‘Declining to open LCs strictly against GSP+’

German envoy warns of shadow over relations

ISLAMABAD:

After German automakers lodged complaints against restrictions being imposed on the import of European automobiles, the German embassy has taken up the matter with the government saying the move is creating a shadow over relations between the two nations.

Ambassador of the Federal Republic of Germany Alfred Grannas said that banks declining Letters of Credit (LCs) for the import of EU origin Electric Vehicles (EVs) was strictly contrary to GSP+ and its unilateral benefits for Pakistan.“Pakistan runs the risk of losing further benefits from GSP+ and its succeeding regime if German companies’ imports are blocked and this becomes known to an enlarged public,” he warned.

Sources told The Express Tribune that the German envoy has taken up this matter with Federal Minister for Economic Affairs, Sardar Ayaz Sadiq. According to a letter, a copy of which is available with The Express Tribune, the German ambassador said, “We have always appreciated the government of Pakistan’s outlook towards environment protection and efficient utilisation of natural resources, clean and green energy,” adding that a positive regulatory framework for the import of EVs has been a major step in that direction.

“This promises to reduce Pakistan’s reliance on imported petroleum products – nearly $22 billion of a total import bill of $72 billion approximately,” he said.

“Against this background, I would like to draw your attention to the difficult situation of official importers for Mercedes-Benz, BMW and Audi in Pakistan who identified EVs best suited to this vision and placed their orders accordingly with the respective OEM’s,” he said, “We have learnt, however, that the State Bank of Pakistan (SBP) is constantly declining the opening of their LCs through commercial banks.”

Germany is not only the largest, and most significant, EU trading partner (by volume and value) for Pakistan, it is also providing significant financial assistance to people affected by the catastrophic floods. “Declining the opening of LCs is against our common spirit to boost mutual trade and is strictly contrary to GSP+ and its unilateral benefits for Pakistan,” he wrote, adding that,“I look forward to cooperating with you on this matter for an early solution. Kindly let me know if you need any further information.”

Earlier, the German-Pakistan Chamber of Commerce and Industry (GPCCI) had requested the government and SBP to resolve the issue of commercial banks refusing to open LCs for German auto companies.

The GPCCI had also warned that these refusals may lead to protests from the European Union (EU) and World Trade Organisation (WTO). It also noted that German auto companies have been present in Pakistan for decades, and the recent ban on imports has made them view Pakistan critically. The total value of vehicles imported from Germany to Pakistan is negligible compared to the country’s total import bill. The GPCCI urged the government to intervene in the matter and ensure that German companies are not victimised.