India stands in the way of EU trade concessions

The European Union (EU), which has proposed unilateral trade concession to Pakistan after the devastation wreaked by floods last year, is going to make a last-ditch attempt at World Trade Organisation (WTO) for approval of the package on Thursday. Though the European parliament has recently cleared the autonomous trade concessions for Pakistan; the persistent resistance to the concessions by India renders the chances of approval in the forthcoming meeting relatively low, sources said.
It is pertinent to note that the European Council in its meeting on September 16, 2010, had decided to grant Pakistan special concessions to support its ailing economy in the wake of devastation caused by unprecedented floods. The total export value of these tariff lines is $1.03 billion and the average tariff on these products is around 8.86 percent. Pakistan’s global export of these products is about $3.80 billion.
As the EU representative in WTO has already made clear, the session of Council for Trade and Goods of WTO in May 2011 is considered a last desperate attempt to secure a waiver of the organisation’s rules for this facility. Islamabad has little hope to have the package approved in the forthcoming meeting, sources indicated. Furthermore, they pointed out there were no positive signs from the Indians regarding the trade concession issue during the recently held ministerial level talks in Islamabad and the expected outcome of the WTO meeting is likely to be a bleak one.
This comes in the backdrop of Pakistan’s refusal to accede to the Indian demand of granting it status of Most Favorite Nation (MFN) in the meeting between the commerce ministers of both countries, Delhi is likely to maintain its stance over the EU concession in WTO resulting in further delay or possibly a complete cessation of discussion on the subject in the international organisation. However, the EU, which has earlier failed to move members, especially India, is again attempting to convince member countries to approve the concession in the fourth round of the WTO meeting scheduled to be held on May 26.
It has been in contact with those countries which had earlier expressed concern over the EU request for a waiver on its tariff preferences for Pakistan. But the EU representative in WTO had informed those gathered at a meeting held on March 21, 2011 that as the union has been frustrated in its efforts to win over opposing countries, in particular India; the next meeting of WTO will be deemed the last chance to seek approval on the facility.
Due to the lack of a positive result in the issue which is being brought to the table for the third time, Pakistani negotiators have become demoralised and lost hope of a solution with regards to the approval of the facility amid deadlock driven by the neighboring country. It is worth mentioning here that the EU representative had also informed the meeting that, “the EU believed it had allayed some of the concerns and intends to continue consultations but stressed that further delays would defeat the purpose of providing immediate relief to Pakistan’s economy” the representative underscored, adding that, “the General Council meeting in May 2011 is the last genuine chance to move beyond the impasse”.
He also indicated that as the period in which the EU waiver request has been under consideration has exceeded 90 days, the Goods Council must provide a factual report on the situation to the May General Council. Nevertheless, during the WTO’s previous meeting, India and Bangladesh had confirmed they were holding discussion with the EU on the concessions. Peru said it would welcome further discussions with the EU on the topic. India has however expressed reservations of the utility of the facility, saying that temporary tariff concessions would not attract foreign direct investment (FDI) or provide employment to those affected by the flood.
It has also claimed that the tariff concessions would not benefit those in genuine need, while those who stand to gain will be existing producers and their employees as they may gain in terms of fresh orders and insists that the flood affected areas are far from the industrial centers. It has further shown procedural concerns that the waiver from MFN obligations was a violation of the cardinal principles of international trade under both the GATT and WTO. Accordingly, even a positive gesture by the EU would also trigger a massive disruption through trade divergence and impact on poor workers in both less developed countries (LDCs) and developing countries.