The potential for boosting exports is enormous but also dependent on adhering to the rules regulating the foreign trade


Mar 24 - 30, 2003





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 competitive prices.