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Exports to EU stagnate despite GSP+ status

Updated August 14, 2019

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Pakistan’s exports to the European Union have stagnated in the last four years despite waiver of duties on several products under the Generalised System of Preferences Plus (GSP+). — AP/File
Pakistan’s exports to the European Union have stagnated in the last four years despite waiver of duties on several products under the Generalised System of Preferences Plus (GSP+). — AP/File

ISLAMABAD: Pakistan’s exports to the European Union have stagnated in the last four years despite waiver of duties on several products under the Generalised System of Preferences Plus (GSP+).

The GSP+ facility, implemented from Jan 1, 2014, helped promote exports from Pakistan to the EU by almost 21 per cent in the first year. However, “no tangible growth was recorded in export proceeds to EU in the following four years”, a senior official of the commerce ministry said.

He admitted that the full potential of GSP+ is yet to be achieved despite the fact that the facility has been in place for the last five years.

Before the GSP+ scheme, Pakistan’s exports to 28-member EU stood at €4.54 billion in 2013, which jumped to €5.51bn in 2014. In the second year of the GSP+ scheme, exports further jumped by 10pc to €6.09bn. However, since 2016 the exports proceeds have remained stagnant at €6.30bn in 2016, €6.69bn in 2017 and €6.88bn in 2018.

On the other hand, Pakistan’s imports from EU, which were at €3.84bn in 2013, have also increased in tandem with exports during the last four years to reach €5.66bn in 2018. In the post-GSP+ period, the country’s imports form the EU rose to €4.09bn in 2014, €4.44bn in 2015, €5.34bn in 2016, €6.15bn in 2017.

Pakistan in order to avail the scheme — set to expire in 2024 — implemented 27 United Nations conventions in 2014.

On the basis of reports (Joint Staff Working Documents) prepared by the European External Action Service, European Commission and EU Delegation in Islamabad, EU Parliament evaluated its GSP+ Scheme in 2016 and 2018, respectively.

According to reports, Pakistan, being the largest beneficiary of GSP+ scheme — 75pc imports under the scheme to EU are from Pakistan — is under immense scrutiny by not only the EU’s civil society organisations but also by the textile and garment manufacturers which see Pakistan as a competitor.

Other challenges to the continuation of GSP+ scheme include the failure of Pakistan to implement labour regulations in export processing zones and shrinking space from the EU’s civil society — which has been agitated by the labour unions, think tanks, INGOs and members of the European Parliament.

The commerce ministry official said the upcoming GSP+ review, due in the first half of 2020, is crucial for the continuation of the scheme.

To enjoy preferential access for goods, Pakistan needs to implement in letter and in spirit the 27 UN conventions on human rights, labour rights, environmental protections and good governance.

Country-wise, data showed that exports to the United Kingdom grew 2.2pc to €1.35bn during the year 2017 compared to €1.32bn in year 2016 whereas those to Germany grew by 3pc to €1.3bn during the period from €1.26bn in the previous year.

Both UK and Germany have emerged as major export destinations for Pakistani goods under the GSP+ scheme. The increase in exports to the UK is an encouraging factor. However, exporters fear they will lose the UK market following Brexit.

Further, Spain has emerged as the third leading destination for Pakistani goods as exports to Madrid increased by around 11pc to €875.4 million in 2017 from €788.5m. Effective marketing strategies have helped Pakistani exports increase its market share in Spain.

Pakistan’s exports to Italy increased 5pc year-on-year to €629.4m in 2017, exports to the Netherlands went up by 14.7pc year-on-year to €635.2m and those to France rose 6.6pc to €463.4m.

Published in Dawn, August 14th, 2019