Pakistani PET: measures applied by EC found to be inconsistent with WTO's SCMA

World Trade Organisation (WTO) has categorically ruled that measures applied by European Commission on Pakistani PET were inconsistent with the Subsidies and Countervailing Measures Agreement (SCMA) of the WTO. The PET (Polyethylene Terephthalate) is used in making of mineral water bottles. The ruling is being seen as Pakistan's major diplomatic success at the multilateral forum in Geneva by trade experts. The report of the WTO adjudicating panel was released in Geneva Thursday evening.
The European Union in 2010 had imposed a crippling countervailing duty on Pakistan's PET. As per conservative estimates, the unfair trade protection measures imposed by EU seven years ago, caused a loss of approximately 300 million Euros to Pakistan's nascent chemical industry. Pakistan had filed a case of unfair trade practices in March 2015, against 28 countries in the European Commission. International Trade Law experts have termed it a success of the present government's economic diplomacy, which will have far reaching effect in protecting Pakistan's exports globally.
PET, also called Resin, is bottle-grade polyester chip, which is used in production of disposable PET bottles for mineral water beverages. When contacted, Pakistan's Permanent Representative to WTO Dr Tauqeer Shah in Geneva told this correspondent that this is the result of very co-ordinated efforts of all stakeholders namely, FBR, NTC, SBP, private sector exporting PET and Ministry of Commerce. "European Union had imposed countervailing duty thereby challenging our Manufactured Bond Scheme (MBS) administered by FBR, the long term finance given for export-oriented projects, and many prevailing commercial practices in Pakistan," he said.
Dr Tauqeer Shah further stated that the case was extremely intense, it continued from March 2015 to March 2017, wherein after very elaborate hearings the panel comprising of three world class experts reserved it findings. "On July 6, 2017, the panel findings' were made public in which the panel consisting of Prof Davis of US (chairman), Mulgrew of Australia and David Berral of Brazil categorically held that measures applied by EU against PET exports are inconsistent with subsidies and countervailing measures agreement of WTO," he said. The panel also ruled that measures applied by EU nullified or impaired benefits accruing to Pakistan under the SCM agreement of WTO.
This ruling will dissuade and restrict other member countries from applying such trade restrictive measures against Pakistani exports and has sanctified our schemes and their administration, namely MBS and LTF-EOP. "This is a victory of the rule-based system called WTO, this is about global rule of law, wherein multilateral systems like WTO guarantee rights of developing countries," he said. Dr Shah further said that Pakistan has always met its WTO obligations and this ruling of the panel clearly demonstrates that Pakistan government's trade policies and export promotion policies are strictly in accordance with the WTO rules.
"This also proves that WTO is unique and has tremendous value for developing countries, wherein the system gives them the right to challenge other big and developed economies through fair, impartial and transparent procedures. In present global environment this dispute mechanism of WTO becomes the crown jewel of the multilateral trading system," he said, appreciating the invaluable legal assistance provided by the team of trade lawyers from Advisory Centre for WTO law throughout the dispute. He said that Commerce Minister was briefed on the case during every visit to Geneva in the last two years. "It was an excellent alignment of political, bureaucratic and technical resources," he concluded.