Current exports worth $1.7 billion may go upto
$2.5 to EU
By AMANULLAH BASHAR
July 16 - 22 , 2001
Exports are considered as the spinal cord in
today's economic regime of any country. Unfortunately, we in
Pakistan never succeeded to cross the psychological barrier of $10
billion. Accusing finger can be raised at various factors but of
no avail at this point of time.
Some of the critics however have the feelings
that the actual size of foreign trade would be far ahead than the
figures declared.
Unfortunately, the actual size of the export
receipts was never reported back by certain quarters. They always
took advantage of the system as they say that every law has a
loophole. The latest example is the newly emerged sector of
information technology where an effective check to ascertain the
exact figure of Software exports is practically impossible. It is
the patriotism and friendly financial laws at home that can help
improving the situation. Since we are talking exclusively about
Pakistan's exports it is needless to mention the growth in export
sector of other countries in the region which have gone far ahead
of us.
Despite talking about diversification in
exports for quite sometimes, Pakistan's mainstay is the cotton
based textile sector which meets over 65 per cent of the total
exports.
In the face of ambitious export targets set for
the years to come, Pakistan's textile sector is currently
negotiating with European Union, one of the important trade
partner of Pakistan. Currently, around $1.7 billion worth of
textile is being exported to EU member countries and it is
believed that size of exports to E.U may go up to $2.5 billion as
soon as quota restrictions on Pakistan textiles are lifted by the
E.U countries.
Active players in the textile exports to E.U
feel that if EU is really sincere in lifting of textile quota
restrictions, it should first withdraw anti-dumping duty imposed
in 1979 on certain textile products from Pakistan.
On the other hand, E.U has already lifted quota
curbs on Egypt, Turkey and Bangladesh and they have been given the
status of Most Favored Nation (MFN) under WTO regime. In any case,
under WTO agreement all trade barriers have to be lifted after
January 1, 2005. However Pakistan is struggling to carve a
respectable place for its textile products before the deadline for
doing away with the quota restrictions by all signatories to the
WTO agreement.
According to APTMA sources, talks between
European Union and Pakistan over the removal of textile quotas
before 1st January 2005 were initiated in November last year.
Three rounds of negotiations have been held between the officials
of both sides but no agreement could have been reached so far.
Abdul Razzak Dawood, Minister for Commerce also
led Pakistan delegation in the second round of talks held in
Brussels in April 2001.
Customs tariff
EU had been demanding drastic cut in Pakistan's
customs tariff for imports from the EU member countries. EU wanted
Pakistan's imports of industrial raw material from EU to be
zero-rated and maximum duty on other items, including manufactured
goods and textile made-ups not to exceed 17.5 per cent. In return
EU has offered 5 per cent duty on imports of textiles from
Pakistan. In the budget for 2001-2002 government of Pakistan has
already reduced its import tariff from 35 per cent to 30 per cent
and is unlikely to trim any further to adversely effect its
revenue.
Pakistan's exports of textile quota items to EU
member countries in the year 2000 were estimated at $963 million
as compared to $924 million in 1999 (increase of 4 per cent).
There are 15 different textile items, which are subject to quota
restraint. The overall utilization of EU quota in 2000 was 79 per
cent as compared to 78 per cent in 1999.
All Pakistan Textile Mills Association (APTMA)
members are exporting to EU against quota categories of yarn,
fabrics and bed linen, annual ceiling of which were utilized above
90 per cent in 2000.
Removal of quota restrictions by the European
Union on Pakista's textile exports alone would not be enough if
eventually the talks conclude to a mutually acceptable agreement
between the two governments.
The EU must also ensure that it would not
resort to anti-dumping duty on any Pakista's textiles and would
also accord generalized system of Preferential Treatment.
Pakistani exporters who are presently content with export of low
quality fabric produced in power and auto looms at cheap rates
would have to face an open market competition in terms of both
quality and price after the phasing out of quota regime on January
1, 2005.
Therefore removal of quota by EU with mutual
understanding could be helpful to the textile exporters sincerely
engaged in value addition of their textile products
The financial wizard in Pakistan however are confident to hit
the export target of $10.6 billion set for the current fiscal in
view of various corrective and supportive measures taken in the
recently announced trade policy.
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