Bangladesh may withdraw complaint over EU help for Pakistan

ADDU CITY: Bangladesh is considering withdrawing a complaint about a European move to grant beneficial import conditions to Pakistani textile makers as an aid measure following Pakistan's floods last year, a senior Bangladeshi official said on Wednesday.

Europe and Pakistan had expected a long-announced plan for trade preferences for Pakistani textile makers to be approved during a meeting of trade diplomats in Geneva this week, but a Bangladeshi complaint halted the move.

Pakistan was being granted the beneficial import conditions to its textile makers as an aid measure following the devastating floods in the South Asian country last year.

Bangladeshi officials said their Pakistani counterparts had "unofficially" raised the matter on the sidelines of an ongoing South Asian leaders' summit on this remote Maldivian atoll.

"I will check with Geneva ... as far as I know we are supposed to withdraw this (complaint)," Bangladesh Foreign Secretary Mohamed Mijarul Quayes told Reuters.

"There has been some informal discussion on this here with the Pakistani officials," he said. "They have asked us unofficially about it and we have told them we are checking and will get back to them. So discussions are on to find out a way."

Islamabad called Dhaka's objections to the beneficial import conditions for its textile makers "an accident".

"Of course, we are very concerned about it. We have been conveyed by them that it was at best an accident," Hina Rabbani Khar, Pakistan's foreign minister, told Reuters.

Bangladesh had concerns about the impact of the European measures, which would make it easier for Pakistan to export textiles to Europe. Bangladesh competes with Pakistan for textiles sales to the European market.

The two-year cut in tariffs offered by the EU would be a small boost for Pakistan's exporters.

World Trade Organization rules say the same deal must be offered to all trade partners, so by making an exception for Pakistan, the EU needs to get all WTO members on side and any single country can block the deal.

"We are very much concerned," said Mohammad Shafiul Islam, president of the Bangladesh Garment Manufacturers and Exporters Association. "As Pakistan is a cotton-producing country, it will be an uneven competition if they are provided trade benefit to EU countries."

Pakistan's top textile body sought to allay these concerns.

"This facility (EU concessions) is just for two years. Also their products are much more competitive than ours," said Mohsin Aziz, chairman of All Pakistan Textile Mills Association.

"It will not hurt their share, it (EU) is such a large and open market. Our government should take up the issue with them and address their concerns."

As a Least Developed Country (LDC), Bangladesh enjoys quota- and duty-free access to EU countries, unlike Pakistan.

Bangladesh exports in the last fiscal year that ended in June 2011 were nearly $23 billion. Readymade garments accounted for more than 80 percent of total export earnings, with 56 percent of overseas sales in EU markets.

Pakistani exporters shipped out textile products worth roughly $2.5 billion to the EU in the same fiscal year, textile officials said.

Until recently India, Pakistan's neighbour and rival, had objected to the European plan, effectively vetoing the move. But as tensions between the two traditional South Asian enemies have eased, India signalled it no longer opposed the plan.

Copyright Reuters, 2011