KARACHI, Feb 1: The European Union (EU) has politely turned down Pakistan’s request for initiating talks for an early conclusion of a free trade agreement (FTA). It has also warned that initiating cases against the EU with WTO Dispute Settlement Body may spoil the environment for closer economic relations.

Initiating of cases will not be viewed as a hostile act and it will not damage professional relations but could affect the pace of the movement towards closer ties, the EU is reported to have told Pakistan.

Sources in Brussels and Islamabad confirmed that Pakistan had not been able to persuade the EU into starting parleys for a free trade agreement, for now. A high-profile Pakistan delegation headed by Prime Minister Shaukat Aziz was in Brussels two days back to meet Belgian and EU leaders and to explore options of closer economic ties.

According to reports reaching here, Prime Minister Shaukat Aziz and his delegation, which included Commerce Minister Humayun Akhtar, met EU Trade Commissioner Peter Mandelson and presented Pakistan’s case for a better market access for Pakistani products, especially textiles in EU countries.

They have argued that other regional competitors benefited either from EBA or GSP Plus, singling out Pakistan. The country is disadvantaged even compared to China because of seven per cent anti-dumping duty on bedlenin exports from the country. FTA could provide an opportunity to ward off the affects of current arrangements on Pakistani exports.

Pakistan has decided in principle to take the European Union to WTO for discriminating against Pakistan in market access to the EU, thereby hurting competitiveness of its exports.

The EU trade commissioner, however, maintained that the revived joint commission and the trade sub-commission provided the best way to proceed to review relationship and consider different approaches for the future.

He is reported to have said that the GSP access to the EU market is better than to other markets and better in textiles than India and China. Both these countries have graduated from preference scheme.

In an informal meeting with Pakistani journalists in Davos last week on the sidelines of World Economic Forum (WEF), Commerce Minister Humayun Akhtar said that Pakistan was drawing a lot of attention in a positive light at the forum and the country was increasingly being viewed as a promising destination for new investment in the fastest growing region of the world.

He told Dawn that Pakistan was in the process of proceeding against the EU in Dispute Settlement Body of WTO. He hoped that the move would not dampen the prospects of FTA with the EU.