GSP+ relief

EDITORIAL: The government would have breathed a sigh of relief when EU (European Union) lawmakers decided to “roll over” the rules and regulations governing Pakistan’s GSP-plus status till 2027.

Yet the EU ambassador to Pakistan has also clarified that this arrangement was made only to avoid a “cliff edge” at the end of the year, and that the country has the same obligations in terms of implementing the 27 international human rights conventions as before.

The whole scheme hit a snag about half way through the PTI (Pakistan Tehreek-e-Insaf) administration, when the European parliament expressed reservations about Pakistan’s commitment to GSP conditions and almost cancelled it.

And it was only after repeated warnings that such an extreme step would badly damage the country’s export sector just when it was struggling with debt repayment that it was extended. But such things are beyond the mandate of the caretaker setup, so they are sure to crop up again when the next elected government negotiates the next extension in 2027.

Right now, though, it is very good news that the export revenue stream is not compromised at this fragile moment. The EU is Pakistan’s second largest export market after the US, after all, and the GSP-plus leverage is crucial to the survival of the local textile industry.

Export revenue is already the weakest link in the current account, with even a historic collapse of the rupee not doing much to increase earnings.

That’s why protecting existing markets, crucial as it is, is still only half the job. One would have expected the foothold in Europe to enable local producers to market their products to a wider audience, but sadly that hasn’t happened. And that’s where the commerce ministry (read successive political administrations) has let the country down.

In fact, the only spirited effort to engage with new countries to carve out fresh export markets in living memory was undertaken by the military regime of former president Musharraf, reaching out as far as Africa and Latin America to secure new buyers for our products.

Then, with the so-called return to democracy, all such initiatives duly fizzled out as the headlines reverted to political intrigues and machinations typical of our democrats.

The other main requirement, one that has also been badly neglected over decades, is expanding the export basket and adding value to production. It’s a shame that the country’s flagship exports still comprise the same old mix of textile and leather products, in addition to rice and some fruits, while the rest of the world, including the Asian region, has moved on to value-added products that are in much more demand in the international market.

Now that election campaigns are about to kick off, it would be interesting to note if political parties include extremely important issues like improving export revenue – and all that it entails – in their manifestoes. They must realise that the recent brush with default, and the trauma endured by common people because of the harsh IMF programmes, have made voters much smarter than before.

They are fed up with paying, literally, for the mistakes of the country’s rulers and they will need to see how the same lot that ran the country into the ground now plans to tackle issues like inflation, unemployment and how they will raise the revenue needed to make fiscal breathing space.

The country’s very survival hangs in the balance. Without adequate reserves, we will always be at the mercy of international lenders to stay solvent. And even if they continue to dole out money, they will require increasingly tough structural reforms that always hurt the people, never the politicians that negotiate them.

So, while the GSP-plus relief is appreciated, a lot remains to be done before there’s anything to celebrate about the export sector.

Copyright Business Recorder, 2023