February 1, 2012 / 1:30 PM / 8 years ago

UPDATE 1-WTO okays EU trade help for Pakistan

(Adds quotes from Pakistani ambassador, detail, background)

By Tom Miles

GENEVA, Feb 1 (Reuters) - A World Trade Organisation committee meeting on Wednesday approved a European Union waiver on duties for 75 products from Pakistan, a scheme intended to boost textile exports to help Pakistan recover from massive floods in 2010.

“I’m very happy. It was a long drawn out exercise, and something of a success for diplomacy,” Pakistan’s ambassador to the WTO, Shahid Bashir, told Reuters.

The waiver, lowering trade barriers for humanitarian reasons, is unprecedented in the WTO and does not set a precedent for similar actions in future.

It is unusual because preferential trade terms offered to one member have to be offered to all, making such favouritism impossible. But the EU asked other WTO members to let it ignore the usual rules to help Pakistan.

The waiver affects many of Pakistan’s most important export products, including textiles, leather and industrial alcohol.

The EU’s imports of the 75 products from Pakistan are worth almost 900 million euros, accounting for about 27 percent of EU imports from Pakistan, according to the EU’s waiver request submitted to the WTO Council for Trade in Goods.

That would account for two-thirds of Pakistan’s exports to the EU and 20 percent of its exports overall.

Competing textile exporters such as Brazil, India, Indonesia and Bangladesh had opposed the plan but dropped their objections after the EU amended the scheme to use tariff rate quotas (TRQs) on 20 products rather than full liberalisation.

“This in effect shows our good relations with India,” Bashir said.

The tariff rate quotas will be set at 20 percent above the average of exports in 2008, 2009 and 2010.

“So we have at least 25 percent margin over and above our 2011 exports. It gives us some flexibility,” he said.

“The TRQ level is quite reasonable. Under the TRQ there’s no duty and over the TRQ there will be the normal MFN (most favoured nation) tariff.”

The waiver will apply from Jan 1, 2012, until Dec 31, 2013, but first needs to be rubber-stamped by the WTO’s General Council. The EU could ask for the waiver to be extended for a third year if it considers Pakistan’s economy still needs help. (Reporting by Tom Miles)

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