Textile sector fears European Union concession package may get delayed
Dated- 26 May , 2012 - Pakistan
Pakistan’s textile sector is eagerly awaiting economic package from the European Union (EU) but some of the sector representatives also fear that the proposed package might get delayed or even scrapped, exporters said.
The Central Chairman, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Shehzad Salim said that the EU Trade Concessions Package announced for Pakistan was politicized during a recent EU Parliament meeting and it seemed that the package would either be further diluted or scrapped altogether.
In order to compensate the losses caused by flood which wrecked havoc in Pakistan two years ago, the EU had announced concessions for Pakistan on 75 dutiable products exported by Pakistan.
The EU package for two years, extendable for a 3rd year, was offered last year, out of a total of 75 items 65 are textile products to support our economy affected with devastated floods but India at the WTO objected followed by Bangladesh and some other countries to the said trade concession to Pakistan.
India withdrew its opposition after granting it Most Favored Nation (MFN) status from Pakistan in November last year but some other countries including Bangladesh opposed the concession.
“As the Indian government has withdrawn their objection followed by settlement with the other complainant countries and finally WTO has given NOC to the EU for the said trade concession may bring a life into ailing garments industry of Pakistan,” said one exporter. Pakistan would get GSP plus status in January 2014, which would increase Pakistan’s exports up to $200 million per year, industry people said.
The package is being redrafted because of objections by Spain and Portugal and now Germany has also started opposing this package due to the recessionary fears in Europe.
Shehzad Salim further added that if the implementation of this package failed, it would have severe harmful effect on Pakistan’s bid for GSP Plus which was going to start from January 1, 2014.
“This is very dangerous development for Pakistan and our textile industry and we can expect further drop in our exports if this packages does not go through,” he warned.
Pakistan’s value-added textile industry especially garments exports were badly suffering due to various factors and the EU’s package which was long awaited by exporters would bring a little life into garment and apparel industry, Salim said.
According to PRGMEA Sources, a compromise package is being redrafted under which the number of items under quota have been increased from 20 to 26 with a quota ceiling of 120 percent of past trade based on 2007-09. Furthermore, on the remaining balance 49 items a ceiling has been proposed based on 130 percent of past trade of 2007-09. Therefore, in essence, all 75 items will be under quota.
The proposed amendments to the generalized system of preferences (GSP) scheme for the period 2014 onward by the European Commission will result in admission of Pakistan to GSP Plus which will provide substantial boost to Pakistan’s exports to the EU from January 1st, 2014.
Former chairman PRGMEA Bilal Mulla told The News if Pakistan’s status of GSP plus was approved the country would be able to increase its exports at the level of $150 to $200 per year.
The package would provide around 20 percent export increase in Pakistan’s exports to the EU markets.
Mulla said that the GSP plus facility on up to average 20 percent export was much enough for Pakistan as it was expected that Pakistan’s overall export to the EU member countries would remain in up to average 20 percent growth.
