BRUSSELS, Oct 20: Pakistan's exports will be eligible once again for the European Union's tariff-cutting scheme - the generalised system of preferences (GSP) - as of January 2006 but are unlikely to benefit from the more advantageous zero-duty version known as "GSP plus ," EU trade chief Pascal Lamy said on Wednesday.
"Pakistan will be de-graduated and benefit from the GSP in 2006," Lamy told Dawn after the European Commission tabled proposals for a new GSP scheme for 2006-2009.
But Pakistani exporters will probably not be able to gain access to the GSP plus scheme, he said. "I would be surprised if Pakistan - given what I know of the country - first of all asks and if it asks whether it would qualify for GSP plus," Lamy said.
The Commission said such GSP plus additional tariff benefits - going down to 0 duty - will only be available for "vulnerable" countries which abide by labour, environmental and anti-corruption standards.
It said countries would have to comply with a list of 27 such international conventions to gain access to GSP plus concessions.
Lamy's proposals include both good and bad news for Pakistani exporters. On the positive front, all Pakistani exports - including textiles and clothing - will be able once again to benefit from GSP tariff rates once the new system enters into force in 2006, after being graduated out of the system in January 2005.
But the new rules also mean that Pakistani exporters already set to lose current drug-related textile and clothing tariff concessions next year, will not be able to benefit from GSP plus provisions for duty-free entry as of 2006.
The EU is obliged to phase out the drug GSP scheme by mid or end 2005 following a WTO ruling - on an Indian complaint - that the EU must use objective, transparent and non-discriminatory criteria in its GSP.
Lamy's proposals must, however, still be approved by EU governments, giving Pakistan and other developing countries time to lobby EU capitals for a change in rules.
Defending his plans, Lamy said the new GSP scheme would be simpler and easier to use for poor nation exporters. He said the system would cover more exports from developing countries and focus on the neediest nations.
Normal import tariffs for poor nation exporters will be cut by 3.5 per cent under the new system.
The threshold for graduating countries out of the system will be set at 15 per cent of total EU imports for any one product.
The GSP cut-off ceiling will be set at 12.5 per cent of total EU imports for trade in textiles and clothing, allowing Pakistan - and possibly also India - to come back into the overall system.
Lamy predicted that this would also make China's highly-competitive textile and garment exports ineligible for tariff benefits, giving other Asian textile exporters an "advantage" and helping them cope with increased competition when worldwide textile quotas are eliminated next year.
The EU trade chief said he also wanted to introduce easier-to- use rules of origin allowing exporters to gain access to the reduced-tariff scheme.
Countries which are members of the Association of Southeast Asian Nations (Asean) will for instance be able to claim regional cumulation to make better use of the GSP, he said.
The Commission's proposals were, however, immediately criticised by the pro-aid group Oxfam which said some of the new ideas were blatantly protectionist.
Oxfam said the 15 per cent rule for cutting off GSP benefits for poor nations penalised countries which were beginning to make inroads into the EU market.
"The rule means that a developing country may be graduated out of the GSP just as it begins to get its foot on the ladder," said Jo Leadbetter of Oxfam.
Oxfam added that the Commission should have further relaxed its origin rules to allow garment exporters in Bangladesh to source from anywhere in the world, including China.
"The EU is letting its fear of China's textile industry to block a reform that could significantly benefit one of the poorest countries in the world," said Leadbetter. The EU's new system - if approved by the bloc's governments and the European Parliament - will apply to 7,200 products.
EU imports under the GSP last year were valued at 52 billion euros out of a total of 368 billion euros worth of overall EU imports from developing nations.