ISLAMABAD: Pakistan’s exports to European Union (EU) countries have surged by 20 per cent during initial year of GSP plus status, indicating the highest-ever growth since 2006. According to the study conducted by the Pakistan Business Council (PBC), the EU imports from Pakistan grew by 20pc during initial year of GSP+ status, a significant rise from an average annual growth rate of 7pc from 2006 to 2013.
It said that Pakistan’s GSP+ status, under the EU new generalised scheme of preferences, came into effect from January 1, 2014, which provided zero per cent preferential tariff rates on approximately 66pc of the EU’s tariff lines. The EU is Pakistan’s largest trading partner, importing US $8.1 billion, or 33pc of Pakistan’s total exports in 2014, of which, 94pc or US $7.7bn fell under GSP+ coverage, the study said.
The study has found that under GSP+ status, there may be enough potential to increase the EU imports from Pakistan by US $3.6bn (from US $8.1bn to US $11.7bn by the end of 2017 and if GSP+ status had not been granted in 2014, the EU imports from Pakistan would have likely risen not more than US $8.9bn by the end of GSP + period or 2017.
In 2014, Pakistan’s textile exports to EU stood at US $5.9bn, which is 72pc of total EU imports from Pakistan or 43pc of country’s total textile exports, while rest of the US $2.2bn exports were from non-textile sector. The study stated that textile sector experienced 21pc growth, while non-textile sector posted 17pc growth during initial GSP+ year, which was lower than the total annual average.
It further said that industries in Pakistan by and large appeared unaware of the full scope of GSP+ coverage, assuming perhaps that preferences were for the textile sector alone. It also revealed that although GSP plus status was an incredible opportunity to increase export revenue in the short-term, it also posed significant risks of making Pakistan dependent on a scheme that the European Commission unilaterally controls, not to mention extreme volatility in export revenue and vulnerability to external economic shocks.
Despite being beneficiaries of the scheme for only a year, Pakistan’s industry leaders are concerned about the textile sector’s dependency on GSP+, and believe that withdrawal of preferential tariffs will significantly hurt the industry, study said. Keeping this in view, the study said that PBC has recommended to the government to make industries and traders aware about the opportunities and risk of GSP+ status. The PBC also stressed the need for developing regional trade and exploring the potential of emerging economies in Asia, Africa and South America as what PBC believed that it was the only way to create stable and consistent economic growth.
