THE European Parliament on Thursday unanimously voted to extend the current generalized system of preferences (GSP) for another four years until 2027 for developing countries, including Pakistan, to enjoy duty-free or minimum duty on exports to the European market. The parliament voted with 561 in favour, five against and two in abstention to extend the current rules on the GSP schemes, including GSP+, after talks with the EU Council on the new rules were paused in June, an official statement issued by the EU Parliament said.
It is, indeed, a welcome development as the decision means there would be no addition to Pakistan’s economic woes, at least, on this account. It is worth mentioning that the current GSP regulation was set to expire at the end of this year and negotiations between the EU parliament and the Council of Member States took place in January 2023 to establish new rules. There is no doubt the extension has been granted by the EU for its own reasons and has nothing to do with the performance of any beneficiary country but its continuation will certainly have a healthy impact on the overall economic situation. Pakistan has traditionally been benefiting from the standard GSP regime of the EU and our exports to the EU have been subjected to 20% less duty than the normal MFN duties charged by the European Union. This preferential tariff has helped Pakistani products not only to enter the EU market but also to sustain their share in it. The respite provided by the roll over decision should be used to ponder over the gains and weaknesses of our system. The intended benefits of the GSP plus included not only manifold increase in our exports but would also act as an instigator for investment, both domestic and FDI, employment generation, inculcation of best practices resulting in enhanced institutional capacity and sustained economic growth. It is, therefore, time to carry out a deeper study as to what extent the country benefited from the scheme and why it could not maximize its benefits. Textile sector was supposed to be the major beneficiary of this scheme but it is airing grievances on account of lack of necessary incentives to ensure increased production and exports, especially the harm done by cross-subsidies in the energy sector. Similar are the problems of other sectors and we hope, Minister for Commerce, Dr Gohar Ejaz, who has the necessary background and knowledge of the relevant issues, would contribute his share in addressing them squarely.
