Capitalising on: GSP Plus – for three or ten years

Govt and private sector both have to shoulder their responsibilities.

KARACHI: After winning the Generalised Scheme of Preferences (GSP) Plus status from the European Union (EU), the debate about how long Pakistan will be enjoying the facility has gained significant importance.

The government and private sector have their own sets of responsibilities, yet they are trying to ask each other to do their job first.

While the private sector has praised the government’s role in qualifying for the GSP Plus status, it is pressing the PML-N administration to do more to get the deadline for trade concessions extended for seven more years beyond 2017.

On the other hand, the government is asking private businesses to work hard and meet the European standards.

The EU – a 28-nation bloc – has granted the GSP Plus status to 10 developing countries, including Pakistan. It came into effect from January this year. Europe will review the scheme in January 2017 before extension for another seven years for countries that effectively implement 27 international conventions on labour laws, good governance and environment.



Exporters believe that under the scheme they can increase sales to Europe from $500 million to $1 billion annually over the next three years.

However, they see shortage of electricity and gas and poor law and order as a major stumbling block and expect special incentive packages from the government.

In a recent conference on corporate governance, top executives from different sectors got engaged in a debate about the role of public sector and building the private sector’s capacity in light of the GSP Plus.

“Our government needs to implement international conventions effectively, otherwise we could lose the GSP Plus status after 2017,” warned Orient Textile Mills CEO Iqbal Ebrahim.

The panellists at the end of the conference even mocked the government. “Our leading ministries might not have even read the requirements of the GSP Plus,” Habib Metropolitan Bank President and CEO Sirajuddin Aziz said.

Experts, however, call on private companies, whether listed or unlisted, to improve corporate governance. According to the revised Code of Corporate Governance 2012 of the Securities and Exchange Commission of Pakistan (SECP), there are four pillars — accountability, fairness, transparency and independence.

State a facilitator

On its part, the government insists that it is monitoring the situation closely and will try to help all sectors, especially textile, pharmaceutical and automobile, to increase exports to the EU. Nevertheless, it is reminding the private sector that it must take the initiative and then expect state support.

“The government is just a facilitator. The onus is on the private sector to implement all international conventions to continue to enjoy easier and greater access to the EU market,” said Ayaz Wazir, spokesperson for Commerce Minister Khurram Dastgir, while talking to The Express Tribune.

When asked what the government has already done to meet the conditions, Wazir said labour efficiency in Pakistan was low, which was a big challenge, but the rest of the challenges like environment and corporate governance were not that difficult to tackle.

Some people in private businesses also echo the government’s views. All Pakistan Textile Mills Association (Aptma) Chairman Yasin Siddik told The Express Tribune that the private sector had the prime responsibility to follow international laws in order to step up country’s exports.

“The government can only pass laws if it is necessary. Rest is the responsibility of the private sector to improve product quality even after the end of the GSP Plus scheme in 2017 or 2024,” said Siddik, who heads the largest lobbying group of textile mills.

Many textile companies were exporting their products to Europe keeping in view all international conventions, but at the same time there were few that could not simply export to the bloc, he said.

“This is a matter of choice for a company whether it wants to work hard or lose the opportunity,” he remarked.

Published in The Express Tribune, February 3^rd, 2014.

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