KARACHI: Vice President of the Pakistan Businesses Forum (PBF) Ahmad Jawad has said the European Commission and Pakistan may launch the EU-Pakistan Trade and Technology Council to allow the two sides to tackle challenges in the areas of trade, technology and security, besides deepening cooperation in the said fields.
Europe is Pakistan’s second most important trading partner, as it accounted for 14.3% of the country’s total trade in 2020 and absorbed 28% of Pakistan’s total exports.
In 2020, Pakistan was the EU’s 42nd largest trading partner in goods, as it accounted for 0.3% of the total EU trade. Pakistani exports to the EU are dominated by textiles and clothing, accounting for 75.2% of the country’s total exports in 2020.
Pakistan’s imports from the EU mainly comprise machinery and transport equipment (33.5% in 2020) as well as chemicals (22.2% in 2020). From 2010 to 2020, EU-27 imports from Pakistan almost doubled, from €3,072 million to €5,537 million.
The growth of imports from Pakistan has been particularly fast since the award of GSP+ (€5,515 million in 2014).
“Textiles and clothing account for over 80% of Pakistan’s exports to the EU,” said Jawad. “While the textiles and clothing industry are the backbone of Pakistani exports, relying so heavily on one product category carries risks for Pakistan. Trade diversification would play an important role in this respect; the granting of GSP+ preferences in 2014 should stimulate Pakistan’s efforts towards diversification.”
He went on to say: “It is an inevitable fact that our economy holds considerable potential, but high costs of doing business, complex regulation and infrastructure bottlenecks all have a detrimental effect on trade and growth. Pakistan’s trade regime and regulatory environment still remain comparatively restrictive.”
He was of the view that Pakistan should aim to nurture relations with the US and EU that are not affected by changes on the political front. Pakistan’s diplomatic relationships must be based on shared interests with each country. There are several examples of countries whose economic links remain intact despite political or border conflicts. For instance, in 2021 the overall trade between China and India stood at $125.66 billion, up 43.3 percent from the previous year.
During this time, numerous military and political scuffles took place between India and China over the disputed region of Ladakh. The Ladakh problem had served to block cooperation on all fronts except trade at the time.
Jawad said the EU is a full toolbox of solutions; they have a lot of peacekeeping missions and bureaucratic exchanges which can benefit Pakistanis, if “we may tap them properly”.
He noted that Pakistan’s current GSP+ status ends in December 2023, but the country has not been able to take full advantage of what the status offers. For continuation of its GSP+ status beyond 2023, Pakistan will need to apply afresh, seeking continuation of its status.
The EU recently announced that for countries to qualify for GSP+ status for the 2024–34 period, they must commit to implement 32 EU conventions as opposed to the current 27. “Now we need to present robust evidence of progress made since the last report and it has to be tangible with visible effects on the ground in order to convince EU lawmakers of Pakistan’s commitment to the conventions.
The PBF’s vice president said there is no institutional support from the government despite getting zero concession on around 6,300 items under GSP+ status, so the country was unable to fully take advantage of this facility.
He said that only the textile sector was able to benefit from the status but the potential for exports from other sectors, like agriculture, was not tapped. “Even the horticulture sector, despite fulfilling the EU’s requirement, was not able to make its footprint in the European market.”
He said that envoys from different European countries had time and again urged local businessmen to tap potential sectors under the extended facility, particularly kinnows, as there was a big market for such products.
“However, we were unable to make our presence (felt) in the European market and even though it is a major export market for the fruit, the quantity exported remains very small,” he said. “We have not really taken advantage of the benefits that we could have gotten from the GSP+ status.”
Commenting on the reasons for this, he said there was a lack of proper export strategy for the EU. “Ideally, what should have happened was that when we got the GSP status, we should have identified a marketing strategy and held road shows as Europe is a very big market. But our ministries and foreign missions did not work on this front,” he said.
Jawad was of the opinion that there was a lot of focus on promoting textiles, due to which other sectors like leather, halal meat and jewellery were neglected.
Copyright Business Recorder, 2022