EU fails to clear trade concession for Pakistan

The European Union (EU) again seemed helpless in the World Trade Organisation (WTO) on Thursday as India, displayed its traditional rivalry with Pakistan and continued its opposition to the proposed trade concession to Islamabad.
The proposals will again be brought under discussion in the General Council of WTO in July 2011 but there is little hope that the deadlock will be broken as India’s inflexible stance over the concession will likely remain consistent.
This was the fourth meeting of WTO since the European Council in its meeting on September 16, 2010, decided to grant Pakistan special concessions to support its ailing economy in the wake of devastation wreaked by the unprecedented floods. The total worth of export of these tariff lines was expected to be $1.03 billion and the average tariff on these products around 8.86 percent.
Though the ambassador of Pakistan to WTO Shahid Bashir has claimed that the proposals have moved forward after the withdrawal of objection from Vietnam but the big hurdle in the way of approving the concession was and is India, sources said.
“Vietnam, Peru, Bangladesh and Sri Lanka were not opposing the draft bill submitted by EU, they however expressed concerns of the implications posed by the proposals and its effect on their own textile based economy,” they pointed out, adding that India was only the country which has challenged on the grounds it was a gross violation of WTO rules.
The Indian ambassador again raised the same objection in the meeting of Council for Trade and Goods of WTO on May 26, 2011, reiterating its position that the waiver of WTO rules was against the violation of the organisation’s rules which are being followed by 153 countries. Delhi’s argument was based on common concerns regarding the change of rules to a particular country which could establish a new trend in the WTO.
The EU’s representative, which had earlier called the meeting as a last resort to pass the proposals, was once again ready to wait for another month to at least secure approval from other countries like Peru and Bangladesh. The EU hoped that India, once it loses support from the few countries in opposition, might make a conciliatory gesture towards Pakistan by allowing preferential trade with Europe.
However, sources claimed that the objections raised by Delhi was not because of the trade implications inherent in the EU proposals but was purely the result of the traditional animosity exhibited in its refusal to accede to the draft proposals in WTO.
Having, comparatively, little share of exports in the textile sector; the limited concession to Pakistan would not dent the overall huge export of the neighboring country, sources opined.
The Indian ambassador, who had expressed distress in previous meetings of WTO over the ‘waiver from GATT Articles I and XIII’ concerning autonomous preferences for Pakistan, had said that temporary tariff concessions could neither attract foreign direct investment (FDI) or provide employment to those affected in the flash floods.
India was also repeating its objections that the tariff concessions would not benefit those who needed aid most while the gainers would be the existing producers and their employees as they may gain in terms of overtime and boosted exports. Its representative also claimed that flood affected areas are far away from the industrial centers and the victims of floods would not benefit from the concessions.
Delhi was also raising the technical concerns that even a positive gesture on the part of the EU would also cause damage in terms of trade divergence and impact primarily on poor workers in both less developed countries and developing countries.