Duty-free access: Exports to EU expected to rise by $500m a year

WTO General Council approves trade concessions for Pakistan.

ISLAMABAD: Pakistan’s exports to the European Union are likely to get a boost of $500 million annually on the back of duty-free access to the 27-nation bloc for a period of two years, said the commerce ministry on Wednesday.

In a handout, issued after the General Council of the World Trade Organisation unanimously approved the EU-backed limited trade concessions for Pakistan on Tuesday, the ministry said the package would fetch an additional $1 billion from 2012 to 2013.

Earlier, the WTO committee on trade in goods had granted approval to the concessions after India and other nations withdrew their opposition. The EU offered the concessions in the wake of 2010 floods.

Now the European Parliament and the EU Council will dictate terms of the package before it is implemented.

After reaping windfall gains from increasing commodity prices in the international market for over a year, the exporters are now facing difficulties in getting new orders both because of energy shortage and drop in demand due to the EU debt crisis. In January, exports fell 15 per cent compared to a year ago, according to the Pakistan Bureau of Statistics.

The commerce ministry said as per the WTO decision the waiver would be effective for two years from January 1, 2012 to December 31, 2013. Therefore, import duties paid after January 1, 2012 would be refundable unless the final EU regulation specified otherwise, it added.

According to the package, out of 75 items, 20 are subject to tariff rate quotas and will be eligible for duty-free import into the EU to a specified quantitative limit. The effective quota is 30 per cent after taking into account an average of Pakistan’s exports to the EU from 2008 to 2010 plus a 20 per cent cap imposed by the WTO to satisfy the opposing nations.

The commerce ministry said the package would provide greater market access to Pakistan in 27 EU countries and would help revive a large number of factories which were not producing to their optimum capacity.

The products included for market access on the basis of tariff rate quotas are ethyl alcohol, some types of cotton yarn and cotton woven fabrics, trousers, stockings, ladies garments, toilet linen, kitchen linen and footwear. Besides, many types of woven fabrics, gloves, T-shirts, track suits, curtains, floor clothes and made-up articles of textile material will be importable from Pakistan without any quota and free of duty.

GSP Plus status

Pakistan is also trying to win Generalised System of Preferences Plus status, known as GSP Plus, offered by the EU to the developing nations for eradicating poverty. This unique package will allow the developing countries to export products duty-free to the EU for four years.

However, it requires that the applicants must adhere to 27 conventions of the United Nations relating to human rights and freedom of speech. Pakistan is a signatory to all these conventions but has yet to sort out issues arising out of their implementation.

In addition to that, there is a clause that the applicant’s exports should not exceed 1 per cent of total EU imports. The EU has proposed to relax this condition up to 2 per cent as currently Pakistan’s exports are above the 1 per cent threshold.

Published in The Express Tribune, February 16^th, 2012.