Pakistan’s renewal of EU’s GSP plus status was smooth sailing. The revival of US’s GSP scheme is another story. Admittedly, as important an export destination as US is for Pakistan’s goods, the GSP scheme does not impact exports significantly.
This is mostly because it does not cover much of textiles, leather and apparel and partly because there is a general lack of awareness and interest in the products it does cover. (For more information on the products it covers read “US GSP scheme: a case of lost opportunities”, published on December 28, 2017).
Pakistan uses its trade policy as a political tool; cases in point are the frequent trade obstacles with Afghanistan and the general attitude of kowtowing to China, resulting in the increasing bilateral trade deficit. The United States, on the other hand, has followed a different policy as far as Pakistan is concerned. Or it did before Trump came to the helm.
US’s GSP scheme expired in December last year. The US House of Representatives passed a bill to renew it for 120 countries, including Pakistan, for the next three years till December 2020. Now it has to be passed by the Senate and then finally signed by Trump. The question is, between the Trumpian tariff war and its hard stance against Pakistan, would he be inclined to grant Pakistan the concessions?
If the bill is rejected, in itself it will not deeply impact Pakistan’s exports. But if it is a step towards US wielding imports from Pakistan as a tool to discipline Pakistan into falling in line, then that would have serious repercussions. In terms of export partners EU as a trading bloc is the biggest market but US is Pakistan’s biggest market country wise with $3.7 billion exported in the last fiscal year. As yet, Pak-US trade has been business as usual with a record high of $6 billion touched last year. In the latest figures, Pakistan’s exports for 7MFY18 have increased by 6 percent on a year-on-year basis, indicating that politics has not impacted economics. However, given the path Trump is walking on, this may very well be a precarious situation.