United Kingdom (UK) has confirmed continuation of Generalised System of Preferences plus (GSP plus) incentives for Pakistan after Brexit. This has been conveyed by acting British High Commissioner to Pakistan Richard Crowder in a letter to Commerce Minister, Engineer Khurram Dastgir Khan.
"As the UK leaves the EU, we want to maintain and strengthen the access to UK markets for developing countries. For Pakistan, which benefits from zero tariffs on two-thirds of all products when exporting to the UK, we aim at maintaining these levels of access, and will continue to deliver improved support by helping to address constraints to trade. The UK will also explore options to expand on our trade relationships with Pakistan in the future," he added.
According to the letter, acting HC said UK's first priority was to deliver continuity in its trading arrangements on leaving the EU and to aim at maintaining current access to the UK for developing countries. He has also brought into the notice of Commerce Minister a joint statement from DFID and Department of International Trade issued on June 24, 2017 titled "Government pledges to help improve access to UK markets for world's poorest countries post-Brexit".
"Once we have left the EU we will be able to build on our track-record as a champion of trade and development, strengthening our existing support and exploring new opportunities to increase trade links. The UK is using our departure from the EU to cement Britain's standing in the world and meet our commitment to developing countries - and to Pakistan - by working to secure their existing preferential access to UK markets," he continued.
The UK currently provides preferences to around 70 developing countries through the EU, including the Generalised Scheme of Preferences (GSP), Pakistan currently benefits from an enhanced tier - GSP + a conditionality for which the UK would implement opportunities that are out of reach and may potentially fuel instability and mass migration, which could in turn have direct consequences for the UK.
Under current EU arrangements, the UK offers duty free quota free access for least developed countries on all goods which they are exporting to the UK, other than arms and ammunition. For the next tier of developing countries, largely classed as lower middle income, the EU offers a mix of reductions on tariffs. DFID's first Economic Development Strategy launched by Ms Patel earlier this year, sets out how private sector investment will help developing nations speed up their rate of economic growth, trade more and industrialise faster, and ultimately lift themselves out of poverty.
"The UK is committed to ensuring that when companies source from developing countries, they do so in a way which protects the human rights of workers and their health and safety," he further stated.
Earlier, Commerce Minister Engineer Khurram Dastgir in a letter to UK Secretary of State for International Trade had expressed the hope that bilateral political and trade relations between Pakistan and UK would continue to grow for mutual benefits of both countries. United Kingdom is one the biggest trading partners of Pakistan. During 2015, bilateral trade between the two countries amounted to $2.47 billion.
With consistent, active support of the UK, Pakistan has had duty free access in the European Union (EU) since January 2014 through "special incentive arrangement for good governance and sustainable development". "We understand that until a formal trade arrangement is reached between the UK and the EU, products of Pakistani origin shall continue to have duty free access in the UK," Khurram added.
According to him, this duty free access is of critical importance to Pakistan. Dastgir added that Pakistan's market share in UK is only one percent, quite negligible and concentrated in a very few sectors. As Pakistan has begun to emerge very recently from a dark period of violent extremism and energy shortages, it is difficult for it to compete with other developing countries which have relatively stronger economies, diversified exports and have the potential to enter into FTA with UK in near future.
"In order to increase bilateral trade, our government may now reinvigorate our efforts for developing arrangements that can yield results in short to medium term," he added.