Britain to carry over GSP Plus status for Pakistan after Brexit

KARACHI: Britain is likely to maintain GSP Plus-like trade cooperation with Pakistan after Brexit, its Minister of State for International Trade Greg Hands said on Wednesday, as part of United Kingdom’s efforts to improve trade ties with emerging market countries.

“Pakistan is a growing economy and considering the size of its economy and how fast it’s growing, we are considering maintaining GSP Plus scheme like facility (for Pakistan) in post Brexit,” Hands told newsmen on a visit to Pakistan Stock Exchange.

The generalised scheme of preferences (GSP) Plus status, granted from January 2014, permitted nearly 20 percent of Pakistani exports to enter the 28-member countries’ European Union (EU) block at zero tariff and 70 percent at preferential rates. Pakistan was among the nine countries – including its textile rivals Bangladesh and Sri Lanka – that won the GSP Plus status.

Pakistan, however, could graduate from GSP Plus anytime till 2023 for noncompliance with anyone of the 27 conventions related to human and labour rights.

Britain has been seeking to boost global trade ties following its last year vote to leave the EU.  Pakistani officials, also seeking a GSP Plus-like deal with post-Brexit Britain, viewed the UK leaving the EU will hit the country’s exports.

Hands said he is in Pakistan to discuss bilateral trade and issues relating to the fresh UK investment in the country but said “no plan to sign any free trade agreement with Pakistan will roll over the terms of the current EU agreement.”

“We realise the need of further improvement in trade volume between the two countries and we have aimed at boosting our bilateral trade to the level of $3 billion in the next phase,” the UK minister said during a three-day trade mission to Pakistan.

The UK is Pakistan’s biggest trade partner in Europe with bilateral trade close to $2.18 billion in 2016.

Pakistan's exports were $1.557 billion against imports of $0.610 billion from the UK. The balance of trade is in Pakistan’s favour.

The country, facing a steep fall in exports, desperately needs concessional markets
to narrow its ballooning trade deficit, which surged 33.52 percent to $6.290 billion
during July-August of fiscal 2017/18. 

A wider trade gap also inflated the July-August current account deficit, which widened 102 percent to $2.601 billion in the first two months of the current fiscal year.

The minister said the British export credit agency, UK Export Finance had doubled Pakistan specific export facilitation fund to £400 million from £200 million to promote bilateral trade.

“Pakistan is an exciting market for British business with 200 million plus consumers… the UK will ensure a smooth transition in its existing trading arrangements after Brexit.”

Hands said many UK-based companies are already working in Pakistan and the China Pakistan Economic Corridor (CPEC) would attract “new investment” from Britain.

“British firms can be an important part of CPEC in the delivery of infrastructure projects as the UK businesses are well-placed to capitalise on new opportunities in the region.”

China has pledged around $57 billion to develop infrastructure in Pakistan as part of CPEC. Chinese investment will support and build power plants, railways, and roads that will cross the Himalayas to connect western China with Gwadar to boost trade.