GSP+ and the politics of economy

Internal chaos must be managed to revive international standing

Politics and economy have frequently brought great powers down. When it comes to Pakistan, these chains have cut deep into ankle skin.

What is a satisfactory explanation for the situation Pakistan finds itself in? Is it essentially inflation and corruption that are holding it back? Is it the lack of a clear economic vision? Is there a grand conspiracy to keep Pakistan from participating in the international economy and thereby impede its rise to power?

While there are many faults in our political and economic systems the politics around the economy has harmed Pakistan’s image in the world the most. A recent resolution passed by the European Union Parliament called on the European Commission and the European External Action Service to review Pakistan’s GSP Plus status. The EU GSP Plus scheme allows qualified developing countries to pay no duties on some exports to the European Union. As part of the EU’s broader GSP regulation with the Standard GSP and Everything But Arms (EBA), the GSP Plus offers additional trade facilities to the countries. The facility was first awarded to Pakistan in January 2014. The offer was later extended till 2022.

The review was called under a resolution with the request for inclusion in the agenda for a debate on cases of breaches of human rights, democracy, and the rule of law pursuant to Rule 144 of the Rules of Procedure on Blasphemy laws in Pakistan, in particular, the case of Shagufta Kausar and Shafqat Emmanuel, a Pakistani Christain couple convicted by a court on charges of blasphemy.

The resolution was passed after some terrorists attacked a hotel in Quetta. At the same time, the country was dealing with the chaos caused by Tehreek Labaik Pakistan, calling for the French ambassador’s expulsion from Pakistan.

This gave the EU sufficient reason to initiate the procedure for the temporary withdrawal of the GSP Plus status for Pakistan and the benefits that come with it. These included duty-free market access to over 6,000 tariff lines. The GSP Plus mechanism allows the partner countries to send over 66 percent of their exports to the EU free of duty. In turn, the countries benefitting from the special status must uphold twenty-seven international conventions pertaining to labour and human rights and environmental protection.

Pakistan has struggled also to get off the FATF’s grey list on which it was placed due to inadequate controls over terrorism financing. The recent EUP resolution has seriously damaged the hopes for the country to gain the international economic status it has hoped for. While trade with countries having bilateral trade and investment relationships with Pakistan may not be affected by such resolutions, the broader impact of the resolution projects a negative image of Pakistan. This is where the politics itself is used against Pakistan.

Pakistan must address the loopholes in its policy infrastructure that are hindering its progress and causing concerns for the country’s trading partners.

Pakistan’s economic growth is expected to reach 1.3 percent in FY2021 and strengthen to an average of 2.7 percent for FY2022-23, according to the Pakistan Development Update. The the World Bank says Pakistan’s economy has shown signs of a nascent recovery. But in a report by the Cato Institute, Pakistan ranks 140th out of 162 countries on the Human Freedom Index 2020, scoring the lowest in South Asia on the Human Rights Index 2020. This gives a pretext of to EUP why Pakistan’s GSP Plus status should be under review.

When Prime Minister Imran Khan came to power, his views on the country’s international standing had already moved away from politics to its economic condition. The loans, the debts, years of financial assistance and money laundering were not his idea of a country with immense potential. His belief was visible in his recent lashing out against the diplomats who he believes do little to bring investment into the country. The review of Pakistan’s GSP Plus status is another failure of the diplomats. Although Pakistan has expressed its dismay over the GSP Plus review and the reasons given for it, the fact remains that the move is driven more by politics than economic factors.

Nations with stronger economies have significant influence in international organisations and regional politics. Although Pakistan’s economy is on a slow recovery, it has yet to achieve the stature of an economically powerful nation. The country, hence, remains a target of many such reviews and is on the FATF grey list.

The government must address the loopholes in its policy infrastructure that are hindering its progress and causing concerns for the country’s trading partners. Human rights, particularly the rights and protection of minorities, and proper regulation of labour laws should be ensured to comply with international standards. Pakistan’s security situation has significantly improved over the years. Still, attacks such as the one in Quetta and the TLP-caused unrest have raised serious questions that should have been avoided.

Compliance with international trade laws and treaties requires continued upholding of the agreed terms and conditions. Blasphemy politics and the treatment of minorities remain a sensitive subject for the government which wants Islamic jurisprudence to be understood by the international community. Pakistan, unfortunately, cannot expect diplomatic backing on such issues as even countries like Saudi Arabia are moving towards greater responsiveness to global concerns.

Such policy issues will always be used against Pakistan on international forums to keep it politically estranged unless it addresses them in a satisfactory manner. Global political and economic hegemony is not all fair play. However, if the policymakers decide to manage the country’s internal chaos and perpetual economic instability, there is hope for reviving its international standing.

The writer is an independent media and foreign policy analyst. She tweets @MsAishaK

GSP+ and the politics of economy