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BR Research

EU-bound exports after GSP+

The initial statistics for Pakistan's trade with the EU are telling a different story.
Published September 19, 2014

The initial statistics for Pakistan's trade with the EU are telling a different story.
The PML-N government was successful in bagging the GSP+ status from the European Union (EU). According to the Ministry of Commerce, between Jan-May 2014, Pakistan's exports to the 28-member block registered a year-on-year growth of 16.53 percent (or $433.13 million). The GSP+ award started in January this year.
EU is one of Pakistan's most significant trading partners. Between 2009 and 2013, the Pakistan's CAGR of exports to the EU was 6.23 percent, whereas exports to EU member states totalled $6.21 billion in 2013.
The sector-wise division of exports shows that Pakistani exports to the EU are subjugated by textiles as well as leather goods. Pakistan's exports of textiles to the EU amounted to $2.15 billion, during the first five months of 2014, signifying an additional $360.09 million. According to the European Commission, the textile products (garments, home textiles and intermediary goods) continued to be the chief beneficiary of the GSP+ facility with an annual growth rate of 8.1 percent.
As per industry analysts, exports are anticipated to increase in the coming months owing to the depreciation of rupee against the dollar due to the political unrest. Moreover, SBP is ostensibly not interfering in the market to depreciate the local currency to enhance exports.
However, an APTMA member stresses that GSP+ arrangement may get to wash its hands of the advantages due to prevalent political instability. Moreover, mismatch in electricity and gas availability to Punjab-based textile industry has compelled them to limit production as they suffer from losses on commitment failure with foreign buyers.
Furthermore, hefty sum of sales tax refunds are pending since one and a half years, depriving the textile industry of an equivalent amount of liquidity that could be used up in business.
The January to May 2014 EU trade figures are impressive. But, in order to double the textile exports, it is essential that textile players should opt for increased usage of man-made fibers, enhance brand development and follow international trends to materialise the maximum benefits from the GSP+ award.

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