KARACHI, July 5: The European Union has agreed to review anti-dumping duty imposed in March this year on bedlinen (Category 20) imports from Pakistan, officials said on Monday.

In order to review the 13.1 per cent punitive duty imposed on bedlinen, the European Commission will have to once again carry out investigations after seeking quotations from cooperative companies or exporters to the European market.

The EU imposed the punitive duty on bedlinen after it claimed that the investigations carried out by the European Commission had found sufficient evidence that cheap imports from Pakistan caused an injury to the European textile industry.

The exporters of bedlinen took strong exception and claimed that the EC investigation team rushed back without completing the investigations and without giving any tangible reason. As a result of this the EU entered into lengthy negotiations with Pakistan to resolve the issue.

Both the sides gave suggestions and counter-suggestions for resolving the issue and at one stage the EU offered 'tariff-quota' under which certain quantity of bedlinen exports would have been allowed without any punitive duty and thereafter a duty would be imposed.

In the meantime, another negative development took place following the EU's decision to graduate Pakistan under the GSP rules (Generalised System of Preference) from January 1, 2005.

The withdrawal of tariff concession on clothing under the GSP is coinciding with the start of WTO's quota-free era beginning next year. This means with the withdrawal of the GSP facility, 12 per cent levy at the customs stage will be imposed on the clothing sector of Pakistan.

Consequently, with a 13.1 per cent anti-dumping duty and a 12 per cent customs duty, Pakistan's exports of bedlinen to the European market will be completely wiped out as the exporters will not be in a position to compete with a total duty impact of around 25.1 per cent.

However, the EU has now realized that Pakistani exporters of bedlinen will suffer immensely and will not be able to sustain under such a heavy duty, particularly when other countries will enjoy the facility of free market era.

The officials expressed the hope that the EU's move for allowing the review of punitive duty would provide both the sides a fair chance to clear their respective positions and protect their interest.

At present Pakistan's annual exports bedlinen to the European Union stood at $350-400 million. "These could touch the $1 billion mark if a fair chance is given under the free-market era," the officials added. Meanwhile, commerce secretary Tasleem Noorani on Tuesday called a meeting of stakeholders at Islamabad to discuss the EU decision.