February 10, 2002	Sunday	Ziqa’ad 26, 1422

KARACHI, Feb 9: The zero duty benefit on textile exports to European Union (EU) is likely to prove short-lived as India is also demanding similar concessions from the EU and seeking a status under Generalized System of Preferences (GSP).

Under the GSP scheme, the EU has granted zero duty benefits to exports from Pakistan to EU for all goods - including textiles — and extended a bilateral trade agreement that saw quotas increased by up to 15 per cent from this year.

Presently, Indian officials are holding talks with the European Union in Brussels and according to reports these officials (Indian) are optimistic about securing duty-free access for textile exports to the EU member states.

The negotiations opened last Wednesday, witnessed Indian officials having offered to reduce tariffs in lieu of duty-free access to EU member state markets.

These talks follow the visit of EU Trade Commissioner Pascal Lamy to New Delhi last year when India sought to be included in the Generalized System of Preferences (GSP) scheme treating it as a country that is combating drug trafficking.

India’s Textiles Minister, Kashiram Rana, is reported to have already offered to reduce tariffs on textiles in exchange for duty-free access to the EU. “We are hopeful of a positive outcome of the deliberations on textiles, which have commenced on Wednesday at Brussels,” he said.

In the aftermath of Sept 11 incident Pakistan was declared as a front line state by the coalition partners in a war against terrorism. As a special package the EU had granted zero duty benefits to exports from Pakistan and extended a bilateral trade agreement that will increase quotas by up to 15 per cent.

However, exporters have been arguing with the government that the benefits of 10 per cent duty cut by the EU had been totally eroded by the rupee appreciation against the US dollar.

The chairman, Pakistan Bedwear Exporters Association (PBEA), Shabir Ahmed told Dawn that the country has once again lost a ‘golden opportunity’ of capturing European market as the benefit of duty free access could not be availed by the exporters who had to lose up to 10 per cent in term of dollar rupee parity.

He said that had the benefits from the zero duty margin were genuinely allowed to trickle down to exporters in past 45 days (beginning from Jan 1, 2002), many non-quota and slow moving items may have captured the EU market.

Once the Indian goods get duty free access to EU market, he said, Pakistan exports would stand no chance because of higher cost of production. Shabir Ahmed said, “our input cost is much higher than India.”

He said financial charges in India are in the range of 5 to 6 per cent whereas in Pakistan they are 14 per cent.

Similarly, he said electricity charges in Pakistan are also higher than what is being charged in India.