Moth-eaten deal: EU trade concessions to transfer little benefit

Observers say the deal will be nothing more than a symbolic gesture.

Shahbaz Rana July 19, 2012


The European Union (EU) Parliament will vote in two months to approve a limited trade concessions package for Pakistan. “The EU Parliament is scheduled to vote in September on duty-free trade concessions for Pakistan,” Lars Gunner Wigemark, the EU’s Ambassador to Islamabad, told The Express Tribune. He said it was expected that the deal will be effective from October this year.

Meanwhile, observers say the deal will be nothing more than a symbolic gesture: offering less than 100 million Euros in benefits to Pakistan through duty waivers.

In a bid to help compensate for losses caused by the 2010 floods, the EU had proposed to waive duties on 75 dutiable products exported by Pakistan. However, during the process of reaching a consensus on the proposal – first in the World Trade Organization (WTO), and then among EU members – the time span for the period of the amenity was reduced from the proposed three years to only 15 months.

Furthermore, EU members have expanded quantitative quotas to cover more products, according to commerce ministry officials. Against 75 items’ duty-free import, the WTO placed quantitative quotas on 20 textile products. The EU members have so for also imposed quantitative quotas on six additional items, and some more products are likely to be added in the limited-access list, said the officials.

Initially, Pakistan had hoped to gain up to 300 million Euros in benefits through duties waivers, but actual benefits will now be far below 100 million Euros, they added. The officials further added that the crisis in EU member states will make it harder to realise even these benefits; orders have already started thinning out.

In such a limited time period and reduced duty waivers, Pakistani exporters will not be able to gain the sort of advantages they were expecting in 2010; aimed at edging out Indian and Bangladeshi competitors; they added.

European Parliament member Jean Lambert, who was in Islamabad to discuss political and economic issues, including the trade concessions, said that certain members of the EU Parliament have raised a voice against granting the concessions to Pakistan. Her comments suggest that the EU had offered the deal in 2010 without doing proper homework.

To a question, Lambert agreed that due to the lapse of a considerable amount of time, the deal now carries symbolic importance only. “It is symbolic, but is still extremely important; Pakistan will be the only country for which we have done this, and people do not want to see it becoming a precedent,” she said, defending the Union.

She said both the WTO and the EU Parliament took a longer time than stakeholders had hoped for, partly because it took a lot of work to get India and Bangladesh agree to the trade waivers extended to Pakistan.

Lambert said that within the EU Parliament, there was a feeling that if the EU really wanted to do something to help, humanitarian aid was the perfect way to do it. She maintained that EU member states are facing economic difficulties; and some of them are textile producers.

Lambert said despite bottlenecks, the EU has not stepped away; and “the EU Parliament will approve the deal in September, barring something terrible happens that none of us can foresee.”

Published in The Express Tribune, July 20th, 2012.

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