KARACHI, July 5: The European Union (EU) is changing its Rules of Origin which are going to badly hit Pakistan’s textile industry as it would result in relocation of entire value-added textile sector to Least Developed Countries (LDCs) like Bangladesh and Sri Lanka.

The private sector had been discussing the strategies to forestall the situation arising out of these new rules, which may shift the weaving and printing to stitching stage for meeting the condition of ‘country of origin’.

“It would be a blow to Pakistan’s textile industry and it would have direct implication on the economy because over 65 per cent of total exports of the country constituted of textiles and clothing,” asserted a leading exporter of ready-made garments.

The rules lay down the criteria for having preferential market access to its member states which have now risen to 25 from 15. The EU has come up with new theory of enhancing intra-regional cooperation and for that purpose these rules are being designed.

But in case of Pakistan it would prove a blow to its textile industry and the economy as a whole for being a single crop economy. Most of its exports are dependent on textiles and clothing. Similarly, textile industry employs highest number of workforce of the country.

Pakistan has failed to diversify its exports and even after the lapse of over 50 years most of its exports originate from textile and clothing sectors.

The EU under its new rules of origin is considering to expand the scope of regional cooperation which applies to members within a regional trading bloc (RTA) such as Saarc and introducing cross regional cooperation which applies to RTAs.

However, the textile industry sources believe that if the new rules are implemented it would dislocate textile made-ups and garment industries from Pakistan to Bangladesh and Sri Lanka. Bangladesh being an LDC will be enjoying duty free access in the EU. Similarly, Sri Lanka would benefit under CSR rules of the EU.

Therefore, the thrust of EU’s new rules towards regional cumulation will not only be killing for Pakistan’s garments and textile made-ups exports but also weaken the sector’s employment generation capacity and render thousands jobless.

The Ministry of Commerce has also invited comments and suggestions from textile and clothing sector for evolving a strategy which may help to avert the blow to country’s textile industry in particular and the economy in general.

Some of the export bodies have already hired the services of some solicitors to come up with some suggestions and a study which may assist them in case if they come to take up the issue to the court of law.

After imposing 13.1 per cent anti-dumping duty on bedlinen by the EU, this is yet another blow to Pakistan’s textiles and clothing exports. The exporters of these goods are already faced with falling euro, which has so far lost 12 per cent against the dollar.