Duty free access: EU approves GSP Plus status for Pakistan

90% exports to EU to be duty free under the regime; export revenue to improve by $1 billion annually.

ISLAMABAD:

The European Parliament has allowed duty free access to Islamabad in a move that will augment its exports by $1 billion annually amid calls to implement international conventions on human rights, good governance, labour and environmental standards.

The EU Parliament approved the Generalised System of Preference, known as GSP Plus status, with 409 to 182 votes for 10 developing countries including Pakistan, according to a statement issued by the EU’s Embassy in Islamabad.

The GSP Plus status means there will be zero duties on over 90% of all products that Islamabad exports to the bloc of 27 nations.



The EU is Pakistan’s largest trading partner. The GSP Plus status will become effective from January 1, 2014.

“The award of GSP Plus status shows confidence of the international markets on the excellent quality of Pakistani products,” said Prime Minister Nawaz Sharif in his written statement. He congratulated the nation for the achievement.

The premier said that gaining access to European markets was the top-most priority of the government as part of the economic development agenda. The status would enable Pakistan to export more than $1 billion worth of products to the international markets each year.

“The textile industry [alone] would earn profits of more than Rs100 billion per year,” said the prime minister. He said the increase in exports would resultantly facilitate economic growth and help in the generation of additional employment.



Pakistan has been suffering from huge losses after it became the frontline state in the global war on terrorism. Finance Minister Ishaq Dar said on Thursday that the country suffered over $100 billion in direct and indirect losses due to the war.

In order to compensate for the huge losses, Pakistan had long been demanding the United States and EU give it preferential treatment in trade and investment – a wish that the US has yet to fulfil despite making promises.

The European Commission’s preliminary assessment is that Pakistani exports, including textiles but also other products, such as leather, would increase by 574 million euros annually, said the EU Embassy. The Pakistani textile industry estimates that exports of textiles to the EU alone under GSP Plus will increase by $650 million in the first year, it added.

“While there is every reason to celebrate this milestone in EU-Pakistan relations, the GSP Plus regime calls for Pakistan to fully implement its commitments under 27 international conventions on human rights, good governance, labour and environmental standards,” said the EU’s Ambassador to Pakistan, Lars-Gunnar Wigemark.

He said the grant of GSP Plus shows the importance the European Union attaches to its relations with Pakistan. “We have listened to Pakistan’s plea for more trade and not just aid,” Wigemark added.

The business community can play a significant role, for instance by ensuring labour rights, employing more women in workplace and making sure that there is no exploitation of child labour. “Improving human rights, including labour standards, is win-win situation for Pakistan and the EU,” the ambassador said.

However, he stressed that there is a need to improve the business climate in Pakistan, including access to energy.

The analysts say there are apprehensions among the business community that the energy shortages may deprive the exporters to get full benefit from the GSP Plus status.

Published in The Express Tribune, December 13^th, 2013.