Tariff cutting accord vital for Pakistani exports to EU: Dastgir

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ISLAMABAD, Jan 27 (APP): Minister for Commerce Khurram Dastgir Friday said a tariff cutting accord for Pakistani exports to Europe was an essential tool in the country’s fight against terrorism and illegal migration.
He stated this in a interview with Politico, an influential global news and information organization based in Washington, D.C, New York and Brussels.
Pakistan obtained GSP+ three years ago, granting it tariff-free access to the EU market for almost two-third of its exports.
Khurram pointed to “encouraging developments” ahead of a meeting with European Commissioner for Trade Cecilia Malmstr”m in Brussels.
“We are just coming out of a very difficult 10-year period full of violence, energy shortages and uncertainty for business,” Khurram said.
“2015 was the first year with a positive turnaround. We are now focusing on more growth and social improvements.”
Pakistan mostly sells textiles, leather and footwear to the EU. Since 2013, the last year before the GSP+ (Generalised Scheme of Preferences) deal, exports to Europe have increased from $ 4.5 billion to 6.1 billion in 2015. According to EU Statistics, EU exports to Pakistan – such as machinery or chemicals – also grew slightly.
The jobs this creates in Pakistan “are a vehicle to fight poverty and extremism,” Khurram said. “We are now seeing in many cities that more and more women are being employed in the garment sector, which has truly beneficial socio-economic effects.”
“All this is crucial to fight the root causes of terrorism,” the minister continued.
Improving people’s economic prospects also reduces the motivation to try and reach the EU illegally, he argued.
Commissioner Malmstr”m this week argued cutting EU tariffs “can help developing countries diversify their economies and move higher up the value chain.” That, she said, represents “leverage we can use to shape globalization.”
“The promise of getting better trade access to Europe – or the threat of losing it – is a powerful incentive to reform,” Malmstr”m said, mentioning Europe’s determination to fight for better labor and environmental standards and tackle corruption.
Khurram admitted his country still has work to do. “There are
concerns, and we are acting on those concerns,” he said, adding his
government is well aware that it can lose the preferential access to
the EU market if its doesn’t deliver on reform targets
Islamabad is also keen to use the multilateral forum of the World Trade Organization “to raise, together with the EU, a joint voice against protectionism” and to support the EU’s plan to establish multilateral court of investment disputes, the minister said.
In 1959, Pakistan was the first country to accept a controversial arbitration mechanism in a treaty with Germany allowing companies to sue the government over public policy decisions that put them at a disadvantage.
However, the minister said his country’s recent experience of such clauses, which are abhorred by opponents of modern trade deals, “hasn’t been very positive.”
“Many multinational companies have an annual turnover that is bigger than Pakistan’s, so it is difficult to fight their claims,” he said.
The EU’s multilateral court – championed by Malmstr”m – with dedicated judges, transparent procedures and an appeal mechanism, would better shield the country from unwarranted claims, he said.
At the same time, he emphasized his country must do more to attract European investors, which is why the government will work this year on making the taxation system “more predictable.”
Provided it meets the EU’s reform targets, Pakistan’s GSP+ status remains in place until 2023. By then, Khan expressed hoped his country’s development will have allowed it to strike a full-fledged trade agreement with the EU.
“A more ambitious trade agreement is very much on our radar,” he said.