Pakistan vying to win GSP plus status

Economy and politics are two steering wheels of governance and any sort of misalignment between them can cause serious problems in the carriage of good governance. In an ideal state, both these vital aspects are intertwined, integrated and coherent. Economic prosperity is a harbinger of political stability and vice versa. When political decision making is devoid of economic reasonability, it leads to bad governance promoting anxiety, dissatisfaction and chaos.
Pakistan’s poor rating in the domain of human rights, gender equality and civil liberties has pushed the country to diplomatic isolation. The situation is worsened by the negative economic indicators and the state is relying on foreign debts, aid packages and bail-out grant. This is the point where dominant donor factor comes to play and donor states and organisations play their cards carefully to ensure the dictation of their own terms on Pakistan to put its house in order. This is carried out through attaching a number of strings with an aid package that is conditional to the compliance of these provisions.

What does the GSP
status entail?

Pakistan’s ratification of United Nation’s Convention against Torture (UNCAT) and International Covenant on Civil and Political Rights (ICCPR) in June 2010 is a case in point. Both these treaties deal with the safeguarding of human rights and Pakistan was diplomatically coerced into signing these documents under ‘carrot and stick rule’ in which you have an option to win a prize by saying ‘Yes’ or prepare to bear the penalty by saying ‘No.’
In the case of Pakistan, the European Union tempted Pakistan that the ratification of UNCAT and ICCPR will entitle it to qualify for a Generalised System of Preference (GSP) plus status. Before going into further details on the topic, let us have an insight into the GSP plus status and its prospective benefits to Pakistan.
Generalised System of Preferences (GSP) is a preferential tariff system extended by developed countries (also known as preference giving or donor countries) to developing countries (also known as preference receiving or beneficiary countries). It involves reduced tariffs or duty-free entry of eligible products exported by beneficiary countries to the markets of donor countries.
Pakistan might acquire three benefits from the GSP plus facility. Firstly, Pakistani exporters will benefit indirectly – through the benefit that accrues to the importer by way of reduced tariff or duty free entry of eligible Pakistani products that will become cheaper than the products from other competitors. Secondly, reduction or removal of import duty on Pakistani products will surely make them more competitive to the importer keeping other aspects (e.g. quality) equal. Lastly, this tariff preference helps new exporters to penetrate the market in the donor country and established exporters to increase their market share and improve upon profit margins.
According to EU policy on GSP plus, its objectives are to focus help on those truly in need; to strengthen GSP plus as an incentive to good governance and sustainable development; and to make the system more transparent, stable and predictable. The three main variants of the “GSP plus” incentive scheme are respect for labour, human, environmental and good governance rights and rules.

Competing on
unequal fronts

It is significant to note here that India is in the List A of the standard beneficiaries of GSP incentives whereas Bangladesh is included in List B as one of the least developed developing countries (LDDCs). Pakistan is hopeful to be listed in category C by January 1 2014 when EU will revise its list. But this entry will be based on the level of governance and respect of fore-mentioned International treaties such as UNCAT and ICCPR. Pakistan ratified both these treaties in June 2010 but this is a partial ratification as the Pakistani government has expressed reservations on 10 sections of UNCAT and 9 sections of ICCPR. EU countries have termed these fundamental reservations tantamount to nullifying treaties that is unacceptable to the EU bloc.
The climax of the story is that India and Bangladesh, which are Pakistan’s traditional rivals in EU markets, are lobbying on different levels for rejection of Pakistan’s case so that they may continue to enjoy an edge over Pakistani products due to their duty free status. Pakistani trade bodies, on the other hand, are demanding the government to take all necessary measures to win the GSP plus status so that they might compete with their Indian and Bangladeshi counterparts on an equal footing.
British High Commissioner in Islamabad Adam Thomson, during his recent meeting with the delegation of Federation of Pakistan Chamber of Commerce and Industry, has pledged that United Kingdom is advocating the grant of the GSP plus status to Pakistan in the European Union. “We are using our influence to win duty free access of Pakistani products in EU markets”, he committed. “We are wooing the British entrepreneurs to invest in Pakistan so that the existing volume of trade between the two countries might be doubled”, he remarked. Pakistani entrepreneurs have a dissention that their government through its emissaries is not doing enough to settle this vital issue which may promote our exports to almost half of those of the world. Pakistani trade bodies have kept the issue alive through their informal meetings with the EU envoys in Islamabad.

Domestic
reactions

Lately, Prime Minister Syed Yousaf Raza Gilani directed to withdraw most of the reservations expressed by the Government of Pakistan on International Covenant on Civil and Political Rights (ICCPR) and UN Convention against Torture (UNCAT). The Prime Minister gave this direction after chairing an Inter-Ministerial meeting convened for discussing the ratification of ICCPR and UN Convention against Torture last week.
It is particular to note that the European Union has earlier conveyed that these reservations had made Pakistan ineligible for the Generalised System of Preferences (GSP) plus status to be accorded in 2014 by the European Union. Responding to this long running issue, the Prime Minister chaired an Inter-Ministerial Meeting and asked the committee to remove all impediments in this regard. After lengthy discussions, it was decided to withdraw the reservations on Articles 6, 7, 12, 13, 18, 19 and 40 of ICCPR. The reservation on Article 3 was narrowed down to Personal Law and Law of Evidence, and reservation on Article 25 was restricted to the election of the President of Pakistan.
On the Convention against UNCAT, it was decided to withdraw reservations on Articles 3, 4, 6, 12, 13 and 16. The reservation on Article 8 was retained. The declarations on Article 20 as provided in Article 28 (1) and Article 30 (1) were also retained. A grant of GSP plus status will entitle Pakistan to avail multiple trade concessions, privileges and enhanced trade activities with the European Union. The policy decision led by the Prime Minister is expected to enhance Pakistan’s exports manifold.

The European Union through its emissaries had conveyed that reservations made by the government regarding ICCPR and UNCAT nullify the impact of ratification of these two International Conventions by the Government of Pakistan. Accordingly, an Inter-ministerial meeting of representatives from the Ministries of Foreign Affairs, Commerce, Law, Justice, Minorities, Interior and Religious Affairs discussed the issue on June 10, 2011 with Mustafa Nawaz Khokhar, Advisor to the Prime Minister on Human Rights in the chair. The aim of the meeting was to deliberate upon the reservations which would jeopardise the status of grant of trade benefits to Pakistan under the GSP plus Scheme of the European Union. Under prevailing circumstances, in the face of the worst energy crisis, it has become nearly imperative for the Pakistan government to take giant steps in export promotion to diminish the financial restraints of the country and creation of a level playing field for GSP plus is an answer to boost outward trade.