ISLAMABAD—The European Union aims to bolster Pakistan’s economy by fulfilling a 16-month-old pledge to slash tariffs on dozens of textile products this spring. The bloc had agreed to grant greater market access to Pakistani exports as a goodwill gesture after devastating floods that tore through the country in 2010.
But the proposal has been held up in a series of negotiations at the World Trade Organization, which must approve the exemptions, it added. According to the report, EU officials are optimistic that
countries that had raised objections - including India, Bangladesh, Brazil, Indonesia and Vietnam - are now prepared to endorse the measures at a series of WTO meetings in February.
France, Italy and Portugal had also initially been wary of the deal, fearing it might hurt their domestic textile industries. With the WTO hurdles cleared, the EU could enshrine the trade terms as soon as April or May, the report quoted Lars-Gunnar Wigemark, the EU ambassador to Pakistan as having said.
“We are hopeful these trade concessions will finally be approved by the WTO and then adopted into law by the European Union,” Wigemark added.
Pakistan has long lobbied western countries for greater access for its textiles - which account for some 60 per cent of its exports - with limited success. Under the deal, the EU will remove tariffs on a list of more than 70 items, mainly textile products but also some ethanol. The report said that India, Pakistan’s regional rival, had been one of the first countries to oppose the plan, but shelved its objections last year as both sides began to take steps to improve ties. EU officials have lobbied other countries who had raised objections to follow suit.
The country of 180m people achieved robust growth in the first half of the last decade, but expansion has slowed significantly in more recent years due in part to energy shortages, floods and war on terror. Suleman Maniya, an analyst at IGI Securities in Karachi, the commercial capital, believes the EU trade package could generate $100m-$300m of additional textile export earnings a year. Pakistan exported about $13bn of textile products last year, he said, and added about the EU deal “it’s not a game-changer, but it’s still a welcome boost.”
Maniya believes the EU concessions will largely benefit major textile concerns as many of the tariff exemptions apply to products such as yarn or cloth. Waheed Khaliq Raamay of the Faisalabad Chamber of Commerce and Industry welcomed the EU’s moves, but said it should also remove tariffs on the kind of clothing produced by the city’s workshops. “They should allow more and more Pakistani items onto the
list, because we have a very wide range of items which can be exported to the EU,” he said.