Problem overview:

     Policies and measures: To encourage cleaner production, the government had a policy to reduce import tax on anti-pollution machinery. In the end, the policy could not be enforced because they could not distinguish which machine is anti-pollution.

Background:

     National Environmental Quality Standards: The Government of Pakistan notified National Environmental Quality Standards relating to Municipal and liquid effluents, Industrial emissions, and Motor vehicle exhaust and noise to come into force on 24 August, 1993 with immediate effect. Except in the case of industrial units to which the following schedule applied:

     Lower import tax on anti-pollution equipment: To encourage industry to ensure compliance of National Environmental Quality Standards, Government started round table consultations with the owners of the industry, through the Federal of Pakistan Chambers of Commerce and Industry (FPCCI). On the recommendations of FPCCI, the Government of Pakistan agreed to charge the lowest slab of custom duty (10 percent ad-valorem) on the imported "equipment and machinery" used as anti-pollution equipment.

     The customs department demanded for a list of anti-pollution equipment and machinery: Necessary notification to this effect was issued by the Central Board of Revenues of the Ministry of Finance vide SRO.221(I)/97 dated 28 March, 1997. The customs authorities, however, demanded a list of machinery and equipment which could be used as anti-pollution equipment for the enforcement of most preferred custom tariff structure, as the existing custom code did not provide such a category.

     The Federation of Pakistan Chambers of Commerce and Industry was unable to provide the list: The Federation of Pakistan Chambers of Commerce and Industry was, therefore, requested to draw up such a list for use by the custom authorities. They were, however, unable to compile such an exclusive list because most of the machinery and equipment intended for use as anti-pollution equipment had multiple uses in the industry and the production systems.

     Despite good intentions, the policy could not be carried out: No other viable alternative acceptable to the Pakistan customs Department therefore emerged. As a result, the enforcement of this tariff concession on import of anti-pollution equipment and machinery, as a measure for sustainable development could not be realized, despite good intentions of the Government.