Post-Brexit trade reforms

When the UK voted to quit the 28-nation European Union (EU) in a June 23 referendum, like the rest of the world, Pakistan too was left wondering how this divorce would change the dynamics of trade with the major European country. Uppermost on everyone’s mind was this real concern that Islamabad will no longer be able to enjoy the Generalised Scheme of Preferences (GSP) Plus status with Britain, under which 20 per cent of Pakistani exports now enter the EU market at zero tariff and 70 per cent at preferential rates. When the European bloc decided to grant this major concession to Islamabad back in 2013, partly in recognition of its huge sacrifices in the war on terrorism, the arrangement was to allow Pakistan to export its products worth more than a billion dollars to the European markets. The textile industry alone was billed to turn a profit of more than one trillion rupees every year. But the dissolution of UK’s long, rocky marriage with the EU appears to upset this win-win situation for Islamabad.

The point of concern is that Britain is the third-largest importer of Pakistani goods, behind the US and China. If it chooses to tear up the deal and withdraw the duty concessions, Pakistani exporters will be left high and dry. It is now a matter of urgency to open negotiations with our largest European importer to salvage the scheme. The good news is our ministry of commerce is working towards this end, with a delegation headed by its secretary due to fly to Britain soon to hold talks on the subject. Commerce Minister Khurram Dastagir has proposed considering alternatives to the GSP facility. A key official was upbeat that the two sides would develop viable alternatives in a bid to keep duty-free exports to Britain on course. The Pakistani delegation will be looking to strike a free trade agreement or a package identical to the GSP Plus, to keep all the incentives in place. Let us keep our fingers crossed to see how things pan out.

Published in The Express Tribune, September 19^th, 2016.

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