THE Ministry of Commerce has prepared a paper assessing possible consequences of the change in US administration on Pakistan’s trade relations with the US.

“We will send our assessment shortly to Prime Minister Nawaz Sharif,” said Commerce Minister Khurram Dastgir Khan.

The US is the single largest export destination for Pakistani products. The change in the US administration has sent chills down the spine of Pakistani exporters who anticipate changes in the trade regime.

Talking about such apprehensions, Minister Khan ruled out any immediate change in trade regime with Washington. The Trump administration’s current focus is on China and NAFTA where changes in US policy are unlikely to have any adverse implications for Pakistan, he said.

Pakistan has no special bilateral trade concessions that can be withdrawn, he stressed.

The only US trade concession that Pakistan currently has is the decades-old multilateral Generalised System of Preferences (GSP). “The US GSP is relevant marginally, as Pakistan’s major exports — textile and leather — are not included in the scheme,” he said, adding that Pakistan mostly trades with US on MFN tariffs.

In the year 2015, as per US statistics, Pakistan exports to US totalled $3.7 billion, out of which only $179 million (5pc) were under GSP. “No statements have been issued on GSP as yet but it is strongly supported by US importers and a lobby of hundred-plus countries that benefit from it,” the minister said.

The GSP status of 127 countries, including Pakistan, was suspended by US Congress after the expiry of the programme on July 31, 2013. However, the GSP has been renewed through Dec 31, 2017, and will be effective retrospectively between Aug 1, 2013 and July 28, 2015.

However, it is not clear whether the scheme will be extended beyond 2017. Under the GSP, Pakistan can export more than 3,500 items to the US market without paying any duties on them.

Many of Pakistan’s goods are eligible for GSP duty-free, including most manufactured items, inputs used in manufacturing, jewellery, carpets, certain agricultural products, many types of chemicals, minerals and marble. However, the products not eligible for GSP include most of textiles and apparel, watches, footwear, handbags, luggage, and leather products.

The minister said that the US withdrawal from TPP has been a positive development for Pakistan as it has eliminated a potential threat for Pakistan’s textile exports. In case the US moves for tariff hikes and stronger regulatory enforcements against countries where it has large trade deficit, this will create opportunities for their competitors in the US market, he further said.

Statements by the Trump administration on Pakistan so far relate more to security concerns. “The ministries of Commerce and Foreign Affairs collaborate in monitoring the Pak-US security relationship, as it serves as a prism for bilateral economic relations,” the minister said. “We will engage principal trade officials as soon as they take office, and our US-based trade officers are preparing their briefs for the initial outreach,” Khan concluded.

Published in Dawn, February 19th, 2017