The report that the European Union Commission has agreed to issue additional flexibility quota of 4000 tonnes comprising three categories of textile products for export to European Union countries for the remaining quarter of 2004, will be seen as a welcome development.
The European Union had earlier suspended the flexibility export quota in textiles and had also announced imposition of anti-dumping duty effective March 2005 on exports of bed-sheets from Pakistan.
At the same time, the European Union was working on the revision of GSP facilities for exports from the developing countries.
As a prelude to this move, Pakistan was threatened with withdrawal of this facility in 2005.
Such a harsh stance of the European Union was obviously likely to have an adverse impact on Pakistan's textile exports to the EU market.
The latest sign of softening of the EU's policy in granting additional flexibility quota for textile exports, appears to be the result of negotiations conducted by Tasneem Noorani, Pakistan's Commerce Secretary, who is currently visiting Brussels.
The EU's decision to release additional textile export quota was reportedly conveyed by Mogens Peter Carl, Director General for Trade in the EU Commission, to Pakistan's Commerce Secretary at a meeting recently.
He also explained to Tasneem Noorani the salient features of the new Generalised System of Preferences (GSP), which the European Union has decided to offer to the developing countries with effect from 2006.
Meanwhile, it is expected that the existing GSP facility for exports from the developing countries to the European Union would continue up to the end of 2005.
Thus, apprehensions of Pakistan's textile exporters that they would face additional tariff impost of about 23 percent following withdrawal of GSP by the European Union combined with the imposition of anti-dumping duty on Pakistan's bed-linen, are likely to be allayed to a great extent.
The question of anti-dumping duty on bed-linen would still hang in balance until the European Union completes an on-the-spot investigation of the cost structure of various bed-sheets manufacturing factories in Pakistan.
The issue was reportedly raised by the Tasneem Noorani in his meeting with the EU Commission's Director General for Trade.
It may be assumed that the EU Commission would not enforce its earlier decision to impose anti-dumping duty on bed-linen without establishing facts and figures of production cost in factories exporting bed-linen.
The Federal Commerce Secretary has reportedly offered full co-operation to the EU's investigating team which would visit Pakistan shortly.
The GSP facility offered by the European Union undoubtedly provides a cushion to Pakistan's textile export. It is yet to be seen what kind of changes the European Union is going to make in the existing pattern of this facility.
According to a report, the Commerce Secretary was told by the EU Director General that the impact of the revised facility would vary on the basis of gradation applied to various textile exporting countries.
However, it is feared that the gradation applied to Pakistan's exports would be rather unrealistic and therefore Pakistan would seek further clarification from the European Commission on this issue.
The EU official has promised to provide all related data on the basis of which Pakistan's gradation is likely to be determined for providing GSP facility, before finally deciding the issue. Now it would be up to the experts in the Commerce Ministry, including Export Promotion Bureau, to support our claim with appropriate arguments for obtaining maximum benefits from the newly outlined EU GSP facility.
Reverting to the additional export quota released by the European Union to Pakistan it is likely to prove to be a timely support to Pakistan's tempo of textile exports to EU countries during the last quarter of 2004, which incidentally would mark the phasing out of the quota regime of textile trade.