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Economic conditions

Pakistan to Regain EU Trade Benefits in 2006 Amid Shift in Generalized System of Preferences

Strategic Insights

— 1 min read

Pakistani exporters are set to regain access to the European Union's generalized system of preferences (GSP) in 2006, after losing access to the scheme next year, according to EU trade chief Pascal Lamy. The new GSP, which will replace the current system, will be simpler and more focused on countries that need tariff cuts to sell their products in the EU's 25-nation bloc. This change will benefit Pakistan's garment and made-ups exporters, who are being phased out of the current system due to overshot EU's specialty index.

Key Takeaways:

  • Pakistan will regain access to the EU's GSP in 2006, after losing access next year due to the shift in the generalized system of preferences.
  • The new GSP will be simpler and more focused on countries that need tariff cuts, benefiting Pakistan's garment and made-ups exporters.
  • Pakistani exporters will be eligible for special tariff preferences under the EU's future GSP plus scheme, provided they meet certain international labour and environmental standards.
  • Commerce Minister Humanyun Akhtar Khan emphasized the negative impact of GSP graduation on Pakistani textile exporters, citing an EU anti-dumping fine imposed on Pakistani bed linen exports.
  • EU trade chief Pascal Lamy acknowledged the problem and suggested a possible solution, allowing South Asian countries to benefit from cumulative rules of origin for their exports to the EU.
  • Any moves by the US to restrict imports of foreign textiles after the end of internationally-agreed textile quotas next year could provoke similar action by the EU.

Statistics:

  • 2006: The year Pakistan is expected to regain access to the EU's GSP.
  • 2005: The year Pakistani exporters of garments and made-ups will be phased out of the current GSP system.
  • 10-year period: The duration of the new EU GSP.
  • 25-nation bloc: The number of nations in the European Union.
  • 13.1%: The EU anti-dumping fine imposed on Pakistani bed linen exports.
  • 2002: The year Pakistan received benefits under the EU's GSP plus scheme.

Sources:

  • 'Pakistan to regain EU trade benefits in 2006' (Asia Pulse, Sept 23, 2004)
  • 'EU Trade Chief Warns of US Move to Restrict Textile Imports' (PPI, Sept 23, 2004)

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