• Non-tariff requirements in the domestic market

    Chapter 6 - Market profiles - Pakistan 

    Customs procedures

    Cotton consignments arrive in containers at two ports, Karachi Port and Port Qasim. Customs formalities are handled by the freight forwarders appointed by the buyers.

    Once the shipment has been made, the shipper sends the original, negotiable documents to the importer’s bank and a non-negotiable set to the importer. The importer gives a copy of this set to the freight forwarder for customs clearance in advance. The freight forwarder obtains the import permit issued by the Department of Plant Protection, Ministry of Food, Agriculture and Livestock. If the import permit is acquired after arrival of the consignment, a penalty of 5,000 rupees is levied on the importer. The bank notifies the buyer to collect the original documents; on the buyer’s instructions, the bank gives the original documents to the freight forwarder, who presents them to the shipping line for clearance.

    After clearance, the shipping line issues the delivery order. Before the arrival of the vessel at the port, terminal handling charges are also paid. An anchorage permit is obtained from the Quarantine Division of the Ministry of Food, Agriculture and Livestock. A phytosanitary certificate is also obtained from the Plant Quarantine Service to certify that the raw cotton in the consignment is free from all pests and diseases, particularly anthonomus grandis, and that the consignment has been fumigated with 3–4 lb of methyl bromide per 1,000 cubic feet for 48 hours before loading.

    After completion of customs formalities, a release order is issued by the Department of Plant Protection. If the phytosanitary certificate has not been acquired, a penalty of 10,000 rupees is due and if fumigation was not done at the port of loading, a 5,000-rupee penalty is levied on the importer. While there are no duties on import of cotton, the importer does have to pay 1% income tax on the total invoice value.

    Specific domestic business practice

    Buying is done on the basis of cost plus freight, as imports are financed by local banks on the total invoice value. Agents receive quotations from their principals on the desired quality and quantity (by fax, verbal or written communication) and forward them to the spinners. Prices are negotiated between the buyer and the agent. All import buying is based on shippers’ type and description. Purchases are also made on the basis of United States ‘Government class’ (also known as ‘Green Card’).

    Most buying is done ‘on call’, e.g. unfixed prices for strict low middling 1-1/16" based on New York futures. As the cotton arrives at the buyers’ warehouses, it is pledged with the bank and released on payment to the bank by the buyer or importer. 
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    Cotton Exporter's Guide

    Brochure - African cotton promotion
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