To­wards GSP-PLUS

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Un­der ‘Gen­er­alised Sys­tem of Pref­er­ences’, since 1971, the Euro­pean Union has set rules en­sur­ing that ex­porters from de­vel­op­ing coun­tries pay lower du­ties on some or all of what they sell to the EU. This gives them vi­tal ac­cess to EU mar­kets con­tribut­ing to the growth of their economies.

The rel­e­vance of the GSP scheme to the cur­rent global sce­nario would be­come clearer in the words of EU Trade Com­mis­sioner, Karel De Gucht, “Global eco­nomic bal­ances have shifted tremen­dously in the last decades. World tar­iffs are at an all-time low. If we grant tar­iff pref­er­ences in this com­pet­i­tive en­vi­ron­ment, those coun­tries in greater need must reap the most ben­e­fits. Trade and de­vel­op­ment go hand in hand and tar­iff pref­er­ences are a small part of a wider agenda to help poorer economies scale up their pres­ence in global mar­kets.”

The over­all GSP scheme has been re­in­forced through the ‘GSP plus in­cen­tive scheme’, by re-ad­just­ing pref­er­ences and rais­ing the im­pact. The three main vari­ants of the scheme are the over­all GSP scheme, the ‘GSP plus’ in­cen­tive scheme in re­spect of labour, hu­man, en­vi­ron­men­tal and good gov­er­nance rights and rules, and the ‘Ev­ery­thing but Arms’ scheme for least de­vel­oped coun­tries.

In the con­text of Pak­istan, to ob­tain duty con­ces­sions on ex­ports, the Euro­pean Union has pro­posed to soften a thorny con­di­tion that would en­able Pak­istan to qual­ify for the next GSP-plus scheme. Pak­istan has an op­por­tu­nity to utilise the fa­cil­ity of EU GSP plus scheme or the one-time trade con­ces­sion pack­age that the EU of­fered after Pak­istan’s floods in 2010. The con­di­tion of less than 1 per­cent ex­ports has been soft­ened by EU, as now it has pro­posed to en­hance this limit from 1 per­cent to 2 per­cent.

The EU GSP is a key in­stru­ment to help de­vel­op­ing coun­tries re­duce poverty by gen­er­at­ing rev­enue through in­ter­na­tional trade. Pak­istan was ex­cluded from the cur­rent GSP-plus scheme, which al­lows more than 7,000 prod­ucts to en­ter the Euro­pean mar­ket without duty and is ef­fec­tive since 2006, as less than one per cent ex­ports to the Euro­pean mar­ket was an important con­di­tion for avail­ing the GSP-plus scheme.

One of the rea­sons for non-in­clu­sion of Pak­istan in the 2006 GSP plus scheme was that Pak­istan’s ex­ports to EU was more than one per­cent and it was also re­luc­tant to ad­here to UN con­ven­tions. Cur­rently, Pak­istan’s ex­port share is close to 1.7 per­cent to 1.9 per­cent to EU coun­tries. How­ever, the en­hance­ment in the limit to 2 per­cent ex­ports will be sub­ject to ap­proval by the EU Par­lia­ment. And this could only be pos­si­ble through ef­fec­tive strate­gies adopted by the Pak­istani gov­ern­ment.

Pak­istan has en­gaged in ne­go­ti­a­tions with the in­ter­na­tional com­mu­nity to seek sup­port over gain­ing the GSP-plus sta­tus. Bri­tain has ex­tended un­wa­ver­ing sup­port to Pak­istan, as the For­eign and Com­mon­wealth Of­fice Min­is­ter for Europe, David Lid­ing­ton has as­sured that Bri­tain would con­tinue to plead Pak­istan’s case in EU and be­yond, to see the coun­try in­te­grated into global trade.

The Swedish Am­bas­sador in Pak­istan, Ul­rika Sund­berg, has also as­sured of Swe­den’s sup­port and the coun­try is mak­ing all out ef­forts to en­sure GSP-plus sta­tus for Pak­istan in EU. These the ef­forts are backed by the will­ing­ness of Swe­den’s busi­ness­men to work with their coun­ter­parts in Pak­istan and ini­ti­ate joint ven­tures. Be­ing an important mem­ber of Euro­pean Union, Swe­den of­fers huge un­tapped trade po­ten­tial to Pak­istan. There is a need for both the coun­tries to iden­tify more trad­able prod­ucts to ex­pand mu­tual trade while fo­cus­ing on value-ad­di­tion.

Pak­istan is known around the globe for its tex­tile prod­ucts, sports goods, sur­gi­cal in­stru­ments, fresh fruits and veg­eta­bles, rice, car­pets, leather made­ups, fish and fish prepa­ra­tions, hand­i­crafts, ar­ti­fi­cial jew­ellery, fancy fur­ni­ture, footwear, hosiery, gar­ments and other con­sumer items. Swe­den be­lieves that all these prod­ucts from Pak­istan still need to be prop­erly in­tro­duced in Euro­pean mar­kets.

Pak­istan is also tied in the most prof­itable Bi­lat­eral In­vest­ment Treaty (BIT) with Ger­many. Ger­many is Pak­istan’s largest trad­ing part­ner in Europe and im­por­tantly a strong sup­porter within the Euro­pean Union for grant­ing of GSP-Plus sta­tus to Pak­istan. The rat­i­fi­ca­tion of an in­vest­ment treaty with Ger­many in 2010 pro­vides greater fa­cil­i­ta­tion for Ger­man busi­nesses, par­tic­u­larly small and medium sized com­pa­nies, to ben­e­fit from the op­por­tu­ni­ties which the Pak­istani econ­omy of­fers, par­tic­u­larly in the power sec­tor, re­new­able en­ergy, en­vi­ron­men­tal tech­nolo­gies, in­fra­struc­ture and hous­ing, health­care, and in­for­ma­tion tech­nol­ogy.

An­other ma­jor Euro­pean econ­omy is Aus­tria and this coun­try too aims to sup­port Pak­istan’s ac­cess to the GSP-plus sta­tus at the next EU-Pak­istan Sum­mit. The Aus­trian am­bas­sador, Axel Wech, has spo­ken en­cour­ag­ingly about the man­ner in which Pak­istan is em­ploy­ing trade strate­gies. It can greatly ben­e­fit from Aus­tria’s ac­cess to the Euro­pean mar­ket and prox­im­ity to ma­jor EU economies

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