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EU GSP plus scheme to help boost exports

ISLAMABAD, June 15: Pakistan has welcomed European Parliament’s recent approval of the amended incentives scheme of Generalised System of Preferences (GSP) which would enable Pakistan to apply for zero duties on its exports to EU countries.

The ministry of commerce, in a statement on Friday, said that in case Pakistan is able to meet all the criteria for GSP plus, its exports to the EU under concessionary tariff lines would receive duty-free treatment from 2014 onward.

Together with Pakistan, the Philippines and Ukraine will also qualify for more imports under the scheme.

To qualify for new rules, exports from Pakistan to EU countries would have to account for less than 2 per cent of the EU’s total GSP imports which is now one per cent. Pakistan, the Philippines and Ukraine would also have to prove that they abide by 27 international conventions in the field of human rights and sustainable development, according to new legislation.

EU had earlier in 2002 given exports from Pakistan concessionary access to EU market which lasted for three years and since then Pakistan had been pleading its case with the European community. The EU Parliament’s plenary session which approved the amended incentive scheme, discussed the issue of safeguarding EU textiles and garments, decided that to ensure that the GSP+ concession does not lead to import surges that harm EU textile and clothing producers.

Members of the EU parliament negotiated with the EU Council a rule that tariff preferences for these products will be suspended for a given country if EU imports from that country grow by 13.5 per cent or more in a year, down from the Commission proposal of 15 per cent, or if imports of specific products exceed 6 per cent of total EU imports of these products, down from the EU Commission’s proposal of 8 per cent.

The EU’s updated trade preference scheme for developing countries will come into force from Jan 1, 2014.

The Parliament backed plans to take high and upper-middle income countries out of the scheme, so that more can be done for poorer countries.

EU parliament members also secured parliamentary oversight of decisions on which countries get preferences, stiffened safeguards for the EU textiles sector and extend product coverage to income from minerals of particular value for some developing countries.

This is the first time that EU Parliament has exercised its power, introduced by the ‘Lisbon Treaty’, to legislate on the GSP.

The GSP plus incentive scheme has been voted to law for 10 years. Proceedings of EU Parliament plenary session in Strasbourg state that “the updated generalised system of preferences removes tariff preferences, such as today’s reduced or zero duties, for EU imports from countries where per capita income has exceeded $4,000 for four years, reflecting the fact that many GSP beneficiaries now compete on an equal footing with the EU in world markets.”

“By providing preferential access to the market of the Union, the scheme should assist developing countries in their efforts to reduce poverty and promote good governance and sustainable development by helping them to generate additional revenue through international trade, which can then be re-invested for the benefit of their own development and, in addition, to diversify their economies.

“The scheme’s tariff preferences should focus on helping developing countries having greater development, trade and financial needs,” explains the EU parliament decision.

The update will reduce the number of countries that enjoy preferential access to EU markets from 176 to around 75. It will also reduce the total value of imports that qualify for EU preferences from 60 billion euros in 2009 to about 37.7 billion euros in 2014, thus creating room to increase preferences for the remaining beneficiaries.

Member parliaments negotiated a rule to ensure that Parliament will have power of veto over any changes in country coverage, product coverage, import thresholds or temporary withdrawals of GSP preferences which currently apply to Belarus and Myanmar.

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