ISLAMABAD: Faced with strong resistance from India at the World Trade Organisation (WTO) in Geneva, the European Union has delayed duty-free concessions for 67 products from Pakistan till March 2011.
It was earlier expected to be effective from January, a senior official told Dawn on Tuesday.The EU recently approached the WTO to seek waiver on trade preferences to Pakistan on these products amounting to almost 900 million euros in import value, accounting for about 27 per cent of EU imports from Pakistan for a two-year period to help the country recover from floods damages.
A senior official in the commerce ministry requesting anonymity confirmed that the waiver was blocked by four WTO-member countries—Vietnam, Bangladesh and Peru led by India in the first meeting of the Council for Trade in Goods, which was mandatory for the implementation of the EU preferences offer to Pakistan. China neither supported nor opposed the waiver to Pakistan.
“One thing was almost sure that India won't let it go easily and so did they do, but EU could have pushed hard as well,” a trade analyst told Dawn while commenting on the development.
According to the official, Pakistan was expecting that the agreement initially would be effective from January next year, but at the same time it was also subject to approval by the EU.
“They say now this approval would be done by March 2011,” the official added.
Although early approval of the law was very important to increase exports to EU markets, the official said EU hinted at starting consultations on the agreement latest by March next year. This will also include taking up the issue of seeking waiver from WTO at the council of trade meeting next year, added the official.
As per minutes of the first meeting of the council in trade, India, Vietnam, Bangladesh and Peru expressed systemic concerns with the EU request for waiver in terms of possible implications to the multilateral trading system and to like exports of developing countries. They called for consultations on the EU request.
However, India specifically said the EU initiative would affect textile workers in other developing countries, and questioned the benefits of such a short-term programme to Pakistan. Peru said the waiver request would affect its exports of textiles, clothing and footwear to the EU. Even Bangladesh opposed the EU concessionary benefits to Pakistan saying it would affect its exports to EU countries.
As a result, it was agreed that consultations would be started on EU request meaning that it would be hard to get the waiver approval easily from the WTO members.
Other countries, which supported consultation included Brazil, Barbados, Chinese Taipei and Hong Kong, China. However, the US, China, Saudi Arabia, Kuwait, Oman, Qatar, the United Arab Emirates, Chile, Turkey, Uganda, Colombia; Norway, Mauritius (on behalf of the ACP Group) and Zambia expressed full support to grant of waiver.
Under EU offer, $1 billion worth of home-textile exports to EU were excluded from concession from Pakistan while mostly duty free import of textile raw material was allowed. As a result, local value- added sector strongly opposed EU offer, saying it would only encourage export of raw material from the country resulting in high input cost for local industry.
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