Fate of EU concessions package uncertain

By Kazim Alam, The Express Tribune

KARACHI: The fate of the European Union (EU) trade concessions package for Pakistan hangs in the balance. While Pakistan’s neighbouring countries initially raised objections to the trade package meant to boost the distressed economy, some EU member countries have now resorted to protectionism, which is likely to hurt Pakistan’s prospects of textile and garment exports to one of its largest international markets.

According to the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), the package became “severely politicised” when it was discussed during an EU parliamentary meeting held last month. “It seems that the package will either be further diluted or scrapped altogether,” PRGMEA Central Chairman Shehzad Salim said in a statement on Friday.

Talking to The Express Tribune, PRGMEA Senior Research Analyst Ibrahim Mahmood said the package was being redrafted after Spain, Portugal and Germany opposed it, citing the economic slowdown in Europe.

He said PRGMEA expected that out of the total 75 items included in the package, the number of products with the quota ceiling of 120% would increase from 20 to 26 under the redrafted package.

Technically, the ceiling of 120% means that Pakistan can export 1.2 times the average volumes exported between 2007 and 2009 in each of the 26 product categories without paying any duty. Any exported volume exceeding the quota ceiling will be subject to regular import duties.

Furthermore, PRGMEA expects that the package will also impose a ceiling of 130% on the rest of the 49 items based on the average trade volumes of 2007-09. “In essence, all 75 items will be under (the) quota,” the statement said, adding that the package would be implemented from the second half of 2012 to the end of 2013.

Pakistan’s exports of woven garments, knitted garments and home textile to EU during calendar year 2011 were 738 million euros, 516 million euros and 920 million euros, respectively. According to the latest figures, Mahmood says the year-on-year garment exports to EU have already declined by approximately 10%.

Announced in the aftermath of the 2010 floods to strengthen Pakistan’s economy, most of the 75 items included in the concessions package are textile-related.

Earlier, the number of items under the quota was increased to 20 from about a dozen when South Asian countries, particularly Bangladesh, opposed the package, saying it would hurt their exports to EU.

Published in The Express Tribune, May 12, 2012.

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