Revamping the Mechanism of Trade Dispute Resolution in Pakistantdro.gov.pk/wp-content/uploads/2015/05/rep.pdf · · 2018-03-09“Revamping the Mechanism of Trade Dispute Resolution

SEMINAR/BRAINSTORMING SESSION ON

“Revamping the Mechanism of Trade Dispute Resolution In Pakistan” at Karachi

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Government of Pakistan

Ministry of Commerce

Trade Dispute Resolution Organisation

Islamabad

REPORT

ON

Seminars/Brainstorming Sessions / Meetings on

“Revamping the Mechanism

of Trade Dispute Resolution in Pakistan”

Held In Karachi from 7th to 10th September, 2015

Report of TDRO visit to Karachi from 7th to 10th September 2015

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Table of Contents

S.N. Contents Page No.

1. Record Notes On Seminar/Brainstorming Session Revamping The Mechanism Of

Trade Disputes Resolution In Pakistan Held At Karachi Chamber Of Commerce

& Industry 07th September, 2015 ………………………………………………………….03

2. Report on Meeting With Federation Of Pakistan Chambers Of Commerce & Industry…….11

(09/09/2015)

3. Report on Meeting With Rice Exporters Association Of Pakistan .................... …. … .. 15

(08/09/2015)

4. Report on Meeting With Pakistan Hosiery Manufacturers Association Of Pakistan……….19

(08/09/2015)

5. Report on Meeting With Pakistan Standards & Quality Control Authority (PSQCA),

Ministry Of Science And Technology (09/09/2015) .................................. ……………… 20

6. Report on Meeting With Pakistan Pharmaceutical Manufacturers Association ............... 21

PPMA (09/09/2015)

7. Report on Meeting With Overseas Investors Chamber Of Commerce And Industry (OICCI)

(10/09/2015) ........................................................................................................................ 23

8. TDRO visits to KPT and NLC container Terminals ..........................................................

ANNEXURES: (i) Schedule of meetings Trade Bodies and Institutions ………. A (ii) Programme………………………………………………………. B (iii) Lists of Participants………………………………………….. C

PRESENTATIONS:

- Presentation By Ms. Roubina Taufiq Shah, Director General, i.

Trade Dispute Resolution Organisation(TDRO)

- Presentation By Barrister Vishal Shamsi, Trainer on Mediation ii.

at National Centre for Dispute Resolution (NCDR)

- Presentation by Mr. Ebrahim Saifuddin Chief Operating Officer, iii.

National Center for Dispute Resolution

- Presentation by Rana Sajjad, President, Centre for International iv.

Investment & Commercial Arbitration (CIICA)


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MINISTRY OF COMMERCE

(TRADE DISPUTE RESOLUTION ORGANIZATION)

*****

RECORD NOTES OF TDRO VISIT TO KARACHI FROM 7TH

TO 10TH

SEPTEMBER 2015

A three member team, headed by DG TDRO, Ms. Roubina Taufiq Shah accompanied by Director

Mr. Khalid Mahmood, and Deputy Director Mr. Mueed Aman Rana, visited various Trade Bodies and

Pakistan Standards and Quality Control Authority (PSQCA) in Karachi from September 7, 2015 to

September 10, 2015. The visit was part of a series of brainstorming sessions held in various cities with

the stakeholders to obtain their input on the draft law of TDRO.

SEMINAR/BRAINSTORMING SESSION ON

“REVAMPING THE MECHANISM OF TRADE DISPUTES RESOLUTION IN PAKISTAN”

HELD AT KARACHI CHAMBER OF COMMERCE & INDUSTRY

07TH

SEPTEMBER, 2015

2. The Sixth Seminar / brainstorming session with regard to Revamping the Mechanism of Trade

Disputes Resolution in Pakistan was jointly organized by Trade Dispute Resolution Organization

(TDRO) and Karachi Chamber of Commerce & Industry, (KCC&I), Karachi on 07th

September, 2015

at KCCI. The main focus of the seminar was to discuss and seek inputs of stakeholders on the

weaknesses of the current trade dispute mechanism and suggestions for the new law being drafted.

President KCC&I Mr. Iftekhar Vohra chaired the session while Mr. Nusrat I. Jamshed, Sr. Director

General, Trade Development Authority of Pakistan (TDAP), Karachi was the Chief Guest. Director

Generals, Trade Dispute Resolution Organization (TDRO), Karachi Mr. Ather Jamal Abro and Ms

Roubina Taufiq Shah Islamabad, co-chaired the Seminar. Members of KCC&I, Representatives of

TDAP, Director General ANF, Additional Collector Customs (Exports), Karachi, SBP, Banks and

various other Departments/ organizations attended the session. The seminar provided a great

opportunity of understanding on the issues which arise during the trading process. Participants gave

reasonable recommendations for the minimization of the issues and suggested different measures for

the promotion of trade in Pakistan. The Program started with Recitation from Holy Quran.


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3. Mr. Iftikhar A. Vohra, President, Karachi Chamber of Commerce & Industry (KCC&I)

in his inaugural address welcomed the visit of TDRO Officer to Karachi and the participants of the

seminar for sparing their time to attend the session. He informed that the Karachi Chamber is the

premier Chamber, playing a pivotal role as an economic partner in trading activity & industrial

development of the country. He informed that the Chamber within its limited resources, is providing

all facilities e.g. Business information & advisory services, Import & Export Procedures, Issuance of

Certificate of Origin, visa letters for the foreign visits of businessmen, holding seminars / workshops

and sending bilateral trade delegations. The Chamber acts as a bridge between its members,

Government and semi-Government institutions and most of its members are in the advisory bodies of

the government. Karachi Chamber also gives valuable suggestions for preparation of Import Export

Trade Policy, Economic Policies and Budget during the financial year. KCC&I has been contributing

for economic revolution and enhancement of industrial base.

3. The President KCC&I indicated that the quantum of Trade Disputes in the Karachi region

which is the hub of trade and business, has been increasing day by day. He stressed that it is the time

both the Chamber of Commerce & Industry, Karachi and TDRO hands to make collective efforts and

play an active role to minimize trade disputes, resolving them effectively within the shortest possible

time.

4. The Chief Guest Mr. Nusrat Iqbal Jamshed, Sr. Director General, TDAP, Karachi in his

key note address thanked the President, Vice President, Members of business community of Karachi

and participants of various organizations in the session and expressed his pleasure and a privilege to

attend this important seminar. He commented that Trade Dispute Resolution Organization (TDRO) has

been established by Ministry of Commerce so that business community may get commercial justice.

He informed that from the start of his service he has been made aware of this issue being a hurdle in

promoting export & import, so much so that it has become meaningless now. He was of the view that

Pakistan‟s trade has increased over the years and with the increase of trade, disputes have been

witnessed, therefore a strong mechanism for resolution of trade disputes is the need of the hour. The

rising tendency of disputes between the business communities spoils the image of the country and

destroys its investment climate. Mr. Nusrat Jamshed stated the requirements of the SMEs need to be

understood, as different organizations express them differently, such as SMEDA works to look after


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98% SME‟s activities, while all business activity is mainly done by the SME‟s sector. He informed

that previously the subject of trade dispute was in TDAP mandate, however in the absence of any

proper law, the organization could not produce effective results. Now the Legal frame work is already

in the making with EU TRTA program providing support to TDRO for an Act / Law which will be

made workable and internationally acceptable. He hoped that the participants of the session would find

the seminar useful and contribute in drafting of law for the enhancement of trade and improving

Pakistan's image in the world.

5. Mr. Athar Jamal Abro, Director General, TDRO, Karachi also informed that TDAP, being

the trade promoting organization, was dealing with the trade dispute cases but as far as he knows,

during his 30 years of service, no trade dispute has been resolved by the department.

6. Barrister Vishal Shamsi, representing NCDR, in her presentation on Mediation in Trade

Disputes stated that NCDR has signed MoUs with TDRO and KCC&I. The evaluation done by NCDR

gives a fact finding report and they charge Rs.7000/- for Mediation. She informed that NCDR was

established in 2007 with IFC funding with an objective to empower people to resolve their disputes. It

is a system parallel to High Court. Justice (Retd) Saeed-uz-Zaman is the Chief Patron of NCDR and

there are 58 Members on the panel with registered Lawyers, Legal Consultants, Chartered Accountants

and Shipping Agents etc. Related field mediators are also available, while there are annual members,

life members like M/s. Gul Ahmed, Angro Foods for whom NCDR resolves disputes. Ms. Shamsi

stated that mediation means to facilitate for negotiations to be done for resolution of a dispute with the

assistance of a third party where both the parties have a win - win situation.

7. Ms. Roubina Taufiq Shah, Director General, TDRO while apologizing for late arrival due

to late departure of PIA‟s flight for Karachi, thanked KCC&I for providing an opportunity to discuss

the most important issue of Revamping the Mechanism of Trade Disputes Resolution in Pakistan at

this forum. In her presentation she introduced TDRO and explained reasons for the establishment of

the Organization and its mandate. DG TDRO informed the audience about the role of TDRO and the

efforts for drafting of trade dispute laws. The DG, TDRO informed that Pakistani businessmen are

facing hurdles in their businesses and one of the major element is the trade disputes arising between

them and their counterparts. She stated that commercial disputes that end in courts of law are always

costly and usually a bitter experience. She informed that Imports and Exports Registration had been

discontinued and trade has been made so easy over the years that all kinds of new exporters and

unscrupulous elements have entered the field. She emphasized the need to provide a strong role of

TDRO so that the interest of genuine businessman can amicably be protected. TDRO has been making

efforts for preparing such rules and laws which may be acceptable locally as well as recognized

internationally. She appealed to the private sector to come forward and give their honest opinion about

the current system, weaknesses and suggestions for improving the same. (She requested all the

participants to fill in the TDRO proforma and return the same for analysis). She added that TDRO is

also providing assistance to Pakistani importers and exporters who are defrauded in international trade

and educating & training exporters and importers to avoid disputes. She urged the KCC&I members to

avail the services of TDRO and requested KCC&I management to coordinate with TDRO on disputes

and assist in locating the companies on whom cases have been filed.


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8. Brig. Abu Zar, Director General, Antinarcotics Force (ANF), Karachi, who had been

requested by TDRO to make a presentation in the Seminar / Brainstorming session, thanked TDRO for

holding such an important meeting. He further gave an extensive briefing on ANF inspection of goods,

informing the participants that narcotics environment as per global dimension is approximate 2.25%

and with the production of opium in Afghanistan, it has a very high potential for drug trafficking

which takes place through Pakistan‟s borders. He stated that the trend of smuggling of drugs through

containers has increased over the years. He informed that ANF has an outreach with five Regional

Directorates at Sindh Karachi; Sukkhar, Hyderabad, KPK Peshawar and Baluchistan Gawader (not

working). He gave details of containers exported as approximately 51,249 and the checking by ANF as

1116, which according to him was only 2% of the total volume of exports of the previous year.

Checking of Loose Cargo is also done after examination at seaport. He informed that „E‟ Form is

purchased, erasing its number and sent through Weboc.. He gave a comparison of cases checked

during last two years at seaport and drugs found therein as follows:

Year Cases Heroin Caught

2014 8 406.5 KGs

2015 5 166.1 KGs

9. DG ANF stated that the exporters should be asked not sell their Form „E‟ which is used in

smuggling of drugs. While the role of ANF in checking drugs in export cargo is important for the

country & its people, it is also inevitable for the exporters. He believed that Pakistani exporters are

honest and patriotic, however certain people try to smuggle drugs in collaboration with their lower

staff. He elaborated that drug trafficking through container shipment loaded with miscellaneous items

like furniture, bed sheets, crockery fruit/ vegetables etc., is on the rise. He reported that there are

sometimes cavities in the container. ANF faces serious challenges not only in segregation of

consignment but also in detection of concealed drugs. A comprehensive & methodical checking

mechanism is adopted by ANF in the best national interest, whereby only 2.25% export containers are

put on hold for necessary checking/ inspection after profiling through a comprehensive “Risk

Management System”. He indicated that ANF at Karachi sea port checks export shipment as per

procedure in vogue, however re-stuffing/ repacking is the responsibility of Port Operating

Companies. He suggested that skilled labour may be arranged by the exporter or his clearing agent for

professional repacking of export cargo. ANF had caught 10 cases of smuggling during 2013 and 10

containers in 2014 and there was total 4065 KGs of Heroin and 223,800 KGs of chares and other

drugs. He remarked that the exporters have to remain vigilant and make sure the presence of their

clearing agent during inspection.

10. DG ANF then gave a briefing on the impediments by Port authorities, such as containers not

grounded in time, utilization of International Operators and Cargo Handlers, sub-standard packing by

untrained labour, provision of less time between entering of container in port and loading on ship, non-

availability of machinery for re-loading of bulk / heavy cargo and typing errors while sending

information to ANF. While giving a run-up on the Cargo Examination Process at the seaports, he

informed that all unsealed containers are checked on the same day and facilitation provided to exporter

to avoid shutting out of container. In case the container contains machinery or scrap which cannot be

pulled out, the container is recommended for scanning. All decisions on “hold” and “release after


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checking” is done centrally at Regional Headquarters level. ANF officials at port cannot “hold”

”release” or “delay” the container at their own.

11. Regarding the impediments by the clearing agents, DG ANF informed their absence in time &

time of repacking, they do not contact ANF immediately in case of mis-declaration, illegal „one

window service‟ is provided by clearing agents to unregistered exporters, misunderstanding created by

clearing agent between exporters & ANF and the fact that they entertain blocked NTN exporters. Most

of the time clearing agent does not present himself for examination instead other person appears. Most

importantly clearing agents charge in the name of ANF, which is very unfortunate.

12. As for the impediments raised by the exporters to ANF, the DG informed that they lack

cooperation by different trade organizations / associations regarding provision of members‟ data. The

forwarders insert their name as shipper in Loading Programme and NTN of exporter, resulting in

wrong entries in export manifest by terminal operators. Selling of E forms to unregistered exporters,

lack of vigilance by export organizations and non-adherence of self-blocking of E form by exporters to

avoid misuse. He added that lack of coordination with banks and Customs authorities, lack of

understanding of ANF procedures & importance of ANF checking and late entries of items on ports

are other issues that can be removed with such seminars. He however informed that ANF facilitates

the exporters by laying down specified location and time for cargo examination, inspection time is

0900 to 1800 hours only, providing namaz break for one hour and provide daily interaction with

exporters and representative of exporters at regional office. ANF has held 30 meetings with different

stakeholders / trade organizations in the last two years and given instructions to Port Terminal

Operators to facilitate exporters. There are arrangements of tarpaulin to ensure safety / cleanliness of

cargo and they allow external labour and packing experts if desired by the shipper.

13. DG ANF also dwelled on the issues with bank authorities where there is an absence of strict

control on E Form issue and its use. He suggested that banks should intimate exporter and customs

once an E-Form is submitted in bank, check ID of the depositor of E Form on the bank counter and be

online with Customs, Port Operators and ANF.

14. Some miscellaneous issues were also highlighted by DG ANF like registration of more than

one company with same name and non-registration of centralized data of all the exporters. If one

container is put on hold by ANF out of a lot, the complete lot is stopped at the port. A Complaint is

filed against ANF without checking the details, facts & duties of other organizations. Freight

forwarders do not communicate with terminal operators and ANF and container. No is issued along

with E- form No. Exporter name & destination. He ended his presentation with the words that there are

Standard Operating Procedure (SOP) on container checking which are forwarded to all concerned. The

provision of ANF facilities free of cost to all organizations and that ANF telephone numbers are open

24/7.

15. The next speaker invited by TDRO was Rana Sajjad Ahmed, President Center for

International Investment and Commercial Arbitration (CIICA) who in his presentation on

“Contracts in International Trade & Commerce” stated that to make an effective contract the terms

of contract should clearly specify and indicate details of goods such as complete and accurate


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description; price delivery and payment term, risk of loss, transfer of title to the goods and inspection

of goods. He further stated that due diligence is required before negotiating the contract as well as to

obtain information about the other party‟s credit worthiness; size & strength; industry knowledge &

quality of business management as well as business history & reputation etc. With reference to the

terms of contract Rana Sajjad stated that conditions like Warranties and Guarantees; liability,

replacement, repair or reimbursement; force majeure circumstances; amendments / modification,

cancellation / termination of the contract should invariably be placed therein. He further stated that

need of a formal contract is required to eliminate / minimize misinterpretation of contract terms and

clarity in case of enforcement. He added that internationally recognized, pre-defined commercial terms

(INCOTERMS) should be used. He further added that the main thing is which would be the Governing

Law of the contract: one party‟s national law or a neutral third country law. In case governing law is

not specified, UN convention on contracts for the International Sale of Goods (CISG) should be

preferred to be incorporated in the contract. Rana Sajjad concluded with the remarks that important

clauses for Dispute Resolution like negotiation; mediation; arbitration; litigation, exclusive or non-

exclusive jurisdiction; and dispute avoidance and management e.g. early neutral evaluation; and

Dispute Board (mid or long term contracts) should also be specified in the contract agreement.

16. Brainstorming Session / Open House Discussion - Questions & Answers.

After the presentation, a brain storming session ensued. Following are some of the queries and their

responses:

16.1 Mr. Qamar Raza, Management Committee Member, KCC&I & a rice exporter enquired that

if a party does not agree for mediation or any settlement, how it be forcefully done. He also

asked DG, TDRO as to how their complaints from abroad could be resolved. Representative of

NCDR replied that it is done in strict words written to the party that they have to face, asked to

convey their comments for cooperation. Internationally, in Singapore, England and other

countries, 90% of the business entrepreneurs agree. Mediation with Netherlands and companies

based in Dubai and Islamabad, it is also done on line through video conferencing linkage etc.

As for the international dispute resolution, DG TDRO informed him that cases will be pursued

with Pakistan missions abroad and through the trade dispute offices of other countries.

16.2 Mr. Azhar Puri, Management Committee and Customs Committee Member, KCC&I asked if

there is any force to call the parties to come forward. He suggested that there should be time

frame that the dispute could be resolved Barrister Vishal Shamsi, NCDR responded in negative

as it is a voluntary process. Maximum time is four days or one week as per agreement. As for a

query on how many complaints are received in NCDR, Ms Shamsi replied that there is a 73.8%

success while billions of dollars have been got released.

16.3 A participant Mr. Tariq wondered what will happen if any party who commits fraud and is not

traceable. To this KCCI president and TDRO responded that all efforts will made through

organizations such as SECP, TDAP, FIA etc to locate the party and made to comply.


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16.4 Mr. Mohsin of Cargo Agent / Pakistan Freight & Forwarders Association informed that a

trade dispute committee has been formed by the Association since 1994 wherein Pakistan Ship

Owners Association has also been taken on board. This committee has resolved many trade and

financial disputes. However Pakistan Ship Agents Association takes time and it is not easy to

make them join hands. The Competition Commission (CC) has also given positive input and

CC Law is now effective. He also suggested that the Associations Membership lists may be

obtained. He wondered why carpet exporters are allowed without checking on undertakings

that if any complaint against a carpet exporter, is reported, he should be held responsible. This

facility should be provided to all trade bodies. He suggested that the Furniture examination

should be done without opening the cargo, the terminal is responsible for theft as no proper

space is provided to them and in the absence of skilled labour, there is a lot of mishandling. He

further stated that the system can be improved with provision of funds.

16.5 A Rice Exporter quoted his problem where an agreement was made for export of rice, and

according to invoice, full payment was required to be made but instead short payment was

received. He wondered how such agreements can be enforcement.

16.6 Mr. Khurram Ejaz, D.S.K. Authority stated that in cargo handling other stake holders are

equally responsible for creating hurdles. When disputes arise with Shipping companies, there

is no proper regulation to handle them. Even when Customs agree, demurrages are not waived

off. He opined that a Regulatory Board should be formed to bind them to regulate these issues.

President, KCC&I replied that the Federal Board of Revenue (FBR) does not respond to their

requests and the chamber is firm to get it done even at Prime Minister‟s level.

16.7 Mr. Auqib Nisar, Chairman Ports and Shipping stated that after the last meeting there is

improvement in the system of shipment. Two bills of Ports and Shipping are lying with the

Assembly for which reminders are issued again and again. The port & shipping companies are

over charging the exporters and there should be a law to regulate them.

16.8 President, KCC&I suggested that TDRO should give authority to the Chambers and jointly

resolve the trade dispute.

17. At the end distribution of Shields with photo session was held. The seminar ended with closing

remarks and thanks to the august audience from CC&I, Karachi.


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19. (1). Meeting With Federation Of Chambers Of Commerce &

Industry (09/09/2015)

19.1 A Brainstorming session was also held with FPCCI on 9th

September 2015 at FPCCI

conference Room, was well attended with senior members and office bearers of FPCCI led by

President FPCCI, Mr. Muhammad Idrees. TDRO DGs Ms. Roubina Taufiq Shah and Mr.

Ather Jamal Abro co-chaired the meeting. FPCCI representatives from Islamabad and Lahore

joined the meeting on skype. The seminar was also attended by S.M. Muneer, Chief Guest

while the other prominent members included Muhammad Ikram Rajput, Vice President and

Incharge Sind Region, Shahnawaz Ishtiaq, Vice President FPCCI, Dr. Mirza Ikhtiar Baig and

large number of importers and exporters.

19.2 In his welcome remarks, Mian Muhammad Idrees President FPCCI, appreciated the

creation of TDRO and stated that every business inevitably faces disputes which require

resolution. The establishment of Trade Dispute Resolution Organisation (TDRO) is a good step


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for resolution of trade disputes under the aegis of Ministry of Commerce and its consultation

with business community for legislation would deliver better results. Mian Adrees further

stated that due to non-existence of such organization the importers and exporters, having minor

trade disputes which would have been easily resolved under arbitration, now become severe

and are stay unresolved.

19.3 In his keynote address, the Chief Guest Mr. S.M. Muneer welcomed the creation of TDRO

as the need of the hour since TDAP was receiving innumerable disputes. The CE TDAP stated

that the powers of TDAP are to file criminal offence suits against the respondent if he fails to

honor his commitment and/or fails to respond to TDAP. However, the CE was of the view that

this was a redundant method thereby rendering TDAP ineffectual. He acknowledged the

necessity of mediation and arbitration as tools for effective dispute resolution. He stressed

upon the fact that the Chambers and the Government should work in tandem with each other to

settle disputes through mediation and arbitration. The establishment of TDRO will facilitate the

business community in case of any dispute arises both in Pakistan and abroad. He further

appreciated that the Director General Ms. Roubina Taufiq herself is eagerly consulting the

trade bodies and other concerned quarters to prepare law covering all aspects to resolve trade

disputes arising day by day for early, expeditious and merit based conclusion. In the end, he

assured full support of TDAP to TDRO in executing its responsibilities.

19.4. Ms. Roubina Taufiq Shah, DG TDRO thanked FPCCI for their assistance in arranging the

session and the participants for their precious time. She introduced TDRO, its creation,

mandate, challenges and gave a brief roundup on the upcoming draft law. She highlighted the

need for having a trade dispute resolution organization in the public sector after constraints of

both TDAP and the chambers which did not have an effective dispute resolution mechanism.

Other contributing factors for the creation of TDRO, were lack-luster performance of

Commercial Courts, backlog in Judiciary, weak contract enforcement mechanism and the

presence of unscrupulous elements in the business community. Her detailed presentation gave

the main reasons for trade disputes and highlighted the fact that many times the Pakistani

businesses suffer when the foreign counterparts files the cases in their own country‟s courts.

The Pakistan missions have no funds to hire lawyers and the exporter cannot afford to contest

the case, resulting in bankruptcy of the exporter many times. For this, she stated that a

revolving fund had been proposed in the Trade policy many times, however, the same has not

been approved. She informed the participants about the extremely low ranking status of

Pakistan in the Ease of Doing Business and Contract Enforcement as per Report of World

Bank 2015. She emphasized that absence of a weak contract enforcement lead to Trade

Disputes. In a State Bank Report, she highlighted that with Pak-India trade expansion,

Pakistan needs to have a proper Dispute Resolution Mechanism in place.


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19.5 Ms. Roubina apprised the participants of the efforts undertaken by TDRO team in the past few

months for consultations with Pakistan's Trade Missions abroad, Chambers, Associations, legal

community and other relevant departments. The MOUs with two important institutes i.e.

NCDR and PRIME were also signed. She presented an analysis of trade disputes received by

TDRO, based on City, Country, Product and Nature of disputes. In the end, she informed the

participants about the regional challenges such as increased trade with Afghanistan, India,

China and Iran and the need for TDRO‟s presence in cities closer to the borders of these

countries. She informed the meeting that there are many trade disputes for Sialkot region

regarding issues pertaining to quality of goods especially in the engineering and surgical

sectors. She requested CE TDAP that the export development institutes setup under EMDF like

SIMTEL in Sialkot, Cutlery Institute in Gujrat etc., need to be accredited with PNAC so as to

have proper certificates for export which is mandatory under the policy. CE TDAP asked her to

send a letter to him in this context and he will look into it.

19.6 Mr. Ebrahim Saifuddin Chief Operating Officer, National Center for Dispute Resolution

then gave an insight into Mediation and its use in Trade Disputes, the way to a conducive

business environment in Pakistan through a power point presentation. He informed that NCDR

was established in 2007 as Karachi Centre for Dispute Resolution with approval of High Court

of Sindh and financial assistance from International Finance Corporation, a World Bank

Group. It provided mediation services in commercial disputes. Later on it provided mediation

services in all types of disputes. In 2015 it changed its name to National Centre for Dispute

Resolution and is working to expand its reach to all of Pakistan. The Centre is headed by

former Chief Justice of Pakistan, Justice (Retd.) Saiduzzaman Siddiqui. He explained what

mediation is and its benefits, stating that it is inexpensive where disputes can be resolved for as

low as Rs. 7,500, with rapid settlement, privacy, without prejudice, preservation of ongoing

relationship, parties will decide the outcome, higher satisfaction, high rate of compliance and

personal empowerment. NCDR has had a 73% success rate since its inception. He quoted

Justice Khilji Arif Hussain statement that “litigation in Court is not only time consuming but

also has adversary effect on business environment. The use of Alternative Dispute Resolution

has grown up tremendously in the last few years. In many countries of the world it is used as a


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vital tool to preserve business relationships and to provide a speedy, cost effective alternative

to litigations. Alternate Dispute Resolution has now become an internationally accepted

method of disputes resolution. Government of Pakistan has also introduced Alternate Dispute

Resolution in Customs, Sales Tax, Income Tax Acts. Section 89-A has also been added in the

Code of Civil Procedure, 1908 by Ordinance XXXIV of 2002.It is thus advised that State Bank

of Pakistan to issue instructions to all commercial banks that before approaching the Court, an

attempt for resolving dispute through mediation/reconciliation may be made instead of

adopting malpractice of sending employee or others, extending threats to customers for

recovery of their disputed or undisputed dues.” – [Constitution Petition 931/2008]”.

19.7 Question & Answer / Brainstorming session: After the presentations, the house was opened

for Q/A session. The President FPCCI regretted the fact that anyone can import and export

without the need for formal membership of a Trade Body. He also informed that many Trade

Bodies have mediation committees but since these committees are voluntary, therefore, they

cannot get their awards/decisions enforced. The President stated that Pakistan's judicial system

is not delivering as per the business community‟s expectations and gave a personal example

where he had to file a case against an importer in Dubai. Once he won the case, he was

reimbursed all expenses accrued in pursuing the case along with the disputed amount. Whereas

in Pakistan, aggrieved parties cannot obtain relief in decades after which the cases become

redundant. However, he was of the view that weak judicial system will actually help strengthen

Alternate Dispute Resolution methods and organizations such as TDRO. He also cited the

example of ADR committee of FBR which is proving to be very successful. While concluding

his comments, the President said that FPCCI has been accredited by ISO-9001.

19.8 Mirza Ikhtiar Baig, senior member FPCCI and CEO Denim Jeans, in response to the fact

that a large number of complaints at TDRO are from New Zealand, commented that many

trading houses of Pakistan have home textiles' trade with New Zealand. Commenting on why

trade disputes occur in the first place, he stated that in many countries, e.g. Columbia,

consignments are released without documents, sometimes this happens because of an

understanding between the importer and the exporter. However, this practice is strictly not

allowed by the Pakistani banks which is a heartening fact. He also pointed out that since Pre

and Post Shipment Inspection Reports increase the cost of doing business, therefore, many

traders skip this necessary step.


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19.9 Mian Shaukat, from Islamabad Chapter of FPCCI and former President, stated that Dispute

Resolution Act was first introduced in UK in 1906, which means Pakistan needs to catch-up

with the developed world and creation of TDRO is a step in the right direction. He also

suggested that a panel should be formed which should include members of Trade Bodies to

come up with the law of TDRO. In this law, he also suggested making FPCCI an appellate

body.

19.10 Sheikh Ayub, from Lahore Chapter of FPCCI, informed the audience that with the help of

IFC, LCCI made a mediation cell and is arranging for the training of the business community

on mediation. He stated that the problem in Pakistan is that people do not have awareness of

mediation coupled with the fact that there is no law to strengthen mediation. To this

observation, Mr. Ebrahim Saifuddin replied that TDRO could include a provision in the law by

which mediation be made mandatory in the contracts as an initial step of dispute resolution.

19.11 Mr. Zubair, Vice President FPCCI, welcomed TDRO's creation and stated that majority of

the disputes are settled through negotiations between the parties. He urged Mr. S.M. Muneer to

help TDRO and also pledged to place all possible resources and help of FPCCI.

19.12 In the end, Ms. Roubina Taufiq Shah, suggested to CE TDAP that TDAP and TDRO should

join hands in training exporters/importers on export procedures. The CE TDAP gave his assent

to both the proposals.

19.13 The meeting ended with shield presenting ceremony followed by the lunch by FPCCI.

20. (2) Meeting With Rice Exporters Association Of Pakistan(08/09/2015)

The next brainstorming session was held at the office of REAP on 8th

Sept 2015 at the

Association office. The Chairman REAP, Mr. Suleman Rafique, and other senior members of

the association attended the meeting. In his welcome remarks, the Chairman informed that

Pakistan exported $2bn worth of rice annually despite worsening law & order in Pakistan and

deteriorating energy situation and if the unofficial figure of smuggled rice exports are added

then Pakistan could well be exporting $ 3bn of rice annually. He stated that UAE is the biggest

market of Basmati. Iran will also be open for trade which will enhance Pakistan's exports as

Iran is the world's biggest Basmati buyer. For the non-basmati rice Kenya is the biggest buyer.


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The. Chairman highlighted that REAP members have sophisticated rice plants and Pakistan's

rice is considered among the best in the world. The REAP members often hold Biryani

festivals abroad, latest of which was one in Malaysia where 350 delegates attended the festival.

In many countries Pakistan's Commercial Counselors arrange B2B meetings for rice exporters.

One delegation to a foreign country costs the association around Rs.10 million . Coming to the

point of dispute resolution, the Chairman said if a rice exporter commits a fraud, a furore

erupts, whereas if a Pakistani is defrauded abroad no government authority reaches out to help

him. He stated that REAP's membership is not mandatory for export of rice, therefore dispute

resolution at the platform of REAP cannot be efficacious.

20.1 The Chairman highlighted a case where an agreement was reached and signed with a Chinese

delegation in TDAP for export of 1500 tons of rice. Shortly thereafter, world rice prices fell

and the Chinese back-tracked. This caused a loss of Rs. 4.5 million to one exporter. However,

TDAP could not help the exporters to the desired level, even though the contract was signed in

TDAP. In the end, he stated that the Government should check rapid price fluctuations in the

rice market and should also provide subsidies to rice growers.

20.2 After the welcome remarks of Chairman REAP, DG TDRO Ms. Roubina Taufiq Shah,

introduced TDRO at length to the participants of the session. She informed that one of the

leading product where disputes are occurring is rice which was creating a bad name for the

country. This is also providing advantage to the other competitors like India, Thailand and

Philippines to increase their market share, since buyers prefer to import from reliable suppliers.

20.3 Opening the Q&A Session, Chairman REAP made a few remarks on points arising out of DG

TDRO's presentation. He stated that all REAP members get Pre-shipment Inspection from SGS

which is a world renowned company for PSI. Only two complaints of rice exporters have been

received in the current year which shows the credibility of REAP membership. On the issue of

cyber crime he informed that he himself was about to be defrauded in Kenya but narrowly

escaped due to vigilance on the part of his buyer. On the draft law and the upcoming Android

application, the Chairman appreciated the efforts of TDRO team and suggested to include

REAP members in the Board of TDRO for inputs on a continuous basis.

20.4 Raising the issue of payment default by foreign buyers, REAP Chairman commented that

internationally rice business is conducted on 20% advance basis, this sometimes leads to

foreign buyers defaulting on the remaining amount. He enquired as to how TDRO could be

instrumental if in future such a situation arises. To this DG TDRO responded that after

receiving complete documents of the case, TDRO would pursue the case on all available fora,

such as, Pakistan's Mission in that country, Dispute Resolution Organization of that country


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and that country's Mission in Pakistan. She also added that TDRO intends to share its law with

other countries' Dispute Resolution Organizations and thus this close liaison would enable

swift resolution of trade disputes.

20.5 Haji Khushi, a senior member of REAP, stated that Government should allow REAP to

blacklist defaulters and circulate their names. This would go a long way in preventing trade

disputes and also enabling their resolution. He added that State Bank should be approached to

offer relaxation to exporters if they are unable to realize their export proceeds within 180 days

in light of their buyers refusing payment. To this DG TDRO responded that in an earlier

session, attended by a representative of SBP, it was clarified that SBP does give relaxation to

exporters in such a scenario once they give credible proof that their foreign buyer has refused

payment.

20.6 Mr. Abdul Aziz, another member of the REAP, suggested that before TDRO forwards

disputes to Trade Bodies for their initial resolution, they should be strengthened under the law.

Once this is achieved, capacity building of exporters and officers in mediation and arbitration

should be carried out for better outputs. Trade Bodies should work under timelines once a case

is forwarded to them.

20.7 Mr. Wajid Piracha commented that the issue of Contract signing is very important and TDRO

should design and sanction contracts and subsequently share it with the Trade Bodies. He also

asked the TDRO team if they can guarantee Pakistan's exporters‟ credibility to foreign buyers.

To this DG TDRO replied that this was the job of the Trade Bodies the exporters are registered

with. She added that the exporters should seek to obtain Invoice Insurance but the members

replied that it was an additional cost.

20.8 Representatives of Baba Rice Mills pointed to the monopoly of Shipping companies and

cited their own experience where Maersk's containers got burnt but the cargo of exporters was

safe. Inspite of this, the shipping line did not allow the exporters to claim their cargo unless

they had paid 52% of CFR value to the shipping line. Thus the Government should introduce

some reforms to do away with the monopoly of the shipping lines.

20.9 The session concluded with exchange of souvenirs and a commitment of close liaison between

the two organizations in the future.


18


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21 (3) Meeting With Pakistan Hosiery Manufacturers Association Of

Pakistan( 08/09/2015)

21.1 TDRO team also visited PHMA on 8th

Sept 2015 and met with its Chairman, Mr. Saleem

Parekh and introduced TDRO, its creation and its mandate to the Chairman. A number of

pertinent points were raised by the Chairman, which are summarized below:

Main problem for PHMA exporters is Anti Narcotics Force, which destroys the

consignments once they are inspected. PHMA officials have met ANF and Port

Terminal Operators a number of times and the consensus on ameliorating the situation

has been the installation of sophisticated scanners at the ports. In this context, PHMA

suggested that ANF could charge each exporter marked for inspection so as to cover the

cost of scanners. However, no progress has been made on this account.

On the question of dwindling exports, the Chairman informed that increased cost of

doing business in Pakistan is the reason for the dwindling exports. As far as dispute

resolution is concerned, he stated that TDRO must continue conducting awareness and

brainstorming session which would help introduce the subject of Dispute Resolution to

the business community.

On accreditation, the Chairman commented that the accreditation of local labs might

not help as the international buyer usually wants inspection reports from internationally

recognized agencies.

The Chairman sought attention of the Government to fix the issue of under-invoicing

which is causing harm to the national exchequer.

Appreciating the work of Ministry of Textiles, the Chairman added that there is a

process of registration with the Ministry for the facilitation of manufacturers/exporters

(this includes funds for R&D purposes). In this context, TDRO could devise a

mechanism whereby a defaulter Hosiery and Apparel exporter could be de-registered.

TDRO law could also include making membership of Trade Bodies mandatory for

exports while the Trade Bodies on their part could be requested to regularly submit

their membership to TDRO.

Another important point raised was that the Country of Origin could be made

mandatory in the law of TDRO and the issuing authority could be held responsible for

issuing it to defaulters. Also, the Trade Bodies may be made to accredit themselves so

that their working improves in the face of growing trade complaints.

An important issue highlighted by PHMA was that the Customs officer responsible for

clearing the goods should also be made responsible if wrong consignment is exported.

21.2 In the end, the Chairman was of the view that TDRO could actually be a good marketing tool

(internationally) for the business community of Pakistan as it will give confidence to

international buyers/sellers that Pakistan is a safe trading destination.

21.3 The meeting ended with a hope and a promise to further interact with each other in pursuance

of the goals set by the two organizations.


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22. (4). Meeting With Pakistan Standards & Quality Control Authority

(PSQCA), Ministry Of Science And Technology (09/09/2015)

22.1 On the third day i.e on 9th

Sept 2015, the TDRO team visited PSQCA in Pakistan Secretariat,

Karachi. DG PSQCA, Dr. Barkat Ali, chaired the meeting. Senior officers of PSQCA were also

present.

22.2 Quality issues of Pakistani products is a major reason of trade disputes. To address this

problem was the agenda behind TDRO team‟s visit of the PSQCA and subsequent

brainstorming as to how to plug loop holes in the system whereby the quality of Pakistani

products could be improved. After DG TDRO introduced the organization to the participants a

brainstorming/Q & A session followed. Some important observations/questions were raised by

the team of PSQCA.

22.3 DG PSQCA, Dr. Barkat Ali, opened the session, while appreciating the efforts of TDRO team

in reaching out to the stakeholders, with the observation that working with fewer resources

was not a viable option and TDRO needs to have proper manpower in place to be able to

deliver, as many bottlenecks could be fathomed in the working of TDRO. He informed that

PSQCA has around 400 staff and offices in 12 different areas, yet the department felt restricted

in its working.

22.4 DG PSQCA highlighted the fact that Pakistan has adopted 15,000 international standards while

8,000 indigenous standards have been made. There is a list of 90 mandatory items that are to be

regulated by PSQCA at the manufacturing and import level. PSQCA does not have an

awareness program of its own, however, DG PSQCA informed that the officers of PSQCA

could be brought on board by TDRO in its future awareness programs. Moreover accreditation

is a voluntary process and also very tedious as it involves a lot of money and time, therefore

many organizations and institutions avoid getting themselves accredited. DG PSQCA pledged

to help TDRO in the most possible way.

22.5 Director PSQCA, Engr. Akhtar Bughio, stated that PSQCA complies to standards of importing

country abroad, besides harmonizing international standards for local usage. Conformity

Assessment Department of PSQCA stamps approval only for the 90 products that are in the

mandatory list of PSQCA, both at import or manufacturing stage. These 90 products are tested

in the accredited labs of PSQCA.

22.6 Engr. Ali Buksh, Director WTO PSQCA, informed that PSQCA has formed a National

Enquiry Point (free of cost and available at the website of PSQCA www.psqca.com.pk) to

apprise the exporters/importers about the internationally prevalent standards. This NEP relates

to Technical Barriers to Trade (TBT) only. The Director related an interesting fact that

weekly/monthly emails are sent to over 10,000 manufacturers but most of them show a lack of

interest on issues of Standards and Controls.

22.7 Mr. Nazir Hussain, Director Standardization PSQCA, commented that at the import stage, a

normal consignment takes 7-10 days, whereas urgent consignments take 3-5 days. For

checking, the consignments are released temporarily to avoid demurrage costs. There are over

30 PSQCA labs all over Pakistan. He informed that importers should ask for Inspection

Reports from their exporters abroad so that upon arrival, PSQCA may determine whether the

consignment was shipped in the right state or not through applying the expertise of its officers

in details of packing, weather, time etc. However, the mandate of PSQCA is only TBT and not

SPS. The department of National Food Security looks after SPS.


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22.8 DG TDRO showed her keenness to visit Karachi ports to see the checking procedures and

loading / unloading of goods, for which PSQCA made necessary arrangements.

22.9 The meeting ended on a positive note of future collaboration between the two departments,

especially in awareness raising programs.

23. (5). Meeting With Pakistan Pharmaceutical Manufacturers Association

PPMA ( 09/09/2015)

23.1 The TDRO team next visited the office of PPMA on 9th

Sept 2015. The officials of

PPMA were led by their ex-President, Mr. Haroon Qasim.

23.2 The meeting started with the introduction of PPMA and the Pharmaceutical Industry by

Mr. Haroon Qasim. He stated that PPMA was established in 1961 with more than 265

members. The Pharmaceutical Industry employs skilled labor and is manufacturing

90% of medicines in the market and only 10% of the medicinal volume is being

imported by Pakistan. Thus Pharmaceutical Industry is helping Pakistan save its foreign

exchange reserves. Of the total manufacturers operating in Pakistan with a total

business of $2.2bn, 60% are local and 40% are Multinational companies. Pakistan's

Pharmaceutical exports are about $200mn. Mr. Haroon cited a report by Mckenzie

International which states that Pharmaceutical Industry has the highest potential for

exports in Pakistan. Currently, Pakistan's export market includes Far East, Africa and

Central Asian States.


22

23.3 Mr. Haroon also cited the example of India, whose exports are $20bn with a local

market of $8.8bn. He pointed out that Import substitution can help Pakistan's Pharma Industry

to grow therefore it is imperative that Government should help this industry. He cited various

problems being faced by the manufacturers at the hands of Drug Regulatory Authority of

Pakistan which oversees the working of the Pharmaceutical Industry. Referring to the need of

introducing the policy of Import Substitution, Mr. Haroon stated that in the region, besides

India, Bangladesh also has a very strong Pharmaceutical Industry.

23.4 Adding to the introduction given by Mr. Haroon, Ch. Israr Sharif, member Executive

Committee and CEO Genex, informed that there was not a single FDA approved plant in

Pakistan. He added that the policies of the Government vary frequently leading to difficulties

for the Pharmaceutical Industry.

23.5 The introduction of the Pharmaceutical Industry was followed by the presentation of TDRO by

DG TDRO after which the house was opened for Q & A/inputs/comments. On the importance

of Contracts, the members stated in unison that at the import stage no one signs contracts and

all agreements are executed verbally. However, at export stage, the Pharmaceutical exporters

do sign contracts. To this, DG TDRO pointed out that to avoid frauds, proper Contracts should

be signed at the import stage also. Ch. Israr raised a point that TDRO should share case studies

of frauds with not only PPMA but also with other Trade Bodies for the general awareness of

the trading community.

23.6 Mr. Amin Nota, Executive Member PPMA, raising a pertinent point on Trade Marks, remarked

that Pakistan was not a signatory to Bern Convention which is hurting Pakistani exporters and

manufacturers as by doing so the Registry of Trade Marks in Pakistan would be acknowledged

world-wide.

23.7 Wrapping up the session, Mr. Haroon Qasim commented that Pharmaceutical Industry is the

biggest victim of cyber crime and the government should do something about it. In the end, he

requested DG TDRO to hold training sessions on contract drafting and other issues of trade for

the technical staff of the Pharmaceutical Industry.


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24. (6) Meeting With Overseas Investors Chamber Of Commerce And

Industry (OICCI) (10/09/2015)

24.1 The last meeting of the visit was held with OICCI on 10th

Sept 2015 at the Chamber‟s office.

The meeting was presided over by the Secretary General OICCI, Mr. M. Abdul Aleem. In his

introductory remarks, he stated that the membership of OICCI comprised 195 members and

these contributed roughly 35-40% to the National Exchequer through taxes. The membership

of OICCI is only granted to Multi-National Companies.

24.2 The DG TDRO made a comprehensive presentation about the aim, mandate, functioning and

goals of the TDRO. Pertinent to mention here is the remark of OICCI Secy. Gen. stated that he

had not attended such a well-researched presentation by a government functionary in quite a

long while.

24.3 Ms. Kamila, Company Secretary, ICI, opened the Q&A session with some important

remarks. She stated that arbitration is costly whereas mediation is a better option. As far as

regulators are concerned, she commented that State Bank of Pakistan is doing a wonderful job.

Acknowledging the concept of registering importers/exporters, she was of the view that it is an

uphill task, and TDRO may not be having enough resources to accomplish it. On the issue of

Contracts, she endorsed the idea of standard templates and suggested introducing contracts in

Urdu and regional languages.

24.4 Mr. Jarri Masood, Country General Manager Pakistan for 3M Pakistan (Pvt.) Ltd.

commented that HS Codes need to be harmonized. Country General Manager, Dabur

International, informed the HS Codes were harmonized, however, the business community has

difference on interpretation of a few HS codes with the Customs Authorities. He also stated

that PCT Committee is ineffectual whereas Pre-Shipment Inspection was mandatory till 1997

but now it is no more mandatory.


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24.5 Mr. Ahmed Waheed, Head Trade & Business Services, made some interesting comments

stating that SBP is about to go online with E form which will greatly help the traders. He

informed that E-form requires the filer of the form to have a contract and also be registered

with a Trade Body, failing which E from will not be issued. Once issued, the importer/exporter

is mandated to submit the documents after 21 days. In Pakistan, Mr. Waheed added that

consignment is not released on copy of documents. In foreign countries, it has been observed

that disputes arise when exporters themselves request their banks to release documents citing

close relations with the foreign importer. This practice should be stopped. Regarding Letter of

Credit, Mr.Waheed stated if a complete set of documents are submitted then bank must release

payment in 5 days which the banks invariably do. If on the contrary, the importer feels that the

payment may be withheld for some time then he should obtain a stay order from the court and

only upon its presentation the bank may stop the payment. He also enquired if the government

intends to give any financial support to small traders? DG TDRO informed him that there is no

such proposal yet.

24.6 Mr. Razi from Honda Atlas commented that TDRO should limit its scope of activities for

now as in the beginning too wide a scope can lead to failure. This point was seconded by the

Secy. Gen. OICCI. Secy. Gen. OICCI also added that lateral issues such as Contract

Enforcement should not be included in the mandate of TDRO at least in the beginning.

Mr. Razi also highlighted the complaints against ANF which needed to be addressed on

priority basis.

24.7 The meeting ended with a note of thanks by Mr. Abdul Aleem, Secretary. General OICCI who

highly appreciated the efforts of the TDRO team.


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25. Visit to Karachi Port Trust and NLC container terminals: The TDRO Team also visited the container

terminals of Karachi and studied the procedures of unloading and stuffing the import / export goods. They had

meetings with customs inspectors and terminal operators. It was observed during the visits that a set procedure

is followed, however all organizations ultimately blamed the exporter for not complying with the import /

export standards and international packaging qualities. This was stated to be the main reason for the destruction

of goods during checking.

Government of Pakistan

Ministry of Commerce

Trade Dispute Resolution Organisation(TDRO) State Life Building No.5 (Phase-I),

Jinnah Avenue, Blue Area, Islamabad

Ph. 051-9223027-33

Fax. 051-9223029

E-Mail: [email protected]

Documents

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