Pakistan, whose economy was devastated in 2010 as floods swept the country, has gained some ground as it attempts to get its hands on a trade-concession package promised by the European Union in response to the disaster, with Bangladesh withdrawing its opposition following changes to the initial proposal.
Bangladesh, whose exporters compete with Pakistani manufacturers particularly in the textile sector, initially fought against the proposal that Pakistan be given duty-free access for 75 items for a limited period of two years. Dhaka has confirmed that it will withdraw its opposition, as the EU has said it will cap seven of the eight items about which the Bangladeshis had reservations.
Pakistan now needs to convince Peru and Brazil to drop their objections against the proposed concession package during a World Trade Organization (WTO) meeting to be held in Geneva on February 1.
"We have decided to withdraw our objection as we are content that seven items from Pakistan that Bangladesh also exports to the EU will now be subject to Tariff Rate Quota (TRQ) under the amended EU trade concession package," a director-level official told Asia Times Online last week after a meeting of officials of the Bangladesh Ministry of Commerce on January 25 at which it was decided that Dhaka would withdraw its objection on the EU concession package.
The original concession package included 33 products of non-value-added textiles, 23 textile garments products, eight items of home textiles, four value-added leather products, three products of footwear, two raw leather items, one ethanol product and one vegetables product.
Bangladesh earned around US$832 million in exports of the eight items to the EU in the fiscal year to last June, the official said.
Under the amended EU concession package, 15 products exported from Pakistan to the EU will now be subject to TRQ while the remaining 60 products will enjoy duty-free access for two years, extendable for a third year.
Pakistan's exports of these products to the EU from January to October 2011 were worth nearly $1.4 billion, according to Pakistan's Business Recorder. The average existing tariff on the import of the products to the EU is around 7.19%, with ethyl alcohol the highest at 31.2% and raw leather the lowest at around 2.5%.
If the concession package is approved, ethyl alcohol will be allowed duty-free access up to the volume of 80,000 tonnes per annum, although a "20% cap will be put on average exports from Pakistan for three years to the EU for duty-free access, beyond the normal GSP [Generalized System of Preferences] tariff," Business Recorder reported on January 26.
The EU placed the original trade concession package before WTO members in the Council for Trade in Goods (CTG) on November 30, 2010. Although the waiver received near world-wide support, Brazil, Peru, Indonesia, Argentina and Bangladesh sought consultations with the EU for "further clarification and to address their concerns on certain products included in the proposed package". India directly objected to the tariff concessions.
India withdrew its objections last November, following a meeting of the commerce ministers of India and Pakistan in New Delhi when Pakistan gave an assurance that it would provide India with most favored nation status.
Argentina and Indonesia also later said they would support a WTO waiver for the EU concessions.
A number of Pakistani dailies had reported over the past two months that Bangladesh had softened its stance on the concessions, but the Financial Express in Bangladesh on January 23 quoted Mohammad Ruhul Amin Sarkar, a senior official of the Commerce Ministry in Bangladesh, as saying, "There is no change in our stance. We will continue to oppose [the] European Union proposal to give duty- and quota-free access for 75 items," adding that Pakistan was a developing country (according to the United Nations), unlike least developed countries such as Bangladesh and others to whose exported goods the EU provides zero-duty entry.
The ministry has been pressured by local exporters who feared losing ground in the EU market.
"Exporters and the Bangladesh Commerce Ministry had all the reasons to be wary of the package as from $22.9 billion worth of goods exported by Bangladesh during fiscal year 2010-2011 around 52% were exported to EU countries," said the Commerce Ministry official. "However, with the cap, our exported products will not be affected much."
If Peru and Brazil concede to the EU proposal, a bill will be placed before the European parliament for legislation before the package comes into effect.
The Commerce Ministry official was confident that Bangladesh's exports would have more to gain if the country could win GSP facilities from the United States by convincing the US government about Bangladesh's success in improved compliances in major export sectors like ready-made garments (RMG) and frozen food.
Bangladesh's GSP has been under review by the US since the American Federation of Labor and Congress of Industrial Organization complained in 2006 about Bangladesh's labor standards, child labor in the RMG and shrimp sectors, adverse working conditions in factories and violation of trade union rights.
A 14-member government team, headed by Commerce Secretary Golam Hossain, attended the third United States Trade Representative (USTR) hearing on January 24 in Washington DC. The past two hearings were in 2007 and 2009.
"We will get a positive review for sure as we are no longer allowing any worker under the age of 18 to work in factories," said the official. "Also, we have firm arguments against all the other four allegations. Additionally, the USTR will be able to evaluate the labor situation in Bangladesh for themselves from the findings of a survey to be conducted here by the US Department of Labor in June of this year," the official said.
Under existing trade relations with the US, Bangladesh does not benefit much from the GSP, a preferential duty-free entry that the US provides on around 4,800 products from more than 130 countries. Major export items from Bangladesh, such as RMG products, leather goods and footwear, are not included in the list.
"Only 0.66% of exports from Bangladesh to the US receive GSP. Most RMG products from Bangladesh had an average duty of over 17%, with the highest duty paid on man-made fiber clothes at 32%," the Commerce Ministry official said.
Asia Times Online :: South Asia news, business and economy from India and Pakistan
Bangladesh, whose exporters compete with Pakistani manufacturers particularly in the textile sector, initially fought against the proposal that Pakistan be given duty-free access for 75 items for a limited period of two years. Dhaka has confirmed that it will withdraw its opposition, as the EU has said it will cap seven of the eight items about which the Bangladeshis had reservations.
Pakistan now needs to convince Peru and Brazil to drop their objections against the proposed concession package during a World Trade Organization (WTO) meeting to be held in Geneva on February 1.
"We have decided to withdraw our objection as we are content that seven items from Pakistan that Bangladesh also exports to the EU will now be subject to Tariff Rate Quota (TRQ) under the amended EU trade concession package," a director-level official told Asia Times Online last week after a meeting of officials of the Bangladesh Ministry of Commerce on January 25 at which it was decided that Dhaka would withdraw its objection on the EU concession package.
The original concession package included 33 products of non-value-added textiles, 23 textile garments products, eight items of home textiles, four value-added leather products, three products of footwear, two raw leather items, one ethanol product and one vegetables product.
Bangladesh earned around US$832 million in exports of the eight items to the EU in the fiscal year to last June, the official said.
Under the amended EU concession package, 15 products exported from Pakistan to the EU will now be subject to TRQ while the remaining 60 products will enjoy duty-free access for two years, extendable for a third year.
Pakistan's exports of these products to the EU from January to October 2011 were worth nearly $1.4 billion, according to Pakistan's Business Recorder. The average existing tariff on the import of the products to the EU is around 7.19%, with ethyl alcohol the highest at 31.2% and raw leather the lowest at around 2.5%.
If the concession package is approved, ethyl alcohol will be allowed duty-free access up to the volume of 80,000 tonnes per annum, although a "20% cap will be put on average exports from Pakistan for three years to the EU for duty-free access, beyond the normal GSP [Generalized System of Preferences] tariff," Business Recorder reported on January 26.
The EU placed the original trade concession package before WTO members in the Council for Trade in Goods (CTG) on November 30, 2010. Although the waiver received near world-wide support, Brazil, Peru, Indonesia, Argentina and Bangladesh sought consultations with the EU for "further clarification and to address their concerns on certain products included in the proposed package". India directly objected to the tariff concessions.
India withdrew its objections last November, following a meeting of the commerce ministers of India and Pakistan in New Delhi when Pakistan gave an assurance that it would provide India with most favored nation status.
Argentina and Indonesia also later said they would support a WTO waiver for the EU concessions.
A number of Pakistani dailies had reported over the past two months that Bangladesh had softened its stance on the concessions, but the Financial Express in Bangladesh on January 23 quoted Mohammad Ruhul Amin Sarkar, a senior official of the Commerce Ministry in Bangladesh, as saying, "There is no change in our stance. We will continue to oppose [the] European Union proposal to give duty- and quota-free access for 75 items," adding that Pakistan was a developing country (according to the United Nations), unlike least developed countries such as Bangladesh and others to whose exported goods the EU provides zero-duty entry.
The ministry has been pressured by local exporters who feared losing ground in the EU market.
"Exporters and the Bangladesh Commerce Ministry had all the reasons to be wary of the package as from $22.9 billion worth of goods exported by Bangladesh during fiscal year 2010-2011 around 52% were exported to EU countries," said the Commerce Ministry official. "However, with the cap, our exported products will not be affected much."
If Peru and Brazil concede to the EU proposal, a bill will be placed before the European parliament for legislation before the package comes into effect.
The Commerce Ministry official was confident that Bangladesh's exports would have more to gain if the country could win GSP facilities from the United States by convincing the US government about Bangladesh's success in improved compliances in major export sectors like ready-made garments (RMG) and frozen food.
Bangladesh's GSP has been under review by the US since the American Federation of Labor and Congress of Industrial Organization complained in 2006 about Bangladesh's labor standards, child labor in the RMG and shrimp sectors, adverse working conditions in factories and violation of trade union rights.
A 14-member government team, headed by Commerce Secretary Golam Hossain, attended the third United States Trade Representative (USTR) hearing on January 24 in Washington DC. The past two hearings were in 2007 and 2009.
"We will get a positive review for sure as we are no longer allowing any worker under the age of 18 to work in factories," said the official. "Also, we have firm arguments against all the other four allegations. Additionally, the USTR will be able to evaluate the labor situation in Bangladesh for themselves from the findings of a survey to be conducted here by the US Department of Labor in June of this year," the official said.
Under existing trade relations with the US, Bangladesh does not benefit much from the GSP, a preferential duty-free entry that the US provides on around 4,800 products from more than 130 countries. Major export items from Bangladesh, such as RMG products, leather goods and footwear, are not included in the list.
"Only 0.66% of exports from Bangladesh to the US receive GSP. Most RMG products from Bangladesh had an average duty of over 17%, with the highest duty paid on man-made fiber clothes at 32%," the Commerce Ministry official said.
Asia Times Online :: South Asia news, business and economy from India and Pakistan
