EU PACKAGE & CRISIS-HIT EXPORTING SECTOR
Feb 6 - 12, 2012
Approval of EU package that allows duty free access to Pakistani products, normalization of trade with India, and currency swap with China and Turkey mean opening of new avenues of exports. However, these pose a challenge to the exporting sector of catering to new demands in the face of acute energy crisis coupled with abnormal hike in POL products, gas, and electricity prices.
Apparently, the unabated increase in energy prices would be rendering the local products uncompetitive in the export market besides giving a way to the imported goods.
Why the policy makers do not follow the examples of China or India where energy prices are kept at the lowest level for the industries to give a big push to production volume. It is quite simple to understand that instead of using electricity, gas and POL products as the revenue collecting agencies, it is preferable to allow the industries to produce more and more with low cost of production and inputs.
Recently, development on export front with the opening of new avenues carries the potential to promote foreign trade to a much higher level than the export receipts of $25 billion last year. It all depends on the policymakers to strengthen our export regime to optimize exports volume with competitive prices in the world market.
EXPORT RECEIPTS BY COMMODITY (THOUSAND US DOLLAR)
TEXTILE JULY-JUNE JULY-DEC 2008-09 2009-10 2010-11 2010-11 2011-12 B. Textile Group 9,776,297 10,182,109 13,075,868 5,902,607 6,594,014 1 Raw Cotton 105,416 209,221 309,587 175,427 134,594 2.Cotton Yarn 988,907 1,237,770 1,785,603 648,760 803,558 3.Cotton Cloth 2,106,840 1,880,161 2,443,733 1,094,518 1,314,582 4.Cotton Carded or Combed 136,562 131,889 156,270 73,979 92,188 5.Yarn Other than Cotton Yarn 70,047 46,853 59,266 17,945 35,847 6. Knitwear 2,054,853 2,061,219 2,708,993 1,301,041 1,267,873 7.Bed Wear 1,526,642 1,641,145 2,026,962 958,056 999,659 8.Towels 546,591 603,035 633,500 299,477 328,929 9.Tents,Canvas & Tarpulin 61,294 75,593 80,765 39,034 43,754 10.Readymade Garments 983,443 963,685 1,091,516 499,162 695,588 11.Art,Silk & Synthetic Textile 387,410 409,123 629,123 281,766 371,532 12.Madeup Articles(incl.Other Tex 330,484 327,596 371,882 178,848 202,566 Other Textile Materials
477,808 594,820 778,668 334,595 303,345
It is heartening to note that after hectic endeavors by the government, the World Trade Organization (WTO) has approved a European Union (EU) waiver on duties for 75 products from Pakistan, a scheme intended to boost textile exports to help Pakistan recover from massive floods in 2010. These products include certain textile varieties, leather goods, and ethanol.
The EU used its contacts to convince those countries including Bangladesh, which were opposing the package on different grounds. India however had announced her support for the package at a meeting between Prime Ministers of India and Pakistan. Now the trade package would be presented before the General Conference of the WTO for approval where no opposition is expected.
It may be recalled that EU had requested for this waiver in 2010. Under most favored nation (MFN) principle of the WTO, no member can give a unilateral trade concession to a country of group of countries without extending the same concession to all members of the WTO. A departure from the MFN principle requires a waiver hence a unilateral grant trade concession by the EU to Pakistan needed a waiver.
According to the commerce ministry, approval of such a waiver from WTO was extremely difficult especially since no prior precedent exists where a waiver was granted to a country to address the economic effects of a natural calamity.
The EU's request for waiver was blocked by various countries including Bangladesh. After hectic negotiations between the EU, Pakistan and these countries the concerns of these countries were addressed through a revised request by the EU, which retained all the products of the original proposals.
The EU concessions and passage of WTO waiver is the result of intense diplomatic efforts of the government. The president and the prime minister during the Pakistan-European Union summits held in 2010 and 2011 in Brussels underlined the need for Pakistan's enhanced market access to the EU as part of government of Pakistan's strategy of "Trade not Aid"
After the General Conference clears the package, a Bill will be tabled in the European Parliament for final approval in which some changes may be made but not necessary.
Other textile exporters such as Brazil, India, Indonesia, and Bangladesh had opposed the plan but dropped their objections after the EU amended the scheme to use tariff rate quotas on 20 products rather than full liberalization. The waiver will apply from Jan 1, 2012 until Dec 31, 2013, but first needs to be rubber-stamped by the WTO's General Council.
The word about the approval of EU Package has sparked enthusiasm in the value-added textile sector, which has termed the package offered by EU as a good omen to the ailing textile industry.
The textile exporters feel that the long awaited package would bring a life to garment and apparel industry. They said that EU package for 2 years, extendable for 3rd year, was offered last year.