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EU's trade concessions to fetch modest benefits – SBP

05
Feb '11
According to State Bank of Pakistan (SBP), the shortage of latest as well as pioneering techniques and the incapability of the export sector to fulfill the orders will hinder the realization of the full potential of the trade concession given to Pakistan by the European Union.

From the quarterly report of the SBP on the country's economy, it is evident that the export sector of the country is deficient in latest technology, designing techniques and is marked by the incapability of the exporters to fulfill huge orders.

The European Union has granted trade concessions to Pakistan on 75 items which are mostly associated with the textile industry. Following the legal procedures which include seeking of consent from the European Union governments as well as the parliament, tariff concessions will come into effect.

These 75 items together constitute about 27 percent of the overall exports of Pakistan to European Union. The overall export earnings of Pakistan from various textile items reached one billion dollar in 2009. Average export earnings over the last three years touched $1.2 billion and the country's export share constitutes three percent of the overall imports of European Union.

According to the SBP, the trade concession given by EU to Pakistan would reduce the prices of Pakistani products in European Union. In spite of the fact that the country's unit prices in case of majority of the items is less than that of its competitors, its share in the EU market is much less than the share of its competitors.

Another major problem identified by the SBP is that if lower value commodities are exported to European Union to take the advantage of the trade concessions then it would lead to a problem of raw material scarcity in the local market. Again, if these products are imported then the cost of production would enhance. It would impede the production as well as exports of bed sheets and towels which have not been included under the ambit of tariff concessions.

According to the report, tariff on various categories of yarn is already low so zero-duty on these products would not reduce their unit prices. Certain categories of fabrics and knit-clothing can take the advantage of tariff concessions as the present tariff rates on these items are fairly high.

Fibre2fashion News Desk - India


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