than the regionally prevailing competitive tariffs.
industries, production, and investment while talking With the adjustments done by the DISCOs, the
to a delegation of the All Pakistan Textile Mills zero-rated industry’s tariff has risen by Rs 1.2 from
Association (APTMA). Rs 11.38 per unit. Sattar added that charging
another Rs 4-5 per unit in addition to the
The APTMA had complained to Abdul Razak cent-based tariff would defeat its purpose
Dawood in a letter that the quarterly adjustments of altogether. The APTMA claims the exporting sector
power tariff negates the initiatives the government pays Rs 15-16/kWh while additional power is
had given to the export sector in this regard. marketed to the general public at Rs 11.7/kWh.

The ECC and the federal cabinet had set the power
tariff for the export sector so that the increase in The APTMA argues how the ECC and the cabinet’s
tariff would be automatic whenever there was decision on a fixed dollar-based tariff can be altered
devaluation in the rupee and the industry would get without prior approval, as the raised tariff is now
competitive tariff, which would help them fix their being regularised retrospectively, paving the way for
product prices accordingly. However, the DISCOs unnecessary litigation.
are charging a quarterly adjustment in addition to
the 7.5 cents/kWh set tariff. The textile industry is also looking forward to
another reprieve in 2021 as Energas, a consortium
APTMA Executive Director Shahid Sattar said in his of large domestic LNG users supported by Exxon
letter, “We now understand that it is proposed to Mobil Corp, sets its eyes on starting Pakistan’s
charge FPA in addition to these as well which largest LNG import terminal by 2021. The project
essentially means that the exporter will not be aims to provide power at 25% less than existing
aware of his energy cost and will therefore have to terminals to customers including textile mills, power
export on a presumptive cost basis which naturally plants and fuel stations, once its terminal gets the
will be higher to cater for unforeseen costs." This, green light.

November/December 2019