Concession for Pakistan: EU duty waiver on 75 items crosses key hurdle

Published: February 2, 2012

The Pakistan-specific trade package will enter into force after its formal approval by the WTO General Council.

ISLAMABAD: 

A World Trade Organisation (WTO) committee on Wednes­day approved a long pending European Union-proposed trade waiver for Pakistan – a move that is intended to help the country recover from devastating floods in 2010.

“I’m very happy. It was a long drawn-out exercise, and something of a success for diplomacy,” said Pakistan’s ambassador to the WTO Shahid Bashir.

The Council on Trade in Goods (CTG) of the WTO unanimously approved the EU-proposed waiver on duties for 75 products from Pakistan, including textiles, leather and ethanol. The proposal will be tabled before the WTO General Council for formal approval on February 14.

The waiver has been approved for a year, and will be extended for one more if the EU does not find an adverse impact of the concessions on its local industry at the year-end review. The EU could ask for the waiver to be extended for a third year if it believes Pakistan’s economy still needs help.

The EU’s imports of the 75 products from Pakistan are worth almost $1.2 billion, or about 5% of Pakistan’s overall exports, according to the EU’s waiver request submitted to the WTO’s council.

According to estimates, the waiver could increase the exports between $100 and $200 million.

Negotiating the waiver

The EU had requested for this waiver in October 2010, and it took 15 months of negotiations to develop a consensus among WTO members.

Competing textile exporters had opposed the plan but dropped their objections after the EU amended the scheme to use tariff rate quotas (TRQs) on 20 products rather than full liberalisation.

The TRQs will be set at 20% above the average of exports in the last three years, said Secretary Commerce Zafar Mahmood while talking to The Express Tribune.

He said the temporary waiver will lead Pakistan to the Generalised Preferential System (GSP) plus status by 2014 – a concessionary package for developing countries, offered to help reduce poverty.

The package includes 33 non value-added textile, 23 garment, eight home textile, four value-added leather, three footwear, two raw leather and 1 vegetable product, and ethanol.

Beyond concessions

EU Ambassador to Pakistan Lars-Gunnar Wigemark welcomed the news from the WTO headquarters in Geneva and said the EU trade concessions would provide much-needed relief for Pakistan after two years of catastrophic flooding.

He added that these specific trade concessions are likely to be valid for two years only, and the EU and Pakistan should examine ways to promote closer trade ties in the longer term.

The EU-Pakistan Joint Commission will meet in Brussels on February 6 to discuss how to take bilateral cooperation, including trade, further, he said.

All 27 EU foreign ministers approved a five-year comprehensive engagement plan with Pakistan on January 23, he added.

(With additional input from Reuters)

Published in The Express Tribune, February 2nd, 2012.

Reader Comments (6)

  • khan
    Feb 2, 2012 - 6:09AM

    “According to estimates, the waiver could increase the exports between $100 and $200 million.” Lets do maths… we have spend 2 years negotiating, so atleast 15-20 million spend on negotiators, numerous foreign trips, add another 25-30 million dollars that we might have spend on lobbyists in 27 member countries and WTO. So net we got a deal for 50- to max 150 million dollars. Also we got forever indebted and grateful to India to lift its reservations. With 70% industries shut down, no gas, no power, how do we plan to meet any order? The world is laughing at us.. begged hard and got a 50-100 mil deal for only 2 yrs. India exports 300 billion in a year and this tiny amount in one week…. shameful.

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  • K B Kale
    Feb 2, 2012 - 6:52AM

    Pakistan is a case study worth teaching in all Universities offering subject of Political Science. Rarely one sees a country that double-crosses its benefactors, helps their arch enemies (Iran, N Korea, Libya, Iraq etc) & still gets money that it spends without giving details of how it spends it.
    Hats off to Pakistani diplomacy!

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  • Malik
    Feb 2, 2012 - 9:20AM

    Every little helps! Thank you our great white masters!

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  • ali
    Feb 2, 2012 - 9:26AM

    A good news for Pakistan’s economy.

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  • Munnabhai
    Feb 2, 2012 - 10:50AM

    @K B Kale:
    Another thing that amazes me is the total absence of the proverbial provi of the guilty conscience amongst Pakistani rulers.
    They take everything from West & then sta.
    Great achievement!Recommend

  • JS
    Feb 2, 2012 - 11:26AM

    So pia loses over 20b ($220m) in 2011, Pak steel is down 11b ($120m), railways in the red for 35b ($390m), PEPCO losses for 2011 are over 365b ($4b)…..lets not even go into what NHA, WAPDA etc are losing. Close to $5billion is pilfered away in 1 year…more than the total amount of US civilian aid in 10 years. And here we are celebrating a potential increase in exports of $200m. Bravo pakistan and pakistanis..

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