Impact of GSP plus status given by European union, on Pakistan

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Impact of GSP plus status given by European union, on Pakistan

  1. 1.    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
  2. 2. • 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.
  3. 3. 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.
  4. 4.  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.
  5. 5.   (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.
  6. 6.   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.
  7. 7.  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.
  8. 8.    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.
  9. 9.  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.
  10. 10. 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.
  11. 11.    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.
  12. 12.  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.
  13. 13.  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.
  14. 14.   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.
  15. 15. 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
  16. 16.   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.
  17. 17.   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.
  18. 18.  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.
  19. 19.  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.
  20. 20. 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.‖ 
  21. 21. 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. 
  22. 22.  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.‖
  23. 23.  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).

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