KARACHI, Nov 16: Exports to European Union (EU), the biggest trading partner of Pakistan, are becoming costlier and uncompetitive owing to a host of factors including the falling value of euro.

Earlier exporters used to complain of punitive duties and high export refinance and mark-up rates, but the falling value of euro has now further aggravated the situation which made exports to EU member states almost unviable.

According to official statistics, most of European currencies had declined by more than 10 per cent during a period of last one year. The euro, which is official currency of the EU member states for external trade, also depreciated by 12 per cent (Dec 30, 2004 to November 8, 2005).

According to the State Bank’s exchange rates data, the euro on Dec 30, 2004 stood at Rs81.2058 but as on Nov 8, 2005 it was quoted at Rs70.1158. Similarly, the pound sterling was quoted at Rs114.5055 (Dec 30, 2004) and now at Rs103.9542 (Nov 8, 2005), showing a depletion of around 11 per cent.

However, the US dollar maintained a steady rate during this period as it was quoted at Rs59.5700 on December 30, 2004 and at Rs59.8000 on November 8, 2005. Therefore, there was no much problem for exporters who get their export proceeds in dollars.

Consequently, exports to Europe are not only threatened by 13.1 per cent anti-dumping duty and 12 per cent customs duty but also by a host of other factors to which currency parity has also become a relevant issue.

The rapid increase in Export Refinance Scheme rates during this period also aggravated the situation as the cost of production rose sharply which further damaged exports to European Union.

Exporters were finding it difficult as to how to compete in the quota-free market when internal and external factors were going against their interest. “External factors are not in our control, but internal matters related to refinance rate and other input costs are totally in our hand,” lamented Shabir Ahmed, chairman Pakistan Bedwear Exporters Association (PBEA).

Rapidly increasing freight charges were also adding to the burden and exporters were seriously looking at avenues outside the national borders. “When profit margins have been depleted to such an extent that basic cost is not covered, therefore, the only option is left to relocate the industry to any LDC, which enjoys duty-free market access to western markets,” Shabir maintained.

In a recent development shipping lines calling at country’s ports for loading export cargo have also enhanced cut-off period to 2 to 3 days which means that consignments should reach port 72 hours ahead of shipping schedule.

A leading shipping company, which almost enjoys monopoly in export cargo, has also started to issue Bill of Lading from China instead from local offices. This has further increased the time for clearing shipment by another two days.

“If taken into consideration all these factors the industry is presently passing through extremely difficult phase,” asserted Jawaid Bilwani, chairman Pakistan Hosiery Manufacturers Association (PHMA).

He urged the government to convene a meeting of stakeholders of export trade to interact and update each other so that issues could be taken up in their true perspective.