The European Union (EU) is the largest trading
partner of Pakistan. The further enlargement of the Union, with the
joining of new member countries, offers enormous potential to Pakistan
to boost its exports to the Union but may also pose some threats. The
number of anti-dumping investigations may increase manifold in order to
safeguard the local manufacturers. However, Pakistan can only benefit if
it follows the rules of the game and also exploit the GSP incentive
available to it, keeping in mind that Pakistan is not the only country
enjoying this incentive.
Export Promotion Bureau (EPB) organized a very timely
seminar to create awareness among the exporters about the opportunities
and challenges. Pakistan's Economic Minister in Brussels, Suleman Ghani
talked for hours to the participants. His address mainly covered three
key areas having the potential to impact Pakistan's exports to the
Union. These are, 1) the Generalized System of Preference (GSP), 2) the
anti-dumping law and procedures and 3) impact of the enlargement of the
Union on Pakistan's trade. While his presentation was aimed at overall
trade, most of the participants dragged him into specific issues related
to textiles and clothing sector and particularly the recently initiated
anti-dumping investigations on bed lenin.
His main emphasis was that with the enlargement of
the Union, the potential for export would increase manifold but unless
Pakistani exporters were able to follow the regulatory regime they could
not achieve the target. Pakistan got two extraordinary incentives after
the 9/11, a 15% increase in textile quota and suspension of some
applicable tariffs. These two incentives provide Pakistani exporters
some edge over some its competitors, in terms of cost, but they
(exporters) still have to comply with the regulatory regime. The greater
access offers an opportunity to Pakistani exporters to establish their
credentials before textile quota regime is completely phased out.
He also emphasized that even after quota regime was
phased out Pakistan would continue to enjoy the benefits available under
the GSP system. The GSP system offers non-reciprocal preferential tariff
treatment for developing countries. It was introduced in 1971 and got
its present shape in 1995. It is applicable on 180 countries including
Pakistan. It covers all the products except a few. The new plan for
2005-2015 would be announced in 2004. It will also specifically draw the
guidelines for 2005-2007 period.
While the developing countries are entitled for
reduced tariff under the general arrangements, they are also entitled
for special incentives if they follow the EU guidelines regarding labour,
environment and drugs. The EU also follows a policy of 'graduation'
under which some of the incentives do not remain effective. However, if
the circumstances change the 'graduated' status does not apply.
Therefore, both the government and exporters must comprehend the rules
governing the trade and try to avail the opportunities.
As regards anti-dumping proceedings against Pakistani
exporters, Suleman termed it normal and also warned about the threat of
more investigations once the Union was enlarged. Any anti-dumping
investigation is based on the premise of protection of local industries.
However, the complainant has to prove that either the injury has been
caused or the influx of low cost imports is causing injury to the local
producers. Some of the textile products are considered 'sensitive' by
the importing countries and any substantial growth in quantity imported
is considered a potential threat to the local manufacturers.
Suleman was of the view that instead of crying or
terming these politically motivated, local manufacturers must get
themselves acquainted with the rules governing such investigations.
Since the basis of any investigation is the complaint, its content must
be read very carefully. Effort has to be made to find the legitimacy of
complainant to make such a move. Local exporters should be fully aware
of their market share in total import of the product, under
investigation, by the importing country.
The enlargement of the Union as such does not pose
any threat because Pakistani exporters are already competing with the
new incumbents. However, some of the health rules etc. of the Union, not
being followed by these countries, would come in force once they join
the Union. Therefore, Pakistanis currently exporting to these countries
must learn to follow these rules immediately, before these countries are
formally admitted into the Union.
As such the EU is the biggest buyer of made in
Pakistan products. Its expansion offer new opportunities but not without
certain threats. It is only up to the local manufacturers to get fully
equipped to prove that they can abide by the rules and still supply at