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.
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.