Issue Brief on “Pakistan-China Trade: Steps to Tackle Under-Invoicing”

Bilateral trade between China and Pakistan is highly skewed in favour of China. Most of the difference is due to greater demand of Chinese goods in Pakistan relative to the demand of Pakistani goods in China. However, the government of Pakistan has identified that under-invoicing on imports from China is also contributing in swelling this difference. During the several rounds of negotiations on the Free Trade Agreement phase II in the past few months between the two sides, the Pakistani officials raised the issue of under-invoicing as well.[1]

Chinese authorities have agreed in principle to launch electronic data exchange after a meeting between with officials of Pakistan’s commerce ministry.[2]In this regard, the federal Board of Revenue (FBR) has launched electronic data exchange system to verify Certificates of Origin of Chinese goods being imported into the country. Commenting on the functionality of the system, an official from FBR said that when Goods of Declaration (GDs) would be filed in China, it would be instantly available with Customs authorities at clearing stations so it would help customs officials to ascertain its exact value on the basis of which they could charge tax collection.[3]

Read More