EU: Industry group opposes Pakistan tariff waiver
The recent decision by the World Trade Organization (WTO) to let the European Union (EU) temporarily lift duties on 75 products from Pakistan - the majority of which are textiles, apparel, and footwear - has been slammed by a European industry group.
Euratex (the European Apparel and Textile Confederation) has been fighting the EU's plans for two years, and says the measure "strongly undermines the interests of EU textile and clothing industry in favour of one of its strongest competitors."
The two-year tariff waiver is intended to help Pakistan recover from massive floods in 2010, and follows initial requests from the EU on in November 2010. The measures will be in effect from 1 January 2012 to 31 December 2013, and will apply to products including cotton yarn and fabrics, jackets, T-shirts, anoraks, trousers, shorts, nightwear and underwear.
"We cannot talk about emergency measures almost two years after the floods," Euratex president Alberto Paccanelli points out, adding the EU has already committed to over EUR423m (US$553.5m) in emergency aid to Pakistan.
"The benefits of this waiver will not go to the populations that suffered with the floods but to a group of extremely competitive companies some of them with turnovers in excess of EUR200m," Paccanelli adds.
Under the new rules, customs duties will be exempted on certain products originating in Pakistan which are imported into the EU. In addition, a tariff preference is given for certain textiles and clothing, leather and footwear products. But there is also a tariff rate quota (TRQ) on some products, limiting the amount of exports that are eligible for duty waivers.
The selected 75 product lines on which the waivers apply amount to almost EUR900m (US$1.18bn) in import value, accounting for about 27% of EU imports from Pakistan.
The EU is Pakistan's largest trading partner, receiving almost 30% of its exports. Textiles account for over 70% of total Pakistani shipments to the EU, followed by leather products at 13%.
This is another point of contention for Paccanelli, who says: "For 15 products included in the waiver, Pakistan is already above 40% share in extra-EU imports. In some cases we can almost talk about a monopolistic position since the share is well above 80%."
The timing of the waiver is also criticised, coming as the EU continues to battle financial and economic crises and rising unemployment rates.
The EU's request now passes to the WTO General Council for adoption, although Euratex is calling for it to be rejected.
Pakistan's textile and clothing exports reached a record level of US$13.8bn in the fiscal year to June 2011, and some industry observers believe the EU proposals will lift this by up to 1.5% a year.
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