ISLAMABAD, July 12: The European Union (EU) member countries have allowed equal preferential treatment in duties in the range of 2.5 per cent on import of clothing from both Pakistan and India under its new generalized system of preferences (GSP) scheme to be effective from January 1, 2006.
Officials in the commerce ministry told Dawn on Tuesday that both Pakistan and India would enjoy similar reduction in duties on export of bed sheets, towels and readymade garments to EU-member countries.
On the other hand, the EU had finally put into operation the GSP plus scheme — zero rating of duty scheme — from July 1, 2005, which would benefit around 14 countries including Sri Lanka. The drug related GSP scheme has ended on June 30, 2005 substituting it with the new scheme as per decision of the WTO ruling.
With this decision, the officials said, those Pakistani products, which had graduated or still enjoying duty exemption under the drug related GSP scheme would now attract normal customs duty from July 1, 2005 till the operationalization of the new scheme.
This means that EU has not given any apparent concession to Pakistan under the scheme as exporters would have to wait for another six months to get a nominal reduction in customs duty on export to EU member countries.
While on the other hand, the EU had given a big favour to India by not graduating their clothing sector from the normal GSP scheme as its limit of share for India has been increased from 10 per cent to 20 per cent.
With this decision, now Pakistani exporters would face a tough competition from Indian exporters in the clothing sector in EU market, which earlier enjoyed exemption from customs duty under the drug related GSP scheme.
The EU had only given Pakistani exporters a preferential treatment in the range of 1.2 to 1.4 per cent on export of yarn and fabric to EU member countries. This facility, has however, been denied to the Indian exporters under the scheme.
Pakistan might not be happy with the EU decision by equalizing her status with that of India, which was the second biggest exporter of textile and clothing products to the world market after China. The EU had rather
New GSP delayed the implementation of the new GSP due to differences among EU member countries over the fixing of graduation limit for textile and clothing producing countries under the new GSP scheme.
But, finally the Indians succeeded in getting that preferential treatment for their exporters, which were earlier denied in the original draft released by the EC in October last, the graduation limit for textile and clothing for the new GSP scheme was fixed at around 10 per cent.
While the Indian share of textile and clothing in the existing scheme was around 12 per cent.
