Daily Times

Over the past four decades, the European Union developed a system of preferential trade, which allowed exporters from developing states to pay lower duties on the products they exported to the EU market. This preferential access titled General Scheme of Preference enabled the states to revive and stabilise their economies through trade and played a key role in promoting the domestic industry established in these states.

Lately, the European Union announced some fundamental changes in GSP for developing countries. These provisions will take effect from January 2014. Hence, products that are imported from states that fit the classification of developing or least developed countries will benefit from little to no duty obligations. These fundamental changes entail adoption of a “Special incentive arrangement for sustainable development and good governance” (GSP plus), which provides additional benefits for vulnerable countries that comply with a list of 16 international conventions on human rights and labour rights, and 11 conventions on good governance and the environment. The GSP plus was designed as a result of the WTO ruling that criticised the previous EU scheme providing special preferences for countries actively involved in the implementation of anti-narcotics programmes. Everything But Arms (EBA) applies to the countries who are seeking GSP plus status. This means that the Least Developed Countries continue to benefit from duty-free, quota-free access to the European markets for all the products except for arms and ammunition. The GSP plus tariff incentives are more attractive compared to the ordinary GSP preferences.

Pakistan had been given concessionary access to the European markets for two years in the past. On the termination of that access, it pleaded its case to the European Union to enact a similar agreement. Only recently did the EU agree to consider Pakistan for the new GSP programme starting in 2014, known as GSP plus. Pakistan has been offered additional tariff reductions as a consequence of GSP plus.

In order to qualify for additional preferences under the GSP plus programme, Pakistan must have ratified and effectively implemented 29 of the most important international conventions. In addition to ratification, Pakistan must provide comprehensive information concerning the legislation and measures taken to implement them.

Under the GSP plus scheme, Pakistan is obligated to enforce effectively its environmental laws and its laws, regulations and other measures to fulfil its international environmental obligations. Such legal obligations (both domestic and international) aim to protect the very fabric of the planet’s ecology and address different dimensions from climate change to the protection of the ozone layer. For instance, Pakistan has ratified both the Montreal Protocol on Substances that Deplete the Ozone Layer and Basel Convention on the Control of Transboundary Movements of Hazardous Waste and their Disposal. Such laws are not being implemented in their letter and spirit and heaps of waste are seen on the roads without any proper disposal arrangement, even though the state was elected President of the Montreal Convention. In addition, Pakistan has been asked to strictly comply with all the human rights conventions; it has lodged numerous reservations on human rights conventions, which must be lifted. Pakistan already withdrew the reservation on International Covenant on Civil and Political Rights (ICCPR) and UN Convention against Torture (UNCAT) as directed by the EU for acquiring GSP plus in 2014. In spite of that, the European Union has been condemning egregious violations of human rights taking place in Pakistan over the years, such as the assassination of Salmaan Taseer, the former Governor of Punjab and the flogging of a 16-year-old girl in Khyber Pakhtunkhwa, and strictly directed the state to abandon its policy of the death penalty. It is mandatory to ensure protection of human rights and to examine ways of ensuring compliance with all the human rights conventions that are binding. The EU GSP plus scheme also gives great importance to labour issues and it has directed the state to adhere to international labour standards. Pakistan has ratified 34 conventions of the ILO; it needs to ensure their implementation, to monitor it vigilantly and strive to adhere to its National Plan of Action for Decent Work (NPADW 2010-2015), which talks about bringing reforms to labour laws. The EU has also expressed dissatisfaction on inadequate legislation over drug pricing policy in Pakistan.

The GSP plus would be beneficial for Pakistan, particularly because it is targeting the least developed countries (LCD), hence there will be less competition from more advanced economies; GSP plus can generate important additional space for the country’s exports. The EU is Pakistan’s single largest trade partner with bilateral trade exceeding 8.1 billion Euros in 2011. It provides an opportunity to Pakistan for improving its relations with the European Union in terms of not only trade but also economic and political relations. Tariffs preference will be suspended when the average value of imports of any item increases by 17.5 percent over three successive years except commodities relevant for Pakistan: textiles for which the cap is 14.5 percent and ethanol for which the cap is 13.5 percent. It will also generate employment for the unemployed youth. In a nutshell, GSP plus will contribute to the reduction of poverty and promotion of sustainable development and good governance by giving a boost to the trading industry.

There is an apprehension that Pakistan may not be successful in getting the GSP plus status due to weak coordination between the government functionaries, i.e. ministry of commerce, textiles, foreign office, etc, and, more importantly, the indifferent attitude of the private sector towards GSP plus prerequisites. Therefore it is mandatory to set up a broad based forum with representation from the public and private sector to review and monitor the progress on GSP plus and take effective measures to withdraw reservations that Pakistan has declared on the conventions.

It has been observed that for an effective access to the EU market, Pakistan needs to conduct awareness-raising sessions on human rights conventions for the industrial sector and ensure uniformity of regulations in all the provinces. It needs to engage legal experts on international law for pointing out the gaps that exist in the ratification and implementation of the conventions and providing guidelines for addressing them. Above all, it has to address the pressure that will be exerted by India and Bangladesh. Pakistan will be naïve to think that India, Bangladesh and all other developing countries will not create hurdles in acquiring an open access to the EU market, because once Pakistan acquires GSP plus status it would not have to make investments in Bangladesh and India.

The writer is a Research Associate at Research Society of International Law and can be reached at sarashujat@rsilpak.org