BRUSSELS, March 14: European Union foreign ministers meeting in Brussels this week face tough discussions on granting special trade preferences to Pakistan, with several EU states expected to back Islamabad’s long-standing battle to gain access to the scheme but others opposing the move.
EU diplomats say a number of countries, including heavyweights Britain and Germany are in favour of making Pakistan eligible for a special duty-free version of the Generalised System of Preferences, known as GSP Plus. The European Parliament has also backed Islamabad’s demands for access to the scheme.
But opposition to treating Pakistan as a “vulnerable country” — a classification which would make Pakistani exporters eligible for GSP Plus — has come from the European Commission and Europe’s southern member states, many of which are textile producers.
Luxembourg as current EU president will present the bloc’s foreign ministers on March 16 with a compromise proposal which does not confer vulnerable status to Pakistan.
But diplomats say they expect a discussion on demands by Germany and Britain for a review of the wording of a key GSP Plus provision which fixes the criteria for countries which are classified as “vulnerable.”
Prospects for a deal in favour of Pakistan are not bright, however. Under EU rules, any agreement on bringing Pakistan into the system must be taken by unanimity by the EU governments. A decision can be taken by a qualified majority of member states but only if it is backed by the European Commission.
Pakistan - and the countries which support its request - argues that excluding Pakistan from GSP Plus will be unfair given the country’s increasing development needs and key role in the international struggle against terrorism and extremism.
The EU’s GSP Plus scheme will be available to low-income countries with poor trade diversification whose exports to the EU represent less than one per cent of the EU’s total GSP imports. To be eligible, countries must also sign up to a range of international conventions on improving labour and environmental standards.
Islamabad has argued that a key defect in the GSP Plus criteria is that it takes no account of the significant development needs of a low-income and poorly diversified country whose exports to the EU are slightly above the very strict one per cent threshold.
EU Trade Commissioner Peter Mandelson said recently, however, that the selection of GSP Plus beneficiaries must be based on “clear, transparent and non-discriminatory criteria.”
“Any specific clause for Pakistan would represent a de facto discrimination,” Mandelson told the European Parliament recently.
The EU, which lost a previous Indian-initiated case in the World Trade Organization against its drugs-linked GSP scheme - of which Pakistan was a key beneficiary - could not afford to face another challenge to its preferences system, he said.
Mandelson insisted, however, that while not eligible for GSP Plus, Pakistan would be able to benefit from the wider trade preferences scheme for all its exports to the EU market.