EU likely to grant GSP scheme from January 2014 onwards

The European Union (EU) remains indifferent to Free Trade Agreement (FTA) with Pakistan but may grant Generalised System of Preferences (GSP) scheme from January 1, 2014 onwards as Pakistan has ratified 27 Conventions, with reservations. Analysts maintain that the EU will not grant duty free access to Pakistan until the death penalty is scrapped, governance improved and human rights violations tackled.
The package has three components which are as follows: (i) general agreement which allows preferential duty on 20 percent of MFN tariffs for textile and clothing products and 3.5 percentage points reduction of MFN tariffs for all other products; (ii) special incentive arrangement for sustainable development and good governance. GSP allows duty free treatment to eligible countries; and (iii) arrangement for Least Developed Countries (LDCs) which provide duty free market access to exports from the LDCs.
According to the Commerce Ministry, presently Pakistan is benefiting from the general arrangement like many other developing countries. However, EU has now introduced changes in its criterion for GSP plus which provides duty free access to a broad range of products to developing countries which fulfil the following criteria: (i) the beneficiary country must has ratified and implemented 27 UN Conventions relating to human rights, good governance and environment and (ii) it must be eligible on following accounts (a) the county is not classified as a high income country and five largest sections of its GSP covered exports account for more than 75 percent of total GSP covered exports to EU; (b) GSP covered exports to EU account for less than two percent of total EU GSP covered imports; and (c) the beneficiary country is not listed as middle income or high middle income country as per the criterion of World Bank. The Commerce Ministry has been requesting the EU for FTA, however, response of EU has been not yet committed in this regard.
According to official documents, European Free Trade Association (EFTA) comprising Iceland, Norway, Principality of Liechtenstein and Switzerland, have agreed to sign declaration of co-operation with Pakistan. The declaration could be signed at the next EFTA ministerial meeting to be convened on November 12, by senior Minister for Commerce Makhdoom Amin Fahim and EFTA Ministers. The proposed declaration will lead to signing of FTA on November 18.