KARACHI, Sept 18: Pakistan may lose the edge of additional tariff concessions allowed by the European Union about two years ago, once the WTO appellate body gives its final verdict on Indian complaint against provisions under the EU’s Generalized System of Preferences (GSP).
Despite the fact that EU under these arrangements had been allowing such tariff concessions to a number of countries for the last so many years but India filed its complaint immediately after the EU decided to add Pakistan to its list.
As a result of this development New Delhi strongly felt that its arch rival, Pakistan would enjoy an advantage and could sweep EU at the cost of Indian exports.
In a preliminary ruling issued recently, the WTO appellate panel upheld Indian complaint against provisions under the EU’s GSP system granting additional tariff concessions to developing countries that take steps to counter illicit drug production or respect international norms on labour rights and sustainable forestry management.
Reports reaching here from Geneva, headquarter of the WTO, show that the ruling given by the appellate body backed India’s claim that the special tariff preferences are inconsistent with Article 1.1 of the WTO’s agreement on tariffs and trade, which requires any advantage or privilege granted to the imports of one WTO member to be automatically extended to all members.
The sources said the ruling also supports New Delhi’s argument that the GSP violated provisions under the so-called ‘enabling clause’, which calls on WTO members to provide ‘nonreciprocal and non-discriminatory preferences’ to developing countries under such scheme.
On the other hand, WTO appellate body rejected the EU’s claim that the special tariff preferences qualified as an exemption from WTO rules under Article XX(b) of the agreement on tariffs and trade, which allows members to implement trade restrictive measures deemed necessary to protect human, animal or plant life or health.
However, a dissenting note by one of the three appellate body members, who sided with the EU makes it more likely that the EU would go to appeal against the verdict once it was finalized and made public. Although the panel’s decision is only preliminary, no WTO appellate body to date has substantively altered its interim conclusions in a final ruling, the sources said.
Faced with anti-dumping proceedings with the EU on bedlinen imports, Pakistan is likely to see difficult days ahead if the final ruling on GSP goes in favour of India. There is a greater possibility the EU will concede and allow such additional tariff concessions to India.
Because if the EU withdraws additional tariff concessions given to Pakistan under the GSP, ahead of time frame (Dec 31, 2004) it would mean that a similar treatment will have to be given to other beneficiaries including Bolivia, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Peru and Venezuela.
Exporters of bedlinen are wary of the situation and feel that the government should immediately take up the matter through diplomatic channels and do strong lobbying at all level with the EU member states.
“The situation is of great concern to us,” said another exporter, “particularly when the EU has recently withdrawn anti- dumping proceedings on bedlinen imports from India. This means that once the EU imposes punitive duty on our bedlinen imports it will put us at a very disadvantageous position vis-a-vis India.
Immediately after 9/11, the EU gave 15 per cent extra market access and also granted additional tariff concessions to Pakistan.