In a key decision, the highest trade adjudicatory body at World Trade Organisation (WTO), has ruled against European Union''s (EU) countervailing duties imposed on import polyethylene terephthalate (PET) from Pakistan. The European Union had imposed crippling trade defence duties on the import of polyethylene terephthalate (PET) from Pakistan, in June 2009.
"The Geneva-based apex body has not accepted the European Union''s appeal against panel decision which had ruled that countervailing duties imposed on imports of polyethylene terephthalate (PET) from Pakistan, by EU were not WTO compliant," said an official. PET is a product used in plastic food and beverage containers. The trade body declined EU''s appeal and upheld Pakistan''s legal argument that duties imposed by the EU were not consistent with the WTO Law.
Pakistan had lodged the initial compliant in WTO in 2015, after many years of deliberations, the complaint related to the trade-restrictive tax measures imposed by the EU on Pakistan''s exports of PET. In 2010, Pakistan''s exports were approx $300 million and when Islamabad filed the case in late 2014, the volume had fallen to about $1m. But the implications of the WTO body ruling are much wider and far reaching for Pakistani policymakers.
"The European Union had imposed countervailing duties thereby challenging our Manufactured Bond Scheme (MBS) administered by the Federal Board of Revenue, and many prevailing commercial practices in Pakistan," observed Pakistan''s Permanent Representative to WTO Dr. Tauqir Shah. "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." He added.
According to the ruling, the point relating to the MBS scheme which went in favour of Pakistan is that the European Commission (EC) considered that it was appropriate to countervail all remissions, rather than excess remissions. The appellate Body, which is supreme body in the WTO dispute system, did not agree on this account with the EU. The Panel dealt with some fundamental issues relating to what constitutes a ''subsidy'' under WTO rules.
These issues were addressed in the context of a ''duty drawback'' scheme, under which domestic producers can obtain reductions of import duties paid on inputs that are consumed in the production of exports. Pakistan has always met its WTO obligations, and this ruling of the panel clearly demonstrates that the Pakistan government''s trade policies and export promotion policies are strictly in accordance with the WTO rules, said, Dr Tauqir, when contacted on email for comments.
He further said, WTO has endorsed Pakistan''s administration of export policies. "In the present environment of protectionism this decision will go a long way in protecting our trade globally".
This decision by WTO appellate body proves that the trade body has tremendous value for developing countries, wherein the system guarantees rights of developing countries.
When contacted, Dr. Tauqir Shah, further said, that the panel''s ruling was the result of very coordinated efforts by all stakeholders in the government of Pakistan, namely, the FBR, the National Tariff Commission, the State Bank of Pakistan, the private sector exporting PET and the Ministry of Commerce. The Minister and secretary Commerce personally monitored the progress of this very important trade dispute.
"There are no winners or losers; every dispute decided at the WTO is a victory for the rule-based multilateral trading system as this is about global rule of law. As a friend of system, Pakistan takes its legal obligations and Rights very seriously," he said.
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