While Pakistan benefits from high utilisation rates of textiles, exporters have not utilised GSP+ preferences for products falling under HS chapters 10 and 90 - says the recent mid-term evaluation report of GSP, conducted by the European Commission. In other words, Pakistan overlooks rice and surgical exports to EU.
It is old news that Pakistan’s export base is non-diversified. While GSP+ allows duty free exports for a range of goods, Pakistan tends to view it as a mean of boosting the textiles sector. Rice and medical instruments are two commodities for which Pakistan is not leveraging preferential access to the EU.
The rice sector in particular has a lot of potential. In 2016, EU’s rice imports were $2.5 billion of which Pakistan’s share was a $161 million. While Pakistan concentrates on China and Afghanistan as its biggest rice markets, it fails to increase its share in the EU market, especially since the stringent polices placed by EU on the presence of hazardous pesticides in Basmati rice could reduce India’s share in the global market. Since Pakistan’s farmers do not use the banned pesticides in their crops, there is an opportunity to move in and take up India’s share.
The bulk of Pakistan’s exports have low value addition, leaning towards resource-based goods rather than value added products. The surgical and medical instruments industry in an exception. A report by TDAP indicates that though the average export price of surgical items made in Sialkot is $1.5-$2.5 as compared to the average Chinese export price of $0.35, these instruments still find a market due to their superior quality.
From lack of government support to issues in increasing scale of operations, both products suffer from similar problems that prevent their increase in exports. One such issue is lack of branding. The buyers of Pakistan’s surgical instruments are international distributors and wholesalers. Despite a history of more than six decades, there are still no brand names.
The absence of being recognised as a brand deprives the industry of directly participating in tender business to cater to the end users.
Similarly, Pakistani rice as a consumer-level retail product has a very low international presence. Exporting rice in bulk without the presence of a brand name means large deals can get cancelled over small price differences. Without proper processing or packaging, Pakistan’s rice exports cannot net a premium price.
The EU market could be better milked if Pakistan’s export base was diversified. Investing in developing rice and surgical goods sector by improving their visibility through branding is one way through which Pakistan can increase its market share in EU in sectors other than textile.
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