EU throws Pakistan a frail life-line

[rsingh]

Asia Times Online :: South Asia news, business and economy from India and Pakistan

KARACHI - The European Union's decision last week to lift duties on about 80 lines of Pakistani imports for the next three years has thrown a thin life-line to the flood-ravaged country, with the move likely to boost exports of products that at present earn up to 900 million euros (US$1.25 billion) annually.

The trade concessions, to come into effect in January, were made in response to the country's desperate plight after flooding this summer devastated vast areas and affected more than 14 million people, The unilateral waiver of tariffs covers about 27% of the country's exports to the EU. Most will be related to textile exports, while leather products such as footwear will also benefit.

A 30% EU duty on imports of ethanol from Pakistan has been dropped, which is expected to benefit sugar mills that produce the fuel. The duty led to the closure of 300 distilleries in the country over the past few years. The country on average exports 250,000 tonnes of ethanol annually, which may climb to 300,000 tonnes annually under a zero-duty regime.

Britain, Sweden and Germany reportedly pushed for the trade benefits to Pakistan, while France, Italy, Portugal and other EU states with large domestic textile and clothing industries were reticent at a time of economic stress. Some experts believe the concessions will do most harm to Bangladesh.

"This is robbing Peter to pay Paul," Reuters quoted a trade expert from one EU country as saying. "The only reason it will go through is because of political relations in the region."

Italy sets conditions for backing Pakistan trade aid – The Express Tribune