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exportThe European Union's updated trade preference scheme for developing countries that will come into force from 1st January, 2014 could be a great boon to the Pakistan's economy if the country is able to exploit its potential for export expansion. Known as GSP plus, the incentive scheme has been voted into law for 10 years by the EU Parliament and in order to qualify under the new rules, exports from Pakistan to EU countries would have to account for less than 2 percent of the EU's total GSP imports which are now only one percent. Another binding criterion under the new legislation is that the country must abide by 27 international conventions in the field of human rights and sustainable development. In order to safeguard EU's textiles and garments industry, it was also provided that tariff preferences for these products will be suspended for a given country if EU imports from that country grow by 13.5 percent or more in a year. Besides, the new GSP plus scheme has now been restricted to poorer countries. According to the EU parliament decision, "the updated generalised system of preferences removes tariff preferences, such as today's reduced or zero duties, for EU imports from countries where per capita income has exceeded $4,000 for four years, reflecting the fact that many GSP beneficiaries now compete on equal footing with the EU in world markets." Explaining the rationale of this provision, it was added that "the scheme's tariff preferences should focus on helping developing countries having greater development, trade and financial needs." The restrictive regime of the new GSP plus would reduce the number of countries that enjoy preferential access to EU markets from 176 to around 75. It would also reduce the total value of imports that qualify for EU preferences from 60 billion euros in 2009 to about 37.7 billion euros in 2014, thus creating room to increase preferences for the remaining beneficiaries. By all accounts, the new scheme would assist the eligible developing countries in reducing poverty, diversifying their economies, promoting good governance and ensuring sustainable development. Since Pakistan along with the Philippines and Ukraine will also qualify to avail concessions under the new scheme, it has welcomed the approval of amended GSP, which would enable the country to apply for zero duties on its exports to the EU countries. According to a statement by the Ministry of Commerce on 15th June 2012, "in case Pakistan is able to meet all the criteria for GSP plus, its exports to the EU under concessionary tariff lines would receive duty-free treatment from 2014 onwards". The language of the Ministry of Commerce is of course very much restrained in expressing its true sentiments towards the new development. The fact of the matter is that Pakistan had been pleading its case for preferential treatment with the EU for a long time. In 2002, the country was able to get concessionary access to the EU market which lasted for only three years. With the new GSP in place, Pakistan would not only automatically qualify under the scheme but will get added benefit due to the elimination of large number of countries from the existing list. Some circles in the country may not like stipulated restrictions on the rapid growth of textile and garments exports and conditions in the field of human rights but such provisions in the GSP could be used to the country's advantage by diversifying our exports and ensuring a better record in the fields of human rights and sustainable development. In fact, the country itself has been striving to achieve these objectives for a long time. Expansion of exports to the EU countries would also lead to closer ties in the field of security and other areas. It also needs to be pointed out that shot in the country's arm in the form of GSP plus has come at the right time when our exports are stagnating and these are able to finance only about 50 percent of our imports. We are certain that country's exports could now be boosted and problems like unemployment and shortage of imported raw materials can be resolved to a great extent if we are able to generate sufficient exportable surpluses by enhancing productivity of economy through removing the impediments which are quite well-known by now. Pakistan must try its best to fully avail this golden opportunity provided perhaps fortuitously by the EU countries.

Copyright Business Recorder, 2012

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