THURSDAY JANUARY 26: EU concession package: Peru, Brazil yet to be convinced

ISLAMABAD: Pakistan is yet to convince Peru and Brazil on the European Union (EU) trade package meant for flood affectees of 2010, sources in Commerce Ministry told Business Recorder. "Consultations with both countries are still continuing and we hope that these will be addressed by the end of current month," sources added.
Pakistan's Ambassador to WTO, Shahid Bashir, and Ambassador to Belgium, along with Economic Minister, Brussels, are also continuing to consult their counterparts from Brazil and Peru for early resolution of the dispute over tariff lines offered by the EU to Pakistan.
Giving the background, sources said that European Council in its meeting on 16th September, 2010 decided in principle to grant time limited and immediate Pakistan-specific trade concessions on 75 tariff lines, subject to WTO waiver. A total number of 15 products will be subject to Tariff Rate Quota (TRQ).
The Government of Pakistan is also lobbying through missions in the respective countries for allaying their concerns and making the case that their vital export interests will not be hurt if EU's package for concessions to Pakistan is implemented after a waiver from WTO.
The package includes 33 products of non-value-added textiles, 23 products of textile garments, 8 products of home textiles, 4 products of value-added leather, 3 products of footwear, 2 products of raw leather, 1 product of ethanol and 1 product of vegetables. Sources said that average existing tariff on import of these products included in the package is 7.19 percent. However, it varies from 31.2 percent on ethyl alcohol to 2.5 percent on raw leather. Under the proposed package, the tariff will be reduced to zero, for a period of two years, extendable for another one year.
Pakistan's exports of these products to EU were worth 1043.58 million Euros as per the statistics available for January - October, 2011. The export of these products was worth 865.95 million Euros during the same period in 2010. This is also higher than the total export of these 75 products during the entire year of 2010 when they were registered to be worth 1032.91 million Euros.
In order to allay the concerns of other countries, the EU decided to subject 15 products to TRQ. Ethyl alcohol will be allowed duty-free access up to the volume of 80,000 metric tons per annum. For other products 20 percent cap will be put on average exports from Pakistan for last three year to EU for duty-free access, beyond the normal GSP tariff will be applied. From the study of exports of these products it becomes evident that there is sufficient room for duty-free access on these products, sources added.
While the proposed trade concessions were an initiative of EU on humanitarian grounds and it was for them to advocate the case, Government of Pakistan also launched a vigorous lobbying and consultation campaign for the WTO waiver immediately after the announcement of the proposed package by European Council in September, 2010.
Secretary Commerce visited Sri Lanka on 12th November, 2010 and held meeting with Sri Lanka's Minister and Secretary of Commerce and Industry. Afterwards, Secretary Commerce also visited Geneva on 26th November, 2010, where he held meetings with Ambassadors of USA, Switzerland, China, Bangladesh, European Union, India and Lesotho (who held chair of Council for Trade in Goods of WTO). The motion for WTO waiver on trade concession was placed before the members of WTO in Council for Trade in Goods (CTG) on 30th November, 2010.
The proposal received world-wide support as USA, China, Saudi Arabia, Kuwait, Uruguay, Mauritius, Madagascar, Chile, Turkey, Uganda, Zambia, Colombia, Hong Kong, Chinese Taipei, Barbados, Norway and Sri Lanka supported the waiver.
However, a few countries namely Brazil, Peru, Vietnam and Bangladesh sought consultations with EU for further clarification and to address their concerns on certain products included in the proposed package. India, however, was the only country to voice opposition against the tariff concessions as a means to help the flood affected population of Pakistan.
After the CTG meeting on 30th November, 2010, the Ministry of Commerce in consultation with Ministry of Foreign Affairs chalked out strategy for securing support of the countries which had expressed reservations and to neutralise Indian opposition, with the approval of the Prime Minister. As the situation unfolded in WTO, the following actions were taken: (i) Prime Minister wrote to his counterpart in Bangladesh seeking support for WTO waiver, in January, 2011; (ii) Commerce Minister on 27th January, 2011 wrote to his counterparts in India, Peru, Bangladesh, Brazil and Vietnam, making a case for Pakistan by elaborating how the proposed concessions will not adversely impact their vital interests in EU.
The CTG meetings were subsequently held on 30th January and 21st March, 2011. India continued to oppose the WTO waiver for the proposed tariff concessions announced by EU for Pakistan. On 30th March, 2011 on the occasion of the semi-final of the Cricket World Cup 2011 played between Pakistan and India at Mohali, Prime Minister himself took up the matter of Indian opposition in WTO with his Indian counterpart where his counterpart assured that India would support the WTO waiver on EU package of trade concessions for Pakistan.
Sources said that since CTG could not form a consensus among all members within ninety days, the matter was put before the General Council of WTO on 3rd May, 2011, where EU requested for permission to continue consultations on WTO waiver. CTG was accordingly mandated to continue consultations with the countries that had expressed reservations and sought further consultations.
However, the earlier assurance of the Indian Prime Minister was not reflected in the stance of Indian Ambassador to WTO, who continued to reiterate arguments presented in earlier meetings of CTG. In view of this development, Commerce Minister wrote to his Indian counterpart on 18th May, 2011, reminding him of the promise of Indian Prime Minister for supporting the motion for WTO waiver on trade concessions announced by EU for Pakistan.
"Commerce Minister desired that we expect Indian support in the meeting of CTG then scheduled to take place on 26th May, 2011. However, the promise of Indian Prime Minister was not actualised into support for the WTO waiver in the meeting of CTG on 26th May, 2011," sources added.
Indian opposition was eventually withdrawn in the meeting of CTG on 7th November, 2011 after Commerce Ministers of both countries met in New Delhi earlier. However during the meeting Bangladesh, Brazil, Argentina, Peru and Indonesia voiced their reservations.
After the meeting of CTG on 7th November, 2011 EU, Pakistan's Ambassador to WTO and Economic Minister, Brussels in consultation with Foreign Office immediately started consultations with countries which had voiced reservations. As a result, Bangladesh agreed to withdraw opposition to the package after inclusion of eight more products (to seven included earlier) the list of products to be subjected to Tariff Rate Quota (TRQ). Argentina also assured that it would no longer oppose the motion for waiver in WTO. Pakistan's Ambassador to WTO has informed that Ambassador of Indonesia to WTO has conveyed Indonesia's support for WTO waiver to the EU Ambassador at Geneva. After the successful passage through WTO, a bill will be placed before European Parliament for legislation before it comes into effect, sources said.