GSP Plus and us

By Syed Mohammad Ali

Published: July 28, 2016, The Expresss Tribume
Our commerce minister recently pointed out that Britains exit from the European Union
(EU) would not have any impact on our exports to either Britain or the rest of the EU under
the Generalised Scheme of Preferences (GSP) Plus arrangement. Thus far, however, Pakistan
has hardly been able to avail the potential opportunities provided by our GSP Plus status.
Pakistan was granted this status back in 2014 and this was considered to be great news for
our economy. GSP Plus meant we could increase exports of textile, leather and other goods to
27 European countries till 2017 without any duties or at preferential rates. This trade
concession was meant to provide a major boost to our exports, given that EU accounts for 25
per cent of Pakistans total exports. Yet, while neighbouring countries like Bangladesh have
managed to increase their exports to the EU due to this facility, our exports to the EU in fact
declined (by over 14 per cent during the 2014-15 period).
Pakistan has not been able to take the expected advantage of the GSP Plus-provided
opportunity due to a combination of factors. Some of the impediments relate to lack of
adequate support to the industries concerned in the form of reliable energy supply, for
example. Misplaced economic priorities are another related problem, which lead to the
export of raw cotton, rather than ensuring its availability for value-added textile production.
There is, however, a host of other reasons, which need to be addressed that have to do with
addressing the broader stated objectives of GSP Plus. The EU had basically instituted the GSP
Plus status to encourage developing economies with low economic diversification and
insufficient integration within the international economy to improve their human rights and
governance in lieu of special trade concessions.
The GSP Plus status requires implementing over two dozen international conventions under
the International Covenant on Civil and Political Rights pertaining to political participation,
protection of minorities, gender equality and child protection issues. According to the
European Commissions first assessment report, released just a few months ago, Pakistan has
not taken significant steps to help achieve the objectives of the provided special status.
Besides the ongoing human rights violations within the country, Pakistan has also not taken

sufficient steps to prevent the widespread exploitation of its workers. Ensuring a decent work
environment is difficult within the country given the inadequate capacity to implement our
existing labour laws. According to ILO estimates, there are less than 400 labour inspectors
across Pakistan. The available labour inspectors are also often accused of corruption and of
collusion with employers. We have also not made any real progress in terms of preserving
workers rights to form unions, strengthening social insurance schemes, abolishing bonded
labour or eliminating child labour since having become signatories to GSP Plus.
The bulk of labour exploitation takes place in our informal sector, which is much larger than
the formal sector, but it is not regulated and thus remains beyond the purview of labour laws
or inspections. The issue of environmental degradation is also on the list of conventions we
are supposed to adhere to under the GSP Plus status. Yet, instead of focusing on keeping
emissions low and trying to improve productivity without exacerbating climate change,
Pakistan is instead pressing ahead with fossil fuel generated energy projects with great gusto.
Mechanisms such as the GSP Plus may not be able to revise adverse terms of trade and
address the broader inequities of the existing global production system, but at least they can
help curb the race to the bottom, whereby developing countries are outdoing each other in
exploiting their local workforce and environment in a desperate bid to secure foreign direct
investment or to boost exports. Instead of only focusing on economic factors, which have led
to a decrease in exports like textiles when reviewing our performance vis-a-vis GSP Plus, our
policymakers must also simultaneously try to provide more protection to formal and informal
workers within the country. The consequences of this ongoing neglect are grave since it does
not only serve to undermine our ability to retain the GSP Plus status, it will also continue to
dampen the future productivity of our workforce, with or without the incentive of preferential
trade opportunities.
Published in The Express Tribune, July 29th, 2016.
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daily pieces

Pakistan fails to fully exploit EUs GSP plus concession

By Israr Khan
January 23, 2016

ISLAMABAD: Pakistan has almost failed to fully exploit the European Unions GSP plus facility on
the back of governments poor policy response and especially indifference towards the countrys top
export oriented textile sector, the countrys total exports dwindled by 14.4 percent during JulyDecember 2015/16.
Despite the European Unions granting of Generalized Scheme of Preferences (GSP) Plus status to
Pakistan, the economy could not able to exploit it due to various reasons including bottlenecks in
policy, implementation and priorities, Muhammad Jawed Bilwani, Chairman Pakistan Apparel Forum
said. If this sector was properly not shouldered, it could create a serious balance of payment crisis and
pressure the economy.
Pakistan had entered the GSP plus club from January 1, 2014, enabling it to export textile goods to 27
European countries till 2017 without any duties. Under it, almost 20 percent of Pakistani exports
entering the EU market at zero tariff and 70 percent at preferential rates. EU accounts for 25 percent of
Pakistans exports and 10 percent of imports. The bilateral trade volume is around $11 billion.
Pakistan is exporting mainly textiles and leather products to EU and imported mechanical and
electrical machinery, chemical and pharmaceutical products.
During the period under review, the new born Bangladeshs exports have increased by eight percent,
while ours has declined by 14.4 percent, it is clearly evident that all the ministries and departments
concerned and related to exports of our country have miserably failed, Bilwani said.
The most vital Value Added Textile Sector has been facing sheer neglect and is not being taken on
board nor consulted and is rapidly losing its share in the global market against regional competitorsIndia, Bangladesh, Sri Lanka just because the government does not seem to care at all, he said. No
textiles minister has been appointed so far.
The government has also upheld billions of rupees refunds of the sector for years. It is violating its
own rules which are evident from the fact that according to FBR rules the payment of sales tax refund
claims would be paid within seven days of the date of Refund Payment Order (RPO) but this rule is
blatantly ignored by the government officials and billions of rupees claims are pending with the
government.
Unless our cost of inputs are brought down in comparison to Bangladesh and India; unless revival of
the Zero Rating of exports No Payment No Refund System; unless billions of rupees refunds to
exporters are released, there is absolutely no chance in the resuscitating and rejuvenating our exports
which are presently in ICU state, he said.
During July-December 2015-16, textile exports declined by 8.9 percent to $6.27 billion over
corresponding period of last fiscal.
The government has imposed duty on import of raw material while actually duty should be imposed
on export of raw material which policy is really pathetic as globally it is a practice that export of raw
material are discouraged.