85,000 tons, was the volume of Pakistan’s
PET exports to the EU in 2010 that
dropped to just 10,000 tons by the
end of last fiscal year CREATIVE COMMONS
ISLAMABAD:
The World Trade Organisation (WTO) has set up a panel to take up Pakistan’s complaint against the European Union (EU) for imposing countervailing duties on the export of polyethylene terephthalate (PET) – a synthetic widely used to manufacture polyester fibre.
The WTO’s Dispute Settlement Body (DSB) established the panel on March 25 to study the complaint related to the trade-restrictive tax measures imposed by the EU on Pakistan’s exports of PET.
In 2010, the EU had imposed 5.1% countervailing duties on the ground that the import of PET from Pakistan was receiving trade distorting subsidies and had caused injury to the European PET industry. PET is used in plastic food and beverage containers.
Pakistan is of the view that the EU has broken WTO rules by imposing anti-subsidy countervailing duties.
In February this year, Pakistan had requested the WTO to constitute a panel to adjudicate the complaint – a move that the EU successfully managed to block. However, Islamabad again approached the WTO last month and this time the EU could not block the request, said an official of the Ministry of Commerce.
He said the WTO had not yet finalised nominees for the panel. The panel will start work once the names are cleared by Pakistan and the EU. In case of a dispute over the names, the matter will go to the WTO director general for arbitration.
It is the fourth case where Pakistan has opted to go into litigation, after the matter could not be settled in bilateral talks. It previously launched three complaints – two against the United States and one against Egypt.
In December last year, both the parties tried to resolve the dispute but the EU did not accede to Pakistan’s request for withdrawing the duties.
After the imposition of duties, Pakistan’s PET exports to the EU have dropped drastically. Total PET exports were worth less than a couple of hundreds of millions of dollars. In 2010, Pakistan’s exports of PET to the EU were 85,000 tons that dropped to just 10,000 tons by the end of last fiscal year, said the Ministry of Commerce. Karachi-based Novtex is the country’s leading exporter of PET. The company had also moved an EU court, challenging the decision. It managed to get partial relief when the court ordered the EU to lower the duties to 4.1%, said the Ministry of Commerce official.
The EU had launched the subsidy investigations in 2009 and took the decision a year later. It had covered three export schemes of Pakistan.
The ministry official said it would take about 10 months before the panel reaches a decision. The WTO panel has wide powers. It has the authority to ask the EU to withdraw countervailing duties and could also impose penalties.
The WTO can also ask Pakistan to take retaliatory measures to offset the impact of the countervailing duties.
Published in The Express Tribune, April 3rd, 2015.
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