Pakistan fails to fully exploit EU’s GSP plus concession

ISLAMABAD: Pakistan has almost failed to fully exploit the European Union’s GSP plus facility on the back of government’s poor policy response and especially indifference towards the country’s top export oriented textile sector, the country’s total exports dwindled by 14.4 percent during July-December 2015/16. 

Despite the European Union’s granting of Generalized Scheme of Preferences (GSP) Plus status to Pakistan, the economy could not able to exploit it due to various reasons including bottlenecks in policy, implementation and priorities, Muhammad Jawed Bilwani, Chairman Pakistan Apparel Forum said.  If this sector was properly not shouldered, it could create a serious balance of payment crisis and pressure the economy.

Pakistan had entered the GSP plus club from January 1, 2014, enabling it to export textile goods to 27 European countries till 2017 without any duties. Under it, almost 20 percent of Pakistani exports entering the EU market at zero tariff and 70 percent at preferential rates. EU accounts for 25 percent of Pakistan’s exports and 10 percent of imports. The bilateral trade volume is around $11 billion. Pakistan is exporting mainly textiles and leather products to EU and imported mechanical and electrical machinery, chemical and pharmaceutical products.

“During the period under review, the new born Bangladesh’s exports have increased by eight percent, while ours has declined by 14.4 percent, it is clearly evident that all the ministries and departments concerned and related to exports of our country have miserably failed”, Bilwani said.

The most vital Value Added Textile Sector has been facing sheer neglect and is not being taken on board nor consulted and is rapidly losing its share in the global market against regional competitors- India, Bangladesh, Sri Lanka just because the government does not seem to care at all, he said. No textiles minister has been appointed so far.

The government has also upheld billions of rupees refunds of the sector for years. It is violating its own rules which are evident from the fact that according to FBR rules the payment of sales tax refund claims would be paid within seven days of the date of Refund Payment Order (RPO) but this rule is blatantly ignored by the government officials and billions of rupees claims are pending with the government.

“Unless our cost of inputs are brought down in comparison to Bangladesh and India; unless revival of the Zero Rating of exports – No Payment No Refund System; unless billions of rupees refunds to exporters are released, there is absolutely no chance in the resuscitating and rejuvenating our exports which are presently in ICU state,” he said.

During July-December 2015-16, textile exports declined by 8.9 percent to $6.27 billion over corresponding period of last fiscal.

The government has imposed duty on import of raw material while actually duty should be imposed on export of raw material which policy is really pathetic as globally it is a practice that export of raw material are discouraged.