ISLAMABAD, Dec 8: Pakistan has decided to challenge the European Union's (EU) trade restrictive measures adopted under the generalised system of preferences (GSP) plus scheme and anti-dumping duty on bed linen in the Geneva-based World Trade Organisation (WTO), it is learnt.
Under the GSP plus scheme, which allows more than 7,000 products to enter the EU free of duty, EU excluded Pakistan on the pretext that its exports to the EU represent more than 1 per cent of its total imports. The EU adopted this arbitrary criterion to exclude Pakistan from the facility.
Well-placed sources told Dawn on Friday that in this regard the government has instructed its WTO mission in Geneva to enter into bilateral consultations with the EU on its GSP-plus scheme and on anti-dumping duty on export of bed linen from Pakistan.
"If the EU fails to respond favourably to Pakistan’s request, then Pakistan will request the WTO to set up a dispute panel to rule on these cases," the sources said.
While on the other hand, the EU had given a big favour to India by not graduating their clothing sector from the normal GSP scheme as its limit of share for India has been increased from 10 per cent to 20 per cent. After this decision, the Pakistani exporters are facing a tough competition from Indians in clothing sector in the EU market, as they (former) earlier enjoyed exemption from customs duty under the drug- related GSP scheme.
Besides, this favour, which resulted into ouster of Pakistani commodities from the European market, the EU has recently offered to negotiate a free trade agreement (FTA) with India, which would further squeeze the market access for Pakistani products.
The sources said that the case was likely to take a year to resolve and in case either party decided to go in appeal, it might take another one year. However, it would put pressure on the EU to either change its current GSP-plus scheme or consider signing an FTA with Pakistan.
Under the WTO rules, the EU was obliged to make available identical tariff preferences to all similarly-placed countries on the basis of objective criteria. Furthermore, the preferences accorded under the European Commission's (EC) special incentive arrangement are confined to selected countries that have given an undertaking to maintain ratification of conventions and implementing legislation and measures, and are thus not generalised and non-reciprocal.
The sources said the WTO's appellate body had ruled in an earlier case that any preferences for developing countries should be consistent with the enabling clause and should be generalised and non-reciprocal.
The dispute on bed linen anti-dumping duty was more contentious, the sources said and added the EC might claim that it has already taken account of various factors and reduced the anti-dumping duty from 13.1 per cent to 5.8 per cent.
However, it has not been able to fully justify any dumping. While calculating this duty, the EU argued that the duty drawback allowed on export of bed linen was excessive but it did not say how much should have been allowed and decided not to allow any for the purposes of calculating anti-dumping duty.
The EU first levied anti-dumping duty on Pakistan's bed linen in 1997, which was withdrawn in January 2002, as the investigation conducted into the matter did not determine the dumping element in Pakistan's exports.
In December 2002, the EU again started investigations but even without completing the investigation process, it imposed 13.1 per cent anti-dumping duty in March 2004 after claiming that it had found sufficient evidence those cheap imports from Pakistan was causing an injury to the European textile industry.
The EU was one of the major markets for the export of Pakistan's bed linen. Pakistan has gained this share because of superior quality and designs of Pakistan's bed linen. At present around 200 bed linen exporters are engaged in trade with EU member states.