GSP is most commonly associated with the EU countries that have given Pakistan GSP Plus status. Less part of the trade media hype is the GSP scheme awarded by US to Pakistan. Though UK’s pending annexation from the EU raised concerns of Britain continuing to offer preferential tariffs under GSP Plus, the expiry of US’s GSP scheme due the end of December is barely a blip on the radar.
In terms of export partners, EU as a trading bloc is the market for more $7 billion of Pakistan’s products. Country-wise however, US is Pakistan’s biggest market with $3.7 billion exported in the last fiscal year. Under the GSP, 3,500 products are covered that make up more than $17 billion of US’s imports.
EU’s GSP Plus is widely associated with the textile sector and highlighted because of it. Since a lot of textiles, leather and apparel exports are not covered under US’s GSP; it has not become a significant part of the trade conversation.
This indicates the general lack of awareness not only in the media, but in the business community as well. For example, there are 7 tariff lines under HS Code 4302 – articles of leather apparel and accessories that are covered under the GSP scheme. Other than leather goods, there are over a 100 products of silk, wool, and cotton at HS Code 8 digit level covered by GSP.
Yet Pakistan does not manufacture to export these items. Given the potential of exports, it is astonishing that Pakistan can negotiate trade agreements that yield meagre results at best but not gear the goods that it has a comparative advantage in accordance to the needs of its top export market.
However, the potential that Pakistan could have leveraged from US’s GSP may end up becoming a moot point. Pakistan’s GSP status is due to expire in a matter of days and the chances of regaining it seems low due to some new regulations that the US Trade Representative (USTR) had introduced in October. Furthermore, given Pakistan’s current political relations with the United States, it seems dicey whether US Congress will approve reauthorisation of the scheme. As things stand, Pakistan may be about to lose a strong means of increasing its export to the United States.
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