KARACHI: Pakistani exporters have urged foreign minister Bilawal Bhutto Zardari to expedite diplomatic efforts for the extension of a preferential trade arrangement with the European Union which allows them to send their products to the region for little or no duty, confirmed business leaders on Monday.
The Generalized Scheme of Preferences Plus (GSP+) is an established trade and development policy instrument that was first institutionalized in 1971 to allow the European Union (EU) to remove duties on products exported by vulnerable developing countries.
These countries get special access to the European market after making commitments to implement several international conventions on human rights, environmental protection, and governance.
Pakistan’s GSP+ status is set to expire on December 31, 2023. More than 78 percent of the country’s exports enter the EU at preferential rates under the scheme that helps its exporters enjoy zero percent duty on several products.
“We informed the foreign minister about the expiry of the status by the end of the next year and asked him to expedite efforts for further extension of the GSP+ status,” Jawed Bilwani, chairman of Pakistan Apparel Forum, who also met the foreign minister along with a delegation, told Arab News.
“The foreign minister has assured to take up the issue along with the ministry of commerce,” he continued. “It is the mandate of foreign and commerce ministries to deal with the EU over the matter.”
The EU is Pakistan’s second-biggest trade partner, accounting for 14.3 percent of the country’s total trade in 2020 and absorbing 28 percent of its total exports.
Pakistani traders said the end of the GSP+ status would deal a blow to the country’s exports which were already suffering due to high production costs.
“Pakistan’s cost of input is too high,” Bilwani said. “This is particularly true of electricity rates which are at their highest level. In this situation, our exports will not be able to compete in the absence of GSP+ status.”
Pakistani exporters said the country had played its part while complying with the required international conventions, though they expressed concern some countries could block the smooth extension of the status.
“Pakistan has done its part of work but some countries which are working against the interest of Pakistan are lobbying for no extension as part of an economic warfare,” Bilwani maintained. “So, our government needs to work hard.”
Pakistani exporters said the products which were currently going to the European market at zero percent duty had otherwise 13 to 17 percent tariff rate.
“Pakistan’s exports to the EU have increased because of the GSP+ status, and now the government needs to tell the world the situation of the country makes the extension of the status necessary,” Zubair Motiwala, chairman of Businessmen Group, told Arab News.
Pakistani traders said the government needed to hire the services of lobbyists to counter anti-Pakistan propaganda.
Relations between Pakistan and the EU turned sour recently after former prime minister Imran Khan criticized the EU in response to a letter written by representatives of 22 countries, including the European Commission, which called on Pakistan to condemn Russia for its invasion of Ukraine.
“Work is being done on every level to get the extension and hopefully it will materialize,” Masood Naqi, an exporter and former Chairman of Qur’angi Association of Trade and Industry, told Arab News. “Bilawal Bhutto knows the issue and a working group of relevant ministries and businessmen has been constituted in this connection.”
According to the European Commission, about 80 percent of textiles and clothing items from Pakistan enter the EU at preferential tariff rates.