GSP Plus in danger

Every prize has a price

It’s not as if the Europeans were never going to check on the 27 international conventions that Pakistan was bound to implement to ensure continuation of the GSP Plus status. Since these conventions relate to human rights, good governance, labour rights, environmental standards, etc, and time has come for Islamabad to present its first report, it is little surprise that the arrangement is already in danger. EU’s director for international trade, Marc Vanheukelen, who is visiting Pakistan, has made it abundantly clear that Pakistan’s only small advance so far – progress in terms of legislation – is not enough “if the situation on the ground does not show change”.

This, of course, comes at a difficult time for the government. Just yesterday Ishaq Dar met with the IMF and revised the growth target down to 4.1 percent, exactly one percentage point below target. There’s not much to write home about in terms of generating revenue either, especially considering the tall promises made about expanding the tax net. If GSP Plus is compromised, the economy is likely to stall on account of insolvency, and more debt will have to incurred just to stay afloat.

That GSP Plus increased textile exports to EU by 23 percent is pretty significant, especially if you consider the momentary hiccup caused by Dar sb’s ingenious bolstering of the rupee by a mysterious exogenous injection. It is even more encouraging that industrial exports to EU also grew by 23 percent under the same program, which is not short of remarkable, because there has been a need to increase industrial exports for a long time. Now these advances are threatened because of Pakistan’s inability to meet its obligations in other areas. The government must realise that its failure to address human rights and related issues is now biting in to the little economic gains that we have been able to make in a long time. Hopefully the threat of suspension will jolt the government into purposeful action. GSP Plus will clearly not be without a price, but it’s a price that broadly benefits Pakistan at the end of the day.