Italy to press EU on Pakistan trade benefits

ROME (Reuters) - Italy, current G8 president, will press EU states to launch free trade talks with Pakistan and to extend to Islamabad trade benefits from which it would normally be excluded, Foreign Minister Franco Frattini said on Thursday.

Frattini told Reuters in an interview that he would use a June G8 conference on stability in Afghanistan also to explore possibilities for Pakistan and that he wanted a European Union-Pakistan summit in the second half of 2009.

Sweden, which takes over the EU presidency in July, has told him of its strong interest in an EU-Pakistan meeting, said Frattini, who met his Swedish counterpart Carl Bildt on Wednesday.

"We have to seek a consensus among member states about the importance of having negotiations on a free trade agreement," Frattini said.

"I think it's possible (even) in the difficult moment that we are facing now to get consensus, because all the member states agree on the importance of sending positive messages -- not only money -- to Pakistan."

Economic initiatives to promote stability in Afghanistan and Pakistan's tribal areas may be more attractive options for European states than sending more troops to Afghanistan, which many NATO allies including Italy have been reluctant to do.

"We want to stabilize (that region) through the economy, through attraction of investment, through promoting trade, not first of all through sending more troops," Frattini said.

Pakistan's ambassador to Italy, Tasnim Aslam, said her country wanted to start free trade talks and to qualify for preferential trade benefits under an EU program targeting less developed nations, known as "GSP Plus."

"We don't need assistance. We don't need aid. We want trade. Because aid doesn't help sustain the development process, while trade does," Aslam told Reuters.

Pakistan had about 7.5 billion euros ($10.2 billion) worth of trade with the 27-nation EU in 2008, up more than 7 percent on 2005. Aslam said this could grow exponentially if Pakistan enjoyed GSP Plus trade privileges.

EU HELPING ITSELF TOO

"By extending this facility to Pakistan, the European Union would be helping itself also," said Aslam, who added that she appreciated Italy's support on the issue.

"The European Union would like to stabilize (the region), because they have their own strategic interests, their troops are present there. By helping Pakistan, they are helping themselves."

The European Commission has so far excluded Pakistan from GSP Plus status because its economy is too developed to qualify for a program meant to help the least developed nations. Islamabad has also not ratified all the necessary labor treaties, a Commission spokesman said.

Frattini said Pakistan was an exceptional case and required special treatment. Asked whether he favored extending GSP Plus status to Pakistan, Frattini said it was important that EU nations "try to find a way" to do so.

"If we stick to the current legislation ... of course the European Commission cannot offer Pakistan (GSP Plus)," he said.

"But we should do something more. We should deal with Pakistan in a political way, not in a bureaucratic way -- dealing with a free trade agreement as if Pakistan were a country like Bangladesh."

Frattini said he would raise the idea of free trade talks with Pakistan at the conference on Afghanistan in June, which Iran has said it will attend.

When he discussed the idea with Sweden's Bildt on Wednesday, Bildt told him a summit or other high-level meeting was "timely and important," Frattini said.

"I'm suggesting a political summit because only through a political summit can we give the European Commission a special mandate," Frattini said. A special mandate is needed to enable the Commission to offer Pakistan special trade benefits, he said.

(Editing by Tim Pearce)