ISLAMABAD, July 28: The European Union (EU) has exempted customs duty on import of three varieties of rice in brown form from Pakistan. The exemption would be effective from September 1, 2004.

Well-placed sources told Dawn on Wednesday that zero duty facility would be available on export of Basmati-370, Kernal and Super Basmati to EU member countries subject to a community control system based on DNA analysis and protection of basmati rice as a geographical indication.

According to the sources, the duty on milled rice have come down from earlier 416 euro per ton to now 175 euro per ton raising the possibility of white rice export tremendously to the EU member countries.

The sources said that export of all other varieties of brown rice other than the 3 varieties listed for zero duty will take place around 65 euro per ton. Elaborating further, the sources said that the agreement as negotiated was favourable for Pakistan except that they have by mistake listed entire basmati varieties for Pakistan and India under one simple list.

"We do not agree with this because we feel, Pakistan should not gift our varieties such as super to India who may export it if it is under one list," the sources remarked. The sources further said that in case Pakistan did not sign the agreement, then super basmati was out of preferential treatment (zero duty for brown).

"We have asked the government to sign the agreement as it was but with condition that we should discuss the issue of two separate lists after normal work starts in Sept," the sources said.

This was with objective that we could get super basmati in the preferential treatment for the time being as it was out and also reserved the right to get corrections done when they come back after holidays.

According to the sources, it was possible that the actual EC regulation will be printed around August 14-15 after translation into about 20 languages. All this will be implemented with effect from September 1, when the marketing year starts in the EU.

"It is a win-win situation for Pakistan after a year of bad trading conditions," the sources said. The export of super basmati variety was around 84,000 tons during the year 2003-04 as compared to about 90,000 tons in the previous year.

Under the transitional arrangement, the sources said that from September 1, 2004 till the entry into force of DNA analysis system, the EC's applied rate of duty on these varieties of basmati shall be zero.

According to the measures, however, if market disturbance occurred, the EC would consult with Pakistan in this regard. If no agreement was reached on the issue, the EC reserves the right to revert to the bound rate of duty of 65 euro per ton for husked brown rice.