The scheme, unveiled on Thursday, will suspend tariffs on 75
types of Pakistani-made goods which account for about 27 percent of exports to
the EU, boosting sales by about 100 million euros.
The move is meant to help Pakistan recover from devastating
floods and maintain political stability. In parallel, Islamabad has agreed to
take back illegal migrants returned by EU states.
Most of the trade concessions will be on textile exports,
though there will be no tariff cuts on Pakistan’s main product — bed linen —
because of EU industry opposition.
“This proposal will offer a real boost to Pakistan’s
economic recovery, while at the same time taking into account sensitivities of
EU industries,” EU trade chief Karel De Gucht told reporters.
The plan foresees suspending tariffs for up to three years,
and will include monitoring to ensure exporters from other states do not try to
smuggle their wares into Europe via Pakistan to avoid duties.
It must be approved by EU governments, the European
Parliament and members of the World Trade Organization, including India, Sri
Lanka and Bangladesh, which compete with Pakistan for textile sales to Europe.
EU officials said they hope for full approval by January.
EU manufacturers criticized the plan for including sensitive
products such as cotton yarn, fabrics and towels, in which European industry is
already struggling to compete with countries that have access to cheap local
cotton.
“We don’t believe our textile and clothing industry should
have to pay for what Europe is giving to Pakistan,” said Luisa Santos, head for
international trade issues at EU textile and clothing lobby Euratex.
“This will not help regular Pakistanis. This will help a
couple of companies that already have turnover of more than 200 million euros,”
she added.
Among companies that could gain from the plan are Pakistan’s
largest listed textile company, Nishat Mills Ltd and Sapphire Textile Mills.
Reeling from floods that have displaced millions, Pakistan
has said it urgently needs greater market access to help stabilise its economy,
and has said Islamist militants could exploit its economic crisis and any
political instability.
The plan was unveiled on the same day as EU ministers
approved an agreement with Pakistan that allows either side to return any
illegal migrants to their country of origin.
Britain, Sweden and Germany pushed for the trade benefits,
but France, Italy and other EU states with domestic textile and clothing
industries were reticent at a time of economic stress. Others say the
concessions will do most harm to Bangladesh.
“This is robbing Peter to pay Paul,” said one trade expert
from a country outside the EU. “The only reason it will go through is because
of political relations in the region.” Products affected by the tariff
suspension include cotton yarn, woven fabrics, cotton jackets, trousers, baby
clothes, socks, gloves, sandals and mushrooms. The tariff break also allows for
100,000 tons of ethanol per year.
