German diplomat says no shortcut to GSP+ scheme

Says Germany will lobby for approval, but reiterates that ball is in Pakistan’s court.

KARACHI: Granting the Generalised Scheme of Preferences-Plus (GSP+) status to Pakistan will be primarily a “political decision” aimed at boosting Pakistan’s economy, German Ambassador to Pakistan Dr Cyril Jean Nunn said while speaking at an interactive session on German-Pakistan relations here on Thursday night.

The GSP+ is a trade arrangement that allows exporters from developing countries to pay lower or no duties on their exports to the European Union (EU).

“It is up to the government of Pakistan to negotiate the GSP+ package with the trade division of the European Commission. There’s no short cut,” the ambassador told a textile industry representative who had a complaint regarding the short window of time in which a country can apply for the GPS+ status, which becomes effective on January 1, 2014.

The granting of the GSP+ status depends on whether the benefitting countries effectively implement as many as 27 international conventions on environment issues, good governance and human and labour rights. While the standard GSP – which will stay in force until the end of 2013 – allows 176 developing countries and territories to enjoy easy access to the EU through various duty reductions for certain product lines, the upcoming GSP+ will be limited to 89 low and lower middle-income countries. Experts believe that with the exit of many competitors from the scheme, Pakistan will be in a position to exploit more opportunities to export to the EU.



Nunn, however, warned that there were some countries within the EU that wanted to protect their markets from Pakistani textile imports as they are not “naturally favourable” to their economies. Explaining that Germany is not a negotiator in the matter of the GSP+ scheme, Nunn nonetheless said his country would use its influence to negotiate a package that suits the two parties.

“However, once you have the package on the table, please remember that it has to go through 27 national parliaments and the European parliament. That’s a tricky business, because any parliament can ask for renegotiations at any time,” he said. “But the good news is that you have friends in the EU who are on your side.”

Regarding the composition of trade between Pakistan and Germany in 2012, for which official data is still not available on the website of the World Trade Organisation (WTO), Nunn said it increased 10%, which is far more than the global growth rate. However, he noted that the trade in textiles between the two countries witnessed a decline in 2012. “It didn’t happen because the German consumer would not buy textiles from this country. It was because textiles from this country were not available (in Germany) for reasons that I don’t have to comment on,” he said; apparently alluding to the energy crisis plaguing the industry in Pakistan.

According to the most recent WTO data available, Pakistan’s exports to Germany increased to $1.3 billion after rising at an annual rate of 14% between 2007 and 2011. Exports to Germany constituted 5.2% of the total exports of Pakistan in 2012, with a majority of exported goods falling in the textile category.

Published in The Express Tribune, February 16^th, 2013.

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