GSP+ status: a major success

The European Parliament has decided to extend the existing GSP (Generalized System of Preferences) for another four years (till 2027), whereas, European Council is expected to give its final approval for the extension of the current scheme soon.

“I am pleased to share that the EU MEPs have decided to roll over the rules on the GSP till 2027,” Caretaker Commerce Minister Gohar Ijaz stated this week.

While extending the GSP for 4 years the political, constitutional and economic issues confronting Pakistan have not gone unnoticed in the European Union (EU) review as it has identified the following: “political turmoil, constitutional challenges, economic crisis, high inflation and serious shortage of foreign reserves are continuously affecting Pakistan”.

Pakistan is a major beneficiary of the trading opportunities offered by the EU GSP. Since 2014, Pakistan benefited from generous tariff preferences (mostly zero duties on two-thirds of all product categories) under the GSP+ arrangement aiming to support sustainable development and good governance.

In order to maintain GSP+, Pakistan has to keep ratification and effectively implement 27 core international conventions on human and labour rights, environmental protection, and good governance.

The EU continuously monitors GSP+ beneficiary countries’ effective implementation of the 27 international conventions on human rights, labour rights, environmental and climate protection, and good governance.

This monitoring includes exchanges of information, dialogue and visits, and it involves various stakeholders, including civil society. The current review is for the period 2020 to 2022.

The European Council defines EU’s overall political direction and priorities, traditionally by adopting conclusions. It does not negotiate or adopt EU laws.

As reported, the EU report further underlines that corruption (political and economic) continues to be perceived as pervasive, and questions are raised on the independence of the National Accountability Bureau (NAB). Anti-corruption rhetoric and legal cases are heavily politicised.

The report states: “Pakistani authorities have made significant efforts in combating the trafficking of narcotics, but given Pakistan’s location as a transit country, as well as, its domestic consumption, it continues to remain a point of concern.

Challenges remain with respect to Pakistan’s capacity to uphold and protect the human rights of its citizens.

Important shortcomings persist in protecting the freedom of religion and belief, and the rights of minorities, in particular in view of the blasphemy laws and their abuse, as well as, hate speech and violence against minorities. Freedom of expression, of the press and of association, as well as, the rights of women and girls continues to be of concern.”

The EU- Pakistan bilateral trade stood at $ 14.857 billion, of which Pakistan’s exports were $9.865 billion in 2022 against $ 6.639 billion in 2021, whereas imports were at $ 5.392 billion as compared to $ 5.544 billion.

Pakistan’s main exports to EU are textile articles, sets, worn clothing, articles of apparel, knitted or crocheted, cotton, beverages, spirits and vinegar, cereals, articles of leather, animal gut, harness, travel goods, manmade staple fibers, toys, games, sports requisites, etc.

While it is surely a positive development that the EU shall extend Pakistan’s GSP period for four years but there are many critical challenges that have to be tackled in-house.

The cost and ease of doing business in Pakistan has made our exports uncompetitive in global markets; notably, in EU countries and if not effectively sorted out shall deny the nation the optimum utilisation of GSP concessions in these difficult times of the nation.

On top of this, as underlined in the EU report, the political turmoil, constitutional challenges, economic crisis, high inflation and serious shortage of foreign reserves are continuously affecting Pakistan. Of the above said challenges the political turmoil and constitutional challenges are home grown and have i-house solutions and can be overcome in greater national interest. The rest of it — the economic crisis, inflation and foreign reserves — will too consequently fall in line of a positive trend.

Copyright Business Recorder, 2023