Pakistan government is proactively seeking support from Sri Lanka and Bangladesh not to challenge the trade aid package approved by the European Union (EU) prior to its presentation to the World Trade Organisation (WTO) for a waiver.
"Yes, we have started lobbying with friendly countries, like Bangladesh and Sri Lanka, to muster support on the EU trade incentives as, without their consent, the package will not be approved by the WTO," an official told Business Recorder.
Commerce Secretary Zafar Mahmood was in Colombo on Friday where he apprised Sri Lankan authorities that trade incentives, extended by the EU for Pakistan, would not affect their exports, the official added.
According to him, Commerce Minister Amin Fahim is also dashing off to Dhaka, in a day or two, on a similar assignment.
"We are confident that both friendly countries will not create any problems for Pakistan at the WTO forum," he added.
On Wednesday last, EU governments approved trade concessions to Pakistan, a move to help the country rebound from July/August floods which caused nearly $10 billion damage.
The final package, which will be implemented from January 1, 2011, is less extensive than the EU had originally hoped, but still covers 75 Pakistani exports--from cotton sheets to clothing and ethanol--which will be allowed to enter the EU free of duty. The EU has not accepted Pakistan's request for replacement of 15 tariff lines, which, according to the Textile Ministry, would benefit Pakistan's textile industry. The duty waiver now needs approval from the WTO and the European Parliament.
Following pressure from EU industries that feared losing market share to cheaper Pakistani imports, the tariff suspensions will now apply for two years, with a third year only granted after an assessment, EU diplomats said. The compromise also sets a duty-free quota on the most sensitive products on the list: some fabrics, towels, women's jeans and socks will lose their duty-free status if exports to Europe rise by more than 20 percent per year.
All remaining items may also lose their tariff suspension if there is a surge in their exports to Europe, under a safeguard mechanism whose method is yet to be agreed, diplomats said. Finally, the compromise has cut the duty-free allowance of ethanol imports from Pakistan to 80,000 tons, from the originally proposed 100,000 tons. The EU Ambassador in Pakistan, Jan De Kok, told Business Recorder that the trade package is yet to be approved by the European parliament, which, he hoped, would be cleared as most of the member countries have already given their consensus, with some reservations.
"There is a lot of sympathy for Pakistan in the EU parliament, which implies that the package will be approved," he said, adding that implementation of the package would commence from early next year.
After approval from the EU parliament, the trade package will be presented to the WTO, which is being represented by 150 countries. "We do not know how long this process will take, but what I can say is that implementation on the package will commence from early next year," he added. According to him, the EU has already discussed the package with other countries and most of them have no objection. However, any country has the right to differ at the WTO forum.
He said that countries like Bangladesh and Sri Lanka could create problems for Pakistan, but at the same time he stated that EU had held consultations with the WTO member countries.
"We will try to remove their trade package-related apprehensions, but if they have any other concern, it will have serious implications," he said.
He stated that some EU member countries had raised concerns over the proposed package, but they would be addressed at the EU parliament level.
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