ISLAMABAD: Pakistan has decided to set up a special working group to track progress on the implementation of 27 conventions of the United Nations (UN) in order to remain eligible for the 10-year duty free access to the European Union (EU).
The group is being set up in the Foreign Office, said Minister of State for Commerce and Textile Industry Khurram Dastgir on Tuesday. He was addressing a press conference to share further details of the GSP Plus incentive that the EU has recently granted to Pakistan.
“At midnight a new door for expanding trade and attracting foreign investment will open for the next ten years,” said Dastgir.
Pakistan has rectified these conventions which mainly pertain to human rights, labour rights, women, children and minority rights and freedom of expressions.
Dastgir said that the biggest challenge in tracking the progress on conventions was coordinating with the provinces, as most of the matters are related to the federating units. “Full compliance was not possible even by the developed nations but what Pakistan will assure is significant progress.”
Pakistan will remain a beneficiary as long as its exports to the EU remain less than 2% of the total imports of the EU and undertakes to maintain the ratification of 27 UN conventions, accepts regular monitoring and reports in accordance to the conventions, said Rukhsana Shah, Secretary Textile Division.
By January 1, 2016, the European Commission will present the European Parliament and to the European Council a report on the status of ratification of the relevant conventions, said Shah. The report will include the conclusion and recommendations of relevant monitoring bodies and the Commission’s conclusions on whether the beneficiary country respects its binding undertakings to comply with reporting obligations.
If the beneficiary country no longer fulfills the conditions or withdraws any of its binding undertakings, the EU may withdraw the concessions, the Secretary Textile added. The EU can withdraw the concessions if Pakistan’s exports increase by at least 13.5% in quantity, as compared with the previous calendar year. The concessions can also be withdrawn if products exceed 6% of the total EU imports of that product.
She said at present the total EU textile imports were $234 billion and Pakistan’s textile exports stood at $3.68 billion or 1.57% of the EU textile imports.
To ensure that Pakistan doesn’t breach the 2% limit, a committee has been formed in the FBR to monitor the exports on weekly basis, said Dastgir. He said the government will also make sure that the textile sector does not face liquidity crunch and all duty drawbacks and refunds are paid in a timely fashion.
According to the EU decision, the products exported by Pakistan will be entitled for duty free status if these are wholly obtained in Pakistan or sufficiently worked or processed there. However, the EU has allowed that the intermediate products imported from Bangladesh, India, Bhutan, the Maldives, Nepal and Sri Lanka and processed in Pakistan will also be entitled for duty free access aimed at promoting regional trade.
“Keeping all other factors constant, Pakistan can now achieve an annual increase of 29% (in value) in total exports to EU,” said Shah. The increase in textiles and clothing exports is expected at 38%. In absolute terms, the government has estimated $1.17 billion per annum additional gain in the first year.
She said the apparel sector will benefit most from the tax advantage, and Pakistan should gear up towards a value-added market.
Due to China and India’s expulsion from GSP Plus, Pakistan is well positioned to take advantage of the scheme. Shah said that Pakistan can gain advantages by increasing exports of printed bed linen, cotton trousers, dyed and printed bed linen, towels, socks and cotton jerseys. The real challenge will be to ensure 100% capacity utilisation of its resources.
Published in The Express Tribune, January 1st, 2014.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS (1)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ
Congratulations on the GSP status Pakistan. I hope to see you benefiting maximum from this status and to see you moving from cotton products to high tech on the export spectrum some day in the near future.