The GSP+ opportunity

The grant of GSP+ status to Pakistan by the EU, which was very much celebrated by policymakers and other stakeholders, particularly the exporters of the country, is contingent on meeting certain prescribed conditions. Realising the importance of the issue, the government of Pakistan has established a Treaty Implementation Cell (TIC) in the Commerce Ministry to ensure compliance with specified international conventions under EU's low-tariff scheme, ie, GSP+. Representatives from all the provinces were represented in the TIC, which would report on the progress made on promulgation of laws on women, children and minorities' rights. It is hoped that the recent decision by the government to withdraw the moratorium on execution of capital punishment would not pose a serious problem and would be overcome, as contrary to general belief, it is not a condition for availing this facility. The news of the Cell was disclosed by Sadruddin Rashidi, Federal Minister for Overseas Pakistanis and Human Resource Development at the launch of the first-ever Buyers' Forum for the country's textile and garment sector. The event was attended by well-known buyers and brands such as GAP, Wal-Mart, Target, H&M, Adidas, Levi Strauss, Primark, Hema and C&A who expressed their commitment to sustainable practices, improving compliance and reporting on environmental, labour, health and safety standards and their implementation. Speaking on the occasion, Ambassador of the Netherlands said that "the Netherlands is a free-trade nation. But free-trade is not free. It needs to be in compliance with labour standards, human rights and environmental standards. Labour conditions are very important to consumers and companies in Europe." It was also revealed that the Netherlands was in discussion with ILO regarding financial support to a major project to improve labour conditions in Pakistan. Stefano Gatto, charge d' affaires of the EU, stated that decent work, adherence to international labour rights and standards were of key importance in a modern economy and it was a high priority area for the European Union, both for its internal policies and international co-operation. Country Director ILO Office for Pakistan appreciated the reporting on the eight labour laws but highlighted areas like data compilation, law and procedures and capacity issues, which required further focus of the government.
The revelation about setting up of a TIC and observations by foreign dignitaries show the seriousness of the issue and the degree of keenness with which the EU countries are watching Pakistan's compliance with the statutory obligations prescribed for the grant of GSP+ status to a country. It needs to be emphasised that meeting of obligations is not a one-time affair only but have to be strictly adhered to throughout the life of the facility granted to the country. Further, most of the other countries have also become quite sensitive to the violation of certain standards, and as such, Pakistan cannot afford to neglect key conditions of the EU due to the fear that it could also lose its other foreign markets. It may be mentioned that the entire increase in Pakistan's exports during FY14 came from the EU, which had granted GSP Plus status to Pakistan in January 2014. During the year six member countries - the UK, Germany, Italy, Spain, the Netherlands and France - were among the 10 high-performing destinations for Pakistan exports. Clearly, it was due to the increased demand from European importers who had started building networks with Pakistani counterparts as early as in the middle of 2013 in anticipation of the new status. It is of utmost importance for Pakistani exporters to gain further access to the EU markets because the country is losing ground in the US textile market due to a steady shift in the preference of US consumers from cotton-based products to man-made fibre. Also, the 10-year GSP Plus status for Pakistan would not only revive the industrial sector of the economy but would help create thousands of jobs for the people, which is of utmost importance at this stage. It is estimated that country's exports could increase by more than dollar 1 billion due to the grant of facility. The GSP+ arrangement, which is conditional to ratification and implementation of 27 international conventions, definitely provides a very sound platform for promoting exports and narrowing the widening gap in the trade balance of the country. It was clearly against this background that the decision to establish the TIC was taken by the government to ensure that the country remains absolutely committed to the implementation of necessary conditions and could initiate timely action if a violation was anticipated to deprive the country of its favoured status in the EU market.
However, it needs to be stressed that a favourable treatment by the EU could help but is not a guarantee for the rapid expansion in exports. For a sustainable growth in exports, authorities of the country also need to enhance productive and exportable capacity of the country by removing energy shortages, ending corruption and militancy, ensuring policy certainty and maintaining a competitive exchange rate. Besides, while welcoming the grant of GSP+ status and the efforts of the authorities to preserve this status, one must also not lose sight of the fact that such incentives are time bound and depend on the goodwill of other countries.