Impact of GSP plus status given by European union, on Pakistan
1.
2.
GSP is abbreviated as ―Generalized scheme of
preferences‖.
The generalized system of preferences is a formal
system of exemption from the more general rules of
the world trade organization.
Specially, it is a system of exemption from the most
favored nation(MFN) principle that obliges WTO
member countries to treat the imports of all other
WTO member countries no worse than they treat the
imports of their ―most favored‖ trading partner
3. • In essence, MFN requires WTO
member countries to treat imports
coming from all other WTO member
countries equally, that is, by
imposing equal tariffs on them etc.
4. There are three main variants(arrangements) of
the scheme:
The standard GSP scheme, which offers
generous tariff reductions to developing
countries. Practically, this means partial or
entire removal of tariffs on two thirds of all
product categories.
5.
The "GSP+" enhanced preferences means full
removal of tariffs on essentially the same
product categories as those covered by the
general arrangement. These are granted to
countries which ratify and implement
international conventions relating to human
and labor rights, environment and good
governance.
6.
(EBA) scheme for least developed countries
(LDCs), which grants duty-free quota-free access to
all products, except for arms and ammunitions.
―Everything But Arms‖ arrangement (EBA) was
born in 2001 to give all LDCs full duty free and
quota-free access to the EU for all their exports
with the exception of arms and armaments. This
makes it the most generous form of preferential
treatment to LDCs globally—an approach we
encourage other partners to follow.
7.
The EU has granted the GSP plus to Pakistan
which will increase our exports by $2 billion
per annum.
According to a statement issued by the EU, the
European parliament voted on a resolution
objecting to the delegated act presented by the
European commission, granting GSP+ to 10
countries, including Pakistan.
8.
The resolution was defeated with 409 votes
against and 182 in favor. In other words, an
overwhelming majority of members of the
European parliament supported the granting of
GSP+ status to Pakistan.
9.
10.
A new GSP will apply in the EU as of 1 January
2014.
Under the new GSP, the effectiveness of the
EBA scheme will be strengthened. By focusing
preferences on those that need them most
(lower-income economies and LDCs), the new
GSP will have to fewer beneficiaries.
This will reduce competitive pressure on LDCs
and make the preferences for LDCs more
meaningful—providing
much
more
opportunity to export.
11.
75 items at the H.S Code 8 digit level have been
granted duty free market access
Out of which;
26 items are under quantity based Tariff Rate
Quotas.
49 items are under a 25% quantity increase
cap, based on average of last 3 years exports.
12. Main features of the reformed GSP:
Concentrating GSP preferences on countries most in
need. A number of countries, which do not require
GSP preferences to be competitive, will no longer
benefit from the scheme as from 1 January
2014, including:
Countries that already have preferential access to the
EU which is at least as good as under GSP – for
example, under a Free Trade Agreement or a special
autonomous trade regime.
13.
Countries which have achieved a high or upper
middle income per capita, according to World Bank
classification.
A number of overseas countries and
territories, which have an alternative market access
arrangement for developed markets
Reinforcing the incentives for the respect of core
human and labour rights, environmental and good
governance standards through
the GSP+ arrangement.
14.
Strengthen the effectiveness of the trade concessions
for Least Developed Countries through the
"Everything but Arms" scheme. Reducing GSP to
fewer beneficiaries will reduce competitive pressure
and make the preferences for LDCs more
meaningful.
15.
Increasing predictability, transparency and
stability. With the exception of EBA, which has
no expiry date, the new scheme will last 10
years, instead of three previously. This will
make it easier and more interesting for EU
importers to purchase from GSP beneficiary
countries. In addition, procedures will become
even more transparent, with clearer, better
defined legal principles and objective criteria.
16.
17.
The first reason is that for more advanced
developing countries, exports under GSP are
not necessarily a significant proportion out of
total exports to the EU (the average is 8%).
The second is that the margins of preference
provided by the EU are relatively low, given
the EU's already low normal ("most-favored
nation") tariff levels.
18. SUMMARY OF ANALYSIS
TRQs
Non-TRQs
TOTAL
Number of items
26
49
75
value of export in 2011 (US$ thousand)
817,458
892,360
1,709,818
1,082,318
1,164,599
2,246,917
264,860
272,239
537,099
32.40
30.51
31.41
Estimated Exports (as per conditions)
Gain in value (US$ thousand)
Gain in terms of % increase
19.
The list of GSP+ countries in the new law is
originally empty. This is because countries which
meet the criteria will be entered into GSP+ as they
apply.
The new GSP+ law expands the number of eligible
countries.
20.
All eligible countries interested in GSP+ under
the new law (including those which enjoyed
GSP+ under the preceding law) must apply
under the new rules to obtain GSP+.
Eligible countries have more than one year to
apply and obtain GSP+ before the new
preferences enter into force on 1 January
2014, but early application is advisable.
21.
Once the new GSP enters into force, status of
countries is revised continuously. When a country no
longer fulfils criteria to be a beneficiary, the partner
exits the beneficiary list with ample transition
periods to ensure economic operators can adapt.
Two cases:
World Bank lists the country as "high-income" or
"upper middle income― three years in a row. At the
beginning of the following year, the country is no
longer beneficiary of GSP and a transition period of
one year is granted for the economic operators to
adapt.
22.
If a preferential market access
arrangement (typically, a bilateral free
trade agreement) is applied (even on a
provisional basis), a transition period of
two years is granted.
23. Minister of finance Ishaq dar said:
―the EU has granted the GSP plus to Pakistan
which will increase our exports by $2 billion
per annum‖.
On this occasion, the EU Ambassador to
Pakistan, Las- gunnar wigemark said:
―This is a very good day for the EU- Pakistan
relations. The granting of GSP+ shows the
importance the European union attaches to its
relations with Pakistan. We have listened to
Pakistan's plea for more trade and not just aid.‖
24. Prime minster Nawaz sharif added:
―Award of GSP plus status shows confidence of
the international markets on the excellent
quality of Pakistani products.‖
• This status would enable Pakistan to export
more than $1 billion worth of products to the
international markets. Only the textile industry
will earn profits of more than Rs 1 trillion per
year.
25.
President Mamnoon Hussain in a statement
said that the GSP plus would strengthen
Pakistan's trade relations with the member
countries of the European union.‖GSP plus
would also significantly help strengthen our
economy through greater trade, generation of
economic opportunities and creation of more
jobs for our people.‖
26.
So, in short there is a hope that this GSP+
status will bring positive effect on the Pakistan
economy especially on our textile
sector(according to our politicians).