A recently published policy paper recommends, to benefit from the extension of GSP plus status from 2023-33, Pakistan needs to fill the gaps on issues like honor killing, forced marriages, child labor laws, cancellation of the registration of INGOs and crimes against journalists. The paper was jointly published by Friedrich Naumann Foundation for Freedom Pakistan and Policy Research Institute of Market Economy (PRIME).
Titled, ‘Pakistan and the European Union under GSP+ Policy Paper,’ the paper highlights Pakistan’s trade performance under the scheme. It warns, absence of this scheme would lead to 12 per cent MFN tariffs and to retain the scheme for 10 more years, the country needs to introduce five new laws in addition to the earlier 27.
GSP+ loss threatens $3 billion textile exports
The policy paper also recommends that for the next agreement, Pakistan should negotiate with the EU on tariffs lines not falling under GSP+. Pakistan needs GSP+ status to deal with the current energy crisis, fiscal deficit, balance of payment deficit and depleting foreign exchange reserves. A loss of the facility would cause the textile industry to lose $3 billion worth of exports annually, warns Pakistan Ready-made Garments Manufacturers and Exporters Association.
The paper says, while Pakistan has introduced certain legal and institutional reforms, to comply with GSP+ obligations, it has not made any significant progress on labor rights. One of Lahore’s largest garment manufacturers is currently negotiating with the EU on labor and environmental standards. Meanwhile, presence of women in high-level occupations remains limited and their participation in the labor market less.
The UN Human Rights Convention has made certain positive changes regarding this. It finalized the Federal Domestic Violence Bill in 2019, appointed the first female chief justice of the High Court and incorporated a Transgender Person under the (Protection of Rights) Act 2018.
Little progress on child and forced labor
However, the EU Election Observer Mission in Pakistan claims, election process is military influenced. There is also an increase in child labor and forced labor in the country. As per the Global Slavery Index, Pakistan is one of the top 10 countries with a high presence of modern slavery in the form of threats, violence, coercion, abuse of power or deception to laborers.
UN Conventions on Good Governance opines, European Union can aid the approval of next GSP+ status by making an on-site visit to verify the implementation of the EC recommended reforms. The paper also recommends that the Union amalgamate its demands with Pakistan’s capacity to introduce an effective trade policy. Pakistan’s inability to compete effectively in the EU has already caused the country to lose out on market-enhancing opportunities.
Initiatives to benefit from the GSP+ scheme
In order for benefit from the GSP+ scheme, the policy paper recommends Pakistan implement the following initiatives.
• Urges Pakistan’s Board of Investment to attract Chinese investors to set up textile processing plants in special economic zones.
• Urges Pakistan’s commercial counselors in the EU to increase demand for Pakistani products in Europe.
• Recommends, they should target more SMEs looking to procure from Pakistan. Mandatory power supply to export-led manufacturers is also one of the paper’s recommendations.
• Introduce zero duties on raw materials required to make man-made fibre clothing in the EU market.
• Recommends a reduction in customs duties on imported machinery used in the textile sector.
With the current political turmoil and rising inflation, getting ready for GSP+ 2023-33 status seems more challenging for Pakistan.