EU not eager for an FTA
By Shada Islam
LIKE most Asian countries, Pakistan has long squabbled with the European Union over access for its exports to the 27-nation bloc’s huge and lucrative market.
There has been endless tension over EU anti-dumping duties, including a 10 per cent punitive tariff imposed on Pakistani exports of bed linen four years ago and Islamabad’s repeated demands that Pakistani exporters should get special trade preferences (known as GSP plus) because of the perilous state of the national economy and the country’s role as an ally in global counter-terrorism efforts.
In Brussels next week, Pakistan and the EU will turn their attention to Islamabad’s demands for the negotiation of a free trade agreement (FTA) between the two sides — and once again, probably find a new trade issue to disagree on. Possibly for a very long time.
EU policymakers insist that they have not yet made up their minds on the pros and cons of a free trade deal with Pakistan. “No doors are closed to Pakistan,” an EU trade official told this correspondent.
After all, the bloc’s foreign ministers last week promised to help consolidate democracy in Pakistan and voiced concern at the country’s economic plight. The focus was on urging Pakistan to fight extremism and step up counter-terror efforts.The EU also recognised the seriousness of Pakistan’s economic crisis and underlined the “importance of economic and commercial development for further long-term progress in Pakistan and of significantly enhancing the EU trade relationship with Pakistan”.
The EU had taken note of Pakistan’s request for a free trade agreement, said ministers. But much to Pakistan’s disappointment, the EU made no firm commitment to open the free trade talks in the near future. Instead, they said the EU would be “examining all options aimed at enhancing trade relations with Pakistan”.
Pakistan’s focus on opening free trade talks with the EU is not difficult to understand. Islamabad has long argued — with some justification — that under current European trade rules, other South Asian countries, including Afghanistan, Bangladesh, Sri Lanka and India, have better access to the EU market than Pakistan.
As least developed countries, Afghanistan and Bangladesh are eligible for duty-free and quota-free access to the EU market. Sri Lanka, classified as a ‘vulnerable economy’ can still secure tariff preferences under the GSP-plus scheme (although the privilege could soon be withdrawn because of the country’s failure to abide by certain human rights conventions) and India is negotiating a free trade pact with the EU.Pakistan, meanwhile, has access to the ‘regular’ generalised system of preferences which is much less generous than the ‘plus’ version and its key bed linen exports are subject to a massive 10 per cent tariff. Pakistani trade officials insist that they want a ‘level playing field’ and that their exports — especially of textiles — are suffering because of concessions being given to other South Asian nations.
In addition to the commercial argument, Islamabad has argued that the EU must give it additional tariff reductions because of Pakistan’s pivotal role in global counter-terrorism efforts.
If only it were that simple. The EU did accord Pakistan special trade preferences in the immediate aftermath of Sept 11, 2001 and Pakistan’s decision to back the ‘war on terror’. But a successful Indian complaint in the World Trade Organisation against the EU quickly brought that concession to an end.
Since then, EU officials confess that they have been “scratching heads” to reconcile Pakistan’s demands for better access to the European market with the bloc’s own, often stringent, trade rules.
Certainly, after years of reflection and hesitation — and faced with a continuing impasse in the World Trade Organisation efforts to conclude a new trade liberalisation round — the EU has started FTA negotiations with a number of countries, including India, South Korea and members of the Association of Southeast Asian Nations.
But negotiating a free trade agreement with the EU is no easy task and not surprisingly the talks are not proving easy. All three separate negotiations have become stuck over technical details and, in some cases, political issues, proving that clinching a FTA deal with the EU is easier said than done.
For Pakistan, the going is likely to be even harder. For one, Pakistan’s exports to the EU are stuck in a rut. Despite repeated European warnings that Pakistan should diversify its export base, textiles and clothing represent a whopping 60 per cent of Pakistan’s exports to Europe. Increasingly, these exports have to compete with cheaper — and better quality — products exported by China and other Asian nations.
Second, given the security situation in the country, EU industrialists are not clamouring for access to the Pakistani market for exports of their goods or services. Third, there is no real economic motive for an EU-Pakistan FTA since Pakistan is only number 52 in the EU’s list of leading trade partners.
And most significantly, Pakistan’s fragile economic structures are unlikely to be able to cope with a free trade pact with the EU since such an agreement will focus not only on eliminating tariffs and non-tariff barriers but also on the harmonisation of regulatory standards in areas such as competition, investment and intellectual property protection as well as labour and environmental laws.
Negotiating a free trade deal with Pakistan would also run counter to the EU’s ‘Global Europe’ strategy which stresses that FTAs should be about “stronger engagement with major emerging economies and regions” and should strengthen EU competitiveness.
In addition, as pointed out by Prof Sally Razeen in his book Trade Policy, New Century: The WTOs, FTAs and Asia Rising most FTAs negotiated by Asian countries are ‘trade-light’ and do not seriously help developing countries to increase their exports to industrialised nations.
Dr Sally admits, however, that foreign policy considerations loom large when countries decide to take the FTA route. As such, these agreements are viewed as a means of cementing stronger political as well as economic links with favoured partners, he says, adding: “For instance, they can be a door-opener to other, strategic, security-related agreements.”
If Pakistan is seeking to clinch a free trade agreement with the EU for prestigious foreign- and security-policy reasons — or merely to catch up with India — it will have to come up with more sophisticated and better-reasoned geopolitical arguments to convince Europe.
The writer is Dawn’s correspondent in Brussels.


Why Brits won’t fight
By Julian Borger
THE British prime minister, Gordon Brown, was accused of hypocrisy on Thursday by human rights activists pointing to the alleged gap between his rhetoric about the plight of the Democratic Republic of the Congo and his readiness to send troops to the country.
The government’s critics highlighted Britain’s role in leading opposition to the deployment of a European force to protect civilians in Congo while the existing UN mission awaits reinforcements.
Britain maintained its stance in Brussels on Thursday less than 24 hours after the prime minister delivered a speech to mark the 60th anniversary of the UN’s universal declaration of human rights. Brown had called for urgent international action to help the people of eastern Congo, and other civilian victims of crises.
However Britain is resisting the deployment of a rapid-reaction European battle group. The UK negotiating team in Brussels is arguing that its armed forces are over-stretched, that the battle group was never designed for an operation like that in Congo, and that deployment of a separate European force in eastern Congo would create a confusing duplication of roles with the UN force Monuc.
Britain’s reasoning did not persuade some human rights organisations. “There is a breathtaking gap between Brown’s rhetorical commitment and what Britain is actually doing in Brussels. Britain has been the most rejectionist of the troop contributing countries,” said Tom Porteous, the London director of Human Rights Watch.
British officials say they are not opposing the deployment of more peacekeeping forces in Congo, and say Britain has offered support to any reinforcements in the form of logistics and specialist officers. However, they say Britain’s army is too thinly stretched in Iraq and Afghanistan to be able to withstand another big deployment. Brown’s aides also argue that the European battle groups — of which there are 15 — do not represent the right response to a situation like that in Congo.
Tomas Valasek, a foreign policy expert at the Centre for European Reform, said: “This isn’t a quick reaction, in-and-out operation that the battle groups were designed for.” Valasek said that there were fears that a European bridging force might not be relieved for months. Thursday marked the second time in two days the British prime minister was attacked over his human rights record. His adviser on constitutional reform, Lord Lester, said on Wednesday he was resigning in disgust over the ruling British Labour party’s “dismal” lack of leadership on human rights.
— The Guardian, London


