LAHORE: The experts have warned the government, the industry and other stakeholders to ensure compliance with 27 Conventions for continuation of free market access to EU countries under GSP plus status, as Sri Lanka lost the status in 2010 owing to its failure to comply with the Conventions related to human and labour rights.
In its report, the Pakistan Business Council (PBC) stated that since compliance is a major element, the government may consider providing matching grants for industries wanting to put in place infrastructure needed for meeting buyer’s compliance requirements. The study conducted by the PBC reveals that maximum additional increase in imports from Pakistan to the EU after fulfilling all criteria under the GSP Plus scheme is estimated to be $1 billion over a three-year period.
Given the various challenges identified in this study, PBC proposes a broad based strategy for optimising the GSP Plus opportunity. However, whether this potential can be fully realised will depend on factors not just limited to a zero tariff access. Other factors such as lower prices, proximity to the EU market, better supply chain integration, and competitiveness of the industry as well as the industry’s ability to rapidly scale up production are important. A compliance review will be held by the EU in 2016.
The study estimates maximum potential imports by the EU from Pakistan in 2016 at about $7.7 billion. However, without GSP plus it is projected that imports by the EU would have reached $6.6 billion by 2016 growing at the average rate of last three years.
GSP plus export projections have been made with the capping mechanism defined under the GSP Plus scheme where maximum annual growth is limited to 17.5 percent in all sectors (14.5 percent in textiles and 13.5 percent in ethanol) to avail zero duty. In 2013 imports by EU was worth $6.0 billion out of which imports amounting to US $2.96 billion would qualify for zero duty under the GSP Plus scheme since they had a market share of less than 6 percent of EU’s total imports from the world.
The major components of the proposed optimisation strategy include: (i) Government, industry and other stakeholders including the political parties in Pakistan need to ensure that the country complies with the requirements and the 27 conventions under which GSP Plus has granted; (ii) each industry in the ‘high potential’ sectors needs to do a competitive analysis and benchmark itself against the industry’s major competitors in the EU markets; (iii) government and industry bodies need a joint strategy to inform exporters of the opportunities that are available to Pakistan under the GSP Plus scheme as well as making them aware of the obstacles; (iv) government needs to facilitate buyers from the EU to visit Pakistan.
