Pakistan has linked the outcome of the upcoming trade talks with India to a change in New Delhi’s stance on the trade concessions offered by the European Union to Islamabad.
Testifying before the commerce committee of the National Assembly, Commerce Secretary Zafar Mahmood said that Pakistan had asked India to drop its opposition to a limited, three-year concession on tariffs granted by the European Union to Pakistan to help the country cope with the economic impact of the 2010 floods.
India – along with Sri Lanka, Bangladesh and Vietnam – has opposed the trade concessions by the European Union and has asked the World Trade Organisation (WTO) to rule them to be a violation of global trade. Pakistan, India and the EU are all signatories to WTO trade agreements. The WTO is due to take up the case in its arbitration panels on March 21.
Pakistani diplomats have already succeeded in convincing Sri Lanka to drop its objections. Prime Minister Yousaf Raza Gilani has written to his counterpart in Bangladesh to drop Dhaka’s objections and the government also expects a favourable response. India, however, has not yet indicated whether it will continue its opposition at the March 21 hearing.
“If India opposes the concessions again, it will lead to an uncomfortable start to the trade liberalisation negotiations with the Indian commerce minister,” said Mahmood. “Indian opposition to the trade relief for flood-hit Pakistan will give negative message to Pakistanis and that too just few days before the start of the Indian minister’s visit.”
The Indian commerce minister is scheduled to visit Islamabad in the first half of April to discuss reducing tariffs and non-tariff barriers to trade between India and Pakistan.
Pakistan has been intensely lobbying the European Union since 2004 to grant the country trade concessions similar to those available to Bangladesh. The government hired DLA Piper, one of the largest law firms in the world, to manage its lobbying efforts but was unable to convince European officials until September 2010, when the devastation caused by the floods convinced EU officials of the need to assist Pakistan’s economy.
The EU Council approved concessionary tariffs on 75 items, mainly textiles and related goods. Tariffs on these goods would go down from an average of 8.83 per cent to zero for a limited window of three years. According to the commerce ministry, the concessions are expected to increase exports by $350 million every year.
However, the package has yet to win approval of the European Parliament. Already there are signs of internal opposition. The EU has amended the original concessions proposal to remove seven items from the zero-tariff list.
“There is no guarantee that the WTO and the EU Parliament will approve the trade concessions,” said Mahmood. “The textile lobbies in Europe are also active against any relief [to Pakistan].”
Published in The Express Tribune, March 11th, 2011.