Grant of GSP plus status

The voting by the International Trade Committee of the European parliament on 5th November, 2013 in favour of granting GSP Plus status to the newly-selected 10 countries, including Pakistan, has paved the way for a formal EU decision for the final approval of such a facility to the designated countries. According to the Minister of State for Commerce, Textile and Privatisation, Khurram Dastagir Khan, the grant of GSP Plus status to Pakistan by the EU with effect from 1st January, 2014 would provide Pakistan a level-playing field to compete with regional competitors in the 27-state European bloc and give Pakistani products, especially textiles, preferred access to additional markets. An extra duty of 9.6 percent on Pakistani exports would be waived off as Pakistan's competitors are already enjoying this facility. Exports to the EU are expected to surge to between dollar 700 million and one billion dollars. This highly significant increase in exports would surely create employment opportunities for nearly 100,000 people in local industries.
State Minister for Commerce was of the view that Europe, through this incentive, has extended a great support to Pakistan in its fight against terrorism and a higher demand for our value-added products in the foreign markets would make the present dysfunctional industrial units in the country functional. The EU, however, had not linked the grant of preferential market access to the abolition of death penalty. A moratorium was imposed by the PPP government; and the PML-N government has merely extended it till further orders. The Minister also claimed that the present government had played a decisive role in getting the package. He had personally lobbied in the EU to get more votes in favour of Pakistan, Commerce Ministry and provincial governments had put in extra efforts in preparing the application alongwith ensuring the timely ratification and implementation of 27 conventions mandatory for qualification for GSP Plus status and advisor to the Prime Minister had also interacted with the foreign governments for the approval of the package.
We feel that the grant of GSP Plus facility to Pakistan from the beginning of the next calendar year is a moment of great opportunity for the country. Pakistan's exports to the EU last year were around dollar 6 billion and their increase to about dollar 7 billion would mean a substantial narrowing down of trade deficit and a sizeable improvement in the current account deficit of the country. More satisfying is the fact that the facility has been made available at a time when foreign exchange reserves of the country are falling rapidly, the Pak Rupee is depreciating against foreign currencies and the country is in dire need of foreign resources. It may be mentioned here that the facility was already available to Bangladesh and Sri Lanka and these two South Asian neighbours had made our exports largely uncompetitive in the EU. It is now a well-known fact that some of our industries shifted their operations to these two countries in recent years. After the grant of facility, not only those industries would have the incentive to shift back but higher investment, especially from China, could also be expected in the textile and clothing industry. All of this was expected to generate higher economic activity and reduce unemployment in the country. However, the biggest challenge for Pakistan would be to translate this opportunity into developing export-oriented industries and create enough exportable surplus to be marketed in the EU market. Much would, of course, depend on the regular supplies of gas and electricity to operate the industrial units. It is estimated that at least 40 percent of the installed capacity in Punjab, where 75 to 80 percent of total manufacturing capacity of the country is located, remains inoperative because of energy shortages. The announcement that no gas for the captive power plants (CPPs) of the province will be available all through the winter is likely to add to the difficulties. Militancy in the country is also not likely to end anytime soon, especially after the election of Fazlullah as TTP Chief. In this kind of situation, it would really be a challenge for the country to increase exports to the EU to the expected level and get maximum benefits from the new facility.
We are of the view that claiming the credit of getting the GSP Plus status for Pakistan for himself or the present government by Dastagir Khan was, however, not very proper. That is because of the fact that previous governments were also involved in the effort and it is the duty of the bureaucrats in the various ministries and the officials of foreign missions to put in their best efforts in such undertakings. As is well known, in 2002, the EU had allowed concessionary access to Pakistani products for three years after great efforts and since then Pakistan had been pleading its case forcefully with the European community for a fresh relief. An application for the GSP Plus status was submitted by the caretaker government in March, 2013. So, while the present government has pursued the case seriously, the past governments had also made their due contributions and followed the case vigorously. Insofar as the contribution of government officials is concerned, they would have failed in their duty if their input was less than desired or adequate.