In 2003-2004, the sector that achieved the single largest growth in exports was the textile industry, l1.32 percent over the previous fiscal year. During 2003-2004, the industry exported a total of $8.3 million according to the Export Promotion Bureau.
Hence what is important to the viability of the textile industry is significantly important to Pakistan economy.
"Only a few weeks are left before the EU deliberates on (and soon thereafter finalises) this scheme, and this scheme is being made for ten years," stated Shabir Ahmed, former chairperson of the Pakistan Bedware Exporters Association, highlighting the need for swift action.
The European Union is currently drafting the 2006-2015 Generalised Systems Preferences (GSP) scheme.
This presents a plethora of opportunities to all countries that could potentially benefit from economic interaction with the EU. The EU being one of Pakistan's largest wading partners, Pakistan stands to benefit significantly from the scheme-or, if it doesn't act, the potential to lose significantly as well.
For example, Pakistani manufacturers currently hold 30 percent of the EU bed linens market. The rest of the world put together only holds 20 percent of the market. Local manufacturers meet 50 percent of the total market demand. Another way to look at it is that Pakistan's largest exporting manufacturer exports 50 percent as much as all of China.
Under the current scheme, for example, several industry sectors in lesser developed countries pay zero duties when exporting to the EU.
This allows the industries to compete with countries where government rebates allow exporters to sell below cost or export value-added items for the price of raw materials.
Some mammoth companies, particularly in the textile sector, have hired their own law firms to lobby with the EU to include priorities that will benefit themselves, and in turn other Pakistani exporters.
However, Ahmed, along with industrialists that do not have the resources to hire their own lawyers in Brussels, is strongly "suggesting that the government appoints lawyers in Brussels who can fight this case."
This panel of lawyers would work with people in Pakistan who are in touch with the ground realities to identify potential opportunities and threats, for favourable legislation.
Inclusions such as allowing zero duties to countries that co-operate on the war on drugs and trafficking will allow the Pakistan industries to compete with other countries that may, for example, give their manufacturers incentives in the form of rebates while the Pakistani companies often lack basic infrastructure such as water treatment facilities.
The necessity for lawyers lobbying on behalf of the Pakistani government arises from the need to understand all the technicalities within the GSP legislation. There are ways to work around hurdles, but only experts that understand the nuances of each term and clause can then work in anticipation of any repercussions.
The government gets heat for not taking proactive or far-reaching action to benefit the exporters, and the exporters get heat for not taking concrete action to benefit their own cause.
The reality on the government side is that Commerce Minister Humayun Akhtar is proactive in addressing the economy's needs, as also the exporters needs. He has visited Europe to negotiate deals, and hopefully also to lobby terms within the scheme. He also set up a meeting with stakeholders and experts to develop a lobbying strategy.
However, the meeting was postponed due to the installation of the new cabinet, and some exporters are concerned since it has yet to be rescheduled.
Still, the government needs to work extra hard within the remaining timeframe a few weeks - with the EU legislators in identifying mutual priorities in time for drafting them into the scheme.
Also, as Pakistani manufacturers are weaned off of subsidies and quotas, the other side of the playing-field needs to be levelled as well.
They should have access to basics such as reliable electricity or manufacturing without interruptions due to lack of stability in the country's law and order situation.
The reality from the business community is that many exporters and associations are "too involved with their daily tasks to take on the future - even though they are aware of the benefits that will accrue to them in future if they are able to get beneficial clauses in the 2006-16 drafting," said Azhar Hussain, Quota Supervisory Council member.
The few companies and associations that have the resources available, are working to influence issues such as the anti-dumping law independently.
These two realities, however, become an unfortunate cycle because the government will not realise the urgency of a need if the direct stakeholders do not go to the trouble of making the concerned minister aware of a potential opportunity or threat.
The trend, regrettably, has been that exporters have not taken the time to submit proposals to the government until, for example, they are getting any more orders. At this stage, it becomes too late to address the need in an organised fashion with long-lasting effects.
However, the 13.1 percent anti-dumping duty that the bed linens industry may have to pay, depending on how the appeals process unfolds, has been a wakeup call.
Exporters are hopefully realising the need to pressure their leaders to weigh the future; deliberate potential opportunities and threats; submit proposals to the concerned ministry; and then work hard with the government so that the government of Pakistan can take these ground realities to the concerned governments-or in this case the EU-from the ministerial level to the ministerial level.
Azhar Hussain suggested one among many strategies open to stakeholders in persuading the EU politicians to see that imposing duties on Pakistan would be counter-productive.
"We must point out how much we are buying from them in order to sell to them," said Azhar.
An analysis can be done on the amount Pakistani exporters spend on importing machinery and other raw materials from the EU. This information may show that reducing market access for Pakistani exporters will translate into reduced sales for some of EU's own exporters.
Comments
Comments are closed.