Amid all the hype surrounding Pakistan being granted the Generalized System of Preference (GSP) Plus status, a government functionary was quick to provide a reality check.
Trade concessions that the country has won from the European Union cannot be fully exploited as, presently, Pakistan exports only 150 – or 2.5% -- of the total 6,000 duty-free product lines that the bloc of 27 nations has offered, said the official.
In his first interaction with the media after the EU granted Pakistan the status, Minister of State for Commerce Khurram Dastgir Dastgir said the country now needed to diversify its export base. “In the coming days the foremost challenge is how to diversify an extremely narrow base of exports,” said Dastgir.
Under the GSP Plus status, Pakistan can export 6,000 products on zero duty and can increase exports by up to 13% of the level the previous year. Shipments reaching the EU from next month will be entitled to duty free access for a period of three years.
According to industry experts, state protection is available only to hand-picked sectors, under which they have got cheap loans, protection from competition and a relief in taxes, leaving many other sectors underdeveloped.
However, textile tycoons, like Mirza Ikhtiar Beg of Karachi, have argued that the European demand of particular Pakistani products like leather, textile products and carpets is the main reason behind the narrow export base.
How the status was earned
Pakistan had to plead its case, first in the European Commission, then at the European Council and finally in the EU Parliament. It had been a rigorous process that involved government dignitaries including Prime Minister Nawaz Sharif, trade experts, diplomats, lobbyists in European countries and the Punjab governor and chief minister.
The country won its first significant trade concession package after a gap of 10 years, said Dastgir, who twice travelled to Europe to convince the governments and members of the EU Parliament, particularly belonging to the left and centre-wing parties.
“I convinced the European governments and the members of the EU Parliament that the GSP Plus is an incentive --- not a reward.”
The minister hoped that jobs created as a result of the status will minimise attraction for becoming extremists.
To a query, Dastgir said no formal military operation had been launched in Balochistan and, as such, there was no question of adverse implications on the GSP Plus status. The EU has linked the status with improvement of human rights and ensuring fundamental ones.
Addressing an issue
Meanwhile, Dastgir said both the government and the business community will have to work out how to expand its exports base. The Ministry of Commerce will reach out to the industries and offer incentives, particularly to agro processing, pharmaceutical, value addition in textile exports and to the leather industry, he added.
The minister said, in the textile sector, the labour-intensive garment sector offers best opportunities for value addition. The sector is also energy-efficient and equally creates opportunities for women. He said the government has also initiated a dialogue with exporters to reduce bureaucratic hurdles.
Speaking on a different note, Secretary Commerce Qasim Niaz said the status was not conditioned on Pakistan abolishing the death penalty, adding that there was no mention of it in 27 international conventions that the country signed or in the GSP Plus documents.
But the EU will gauge the country’s performance and prepare a baseline and track improvement on human rights, women rights, labour rights, and freedom of expression through international non-governmental organisations.
Dastgir said the status has made the country an attractive destination for regional investors and a Chinese company has already bought 52% stakes in a textile mill and will invest $2 billion in expansion to gain advantage.
He advised the industries not to indulge in a price war and instead focus on the quality to permanently win over the EU markets.
Published in The Express Tribune, December 17th, 2013.
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