GSP-Plus & textile industry

The eighth largest exporter of textile products in Asia and the fourth largest cotton producer in the world, Pakistan is a country whose fibre potential remains untapped even today.
While the sector is inarguably indispensable to the economy - employing some 30 percent of the countrys 49 million workforce - the sectors overall performances over the last five years continue to leave a bad taste in ones mouth.
Despite the fact that Pakistan has the third largest spinning capacity in Asia, its total exports of ready-made garments - which sit at the top of the value-added chain - still hover around the billion dollar mark, making up less than 10 percent of the countrys total textile exports.
To top that up, the country has almost zero share of branded and high-value fashion and sportswear textile in global markets, despite huge public demand for such products in Europe and the US. Consequently this demand is fulfilled by the countrys direct competitors, India and Bangladesh, who have continued to siphon away demand for the higher value added textile products from Pakistan.
The better part of the last 12 months however, have been kinder to the countrys textile segment, largely on account of Chinas aggressive cotton stockpiling policy that has pushed up domestic prices, forcing the worlds largest textile industry to boost imports of yarn by as much as a third in 2013, while production moves to South East Asia, drawn by lower costs there.
But to call a spade a spade, Pakistans textiles are stuck in a low value added rut. And this has been certainly exacerbated by the lack of will on the part of policymakers who have still been unable to negotiate the GSP plus status despite the fact that the ball has been in their court for a while now.
Currently, Pakistan gets about $10.2 billion of its $12.5 billion textile export revenue from a narrow base of around 20 countries. And for a larger part, yarn grey fabric and low value added made-ups continue to dominate these dispatches. Moreover, total textile exports account for merely 5.7 percent of the total textile imports of the 20 countries who source from Pakistan.
On the contrary, competitors like Bangladesh, who have duty-free access to markets like Russia and Malaysia and a GSP status for European and American exports, witnessed a 6.5 percent growth over last years textile export total. The countrys exports to the European and American markets alone went up to $6 billion during FY11-12 according to the Export Promotion Bureau of Bangladesh.
Going forward, the textile sector continues to remain hopeful about the possibility that the countrys exports might gain the much coveted GSP Plus status in 2014, which will help the countrys textiles gain some footings in the European value added textile market.
Islamabads long-standing demand for an early and better deal for its textile and apparel exports to the 27-nation bloc have however been continuously failing for the better part of the last 2 years and the lack of EU movement on textile tariffs is embarrassing for Islamabad which has been pressing for such a move for several years.
Although Pakistan qualifies for GSP Plus status but to get the status it would have to submit an application to the EU Commission in Brussels and sources report that the new government is yet to make that application. Now all eyes rest in unison on the pro-industry PML-N regime and the decisions it will make in this regard, are hopefully expected to come to light by the end of this year.