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US renews GSP scheme for Pakistan

Updated March 13, 2018


ISLAMABAD: The US House of Representatives has passed a bill to renew the Generalised System of Preferences (GSP) scheme allowing duty free access for goods from 120 countries including Pakistan for the next three years.

The scheme expired on December 31, 2017. The Bill now provides an extension up to December 2020.

A senior official in the commerce ministry told Dawn that this was the first hurdle in the renewal of the package. Now, the bill will be presented in the US Senate for a passage.

After the passage of the bill, US president Donald Trump will sign it into a law.

According to the official, Pakistan is one of the beneficiaries of the scheme. He was optimistic that the bill will sail smoothly through the US senate. He said impact on trade volume is limited due to small participation.

The official said the new eligibility criteria will also to be met by the beneficiary countries.

On Oct 25, USTR announced to implement the 15 eligibility criteria of the GSP established by the US Congress. Most of these include respecting arbitral awards in favour of US citizens or corporations, combating child labour, respecting internationally recognised worker rights, providing adequate and effective intellectual property protection, and providing the United States with equitable and reasonable market access.

According to the official, the 120 beneficiary countries will now require compliance of the eligibility criteria. However, the commerce ministry official claimed that Pakistan is compliant in all these areas.

It is worth mentioning that the beneficiary 120 countries have also established a GSP alliance in Washington, according to the official. This alliance is also in contact with Washington, he added.

In 2015, when the GSP scheme was revived with retrospective status, it was estimated to get maximum utilisation of available concessions.

However, data shows the utilisation of the scheme was very limited over the past years.

Official data shows that in the FY16 Pakistan’s GSP exports stood at $247 million, up from $180.5m in the previous year.

The official said the utilisation is improving and it will further improve following the depreciation of Pakistani currency.

GSP-based exports account for 5 per cent of Pakistan’s total exports to the USA. Non-GSP exports to USA stood at $3.4 billion in the year 2016-17.

Published in Dawn, March 13th, 2018