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Textile Ministry assessing implications

Our Bureau

NEW DELHI, Oct. 18

The European Commission's proposed preferential trade package for Pakistan has not come as a surprise to Indian Textile Ministry officials, with many of them pointing out that it was the outcome of a series of negotiations between the EU and Pakistani ne gotiators that began in March.

Asked about the impact of the EU announcement, the Union Textile Minister, Mr Kashiram Rana, said, ``The Ministry is in the process of receiving entire information on the trade package and would make necessary assessments in due course.''

The EU on Tuesday announced a comprehensive trade package for Pakistan that would give them the best possible access to the EU short of free trade agreement by making it eligible for the new Specialised Generalised System of Preferences (GSP) scheme for countries combating drugs.

The package, which is to be presented to the European Parliament for approval, has been specifically tailored to target clothing and textiles accounting for three-quarters of Pakistan's exports to the EU.

It would remove all tariffs on clothing and increase quotas for Pakistani textiles and clothing by 15 per cent. In return, Pakistan will give improved access to its market for EU clothing and textile exporters.

As per the proposed package, the first measure under the GSP scheme would be to include Pakistan in the special regime for certain countries combating drugs. It will eliminate the existing preferential 7 per cent duty rate as of January 1, 2002. Translat ed into economic terms, this concession would eliminate Euro 150 million of duties a year with the resultant increase in the competitiveness of Pakistani exports in the EU market.

The EU, would propose boosting the quota for imports of Pakistan textiles and clothing by 15 per cent on a once-off, across-the-board basis. This concession would be worth a potential Euro 1 billion to Pakistan over the four-year period to 2004.

As part of the agreement, Pakistan would in turn reduce its duties in the textile and clothing sector to rates of 5 per cent, 15 per cent and 25 per cent from 2002 (a 5 per cent reduction across the board compared with 2001) and bind these rates to a max imum amount for the future in the WTO not later than July 1,2002.

A senior Indian Textile Ministry official claimed that this may well be the first occasion where trade concessions are being accorded for a country's efforts (Pakistan in this case) at controlling drug-trafficking.

``These concessions are being given for the steps Pakistan has effected to control drug-trafficking. They have also been accorded such concessions for the special circumstances that they are now faced with (Afghanistan issue),'' the official said.