'EU's zero duty proposal for Pakistan will damage WTO rules'

GENEVA: The EU's proposal for zero duty on the import of 64 textile items from Pakistan and other concessions with a view to help last year's flood victims could cause irreparable "systemic" damage to global World Trade Organisation rules, trade diplomats have said.

Brussels' largesse to Pakistan would not come into force without an approval from the WTO's Council for Trade in Goods (CTG), which is expected to meet on May 26th.

But the EU's initiative, which is more than one year after the Pakistan floods, is only a short-term trade measure for two years instead of being long-term developmental relief, sources said.

The scheme is facing rough weather within the EU member states.

Some member states -- Italy, Spain, and Portugal -- as well as textile lobby Euratex and European textile and apparel industry, have opposed the EU's trade-related concessions for Pakistan, as it would affect their own textile industry.

Further, EU Commissioner Karel de Gucht is going to reconsider today at a meeting of commissioners in Strasbourg whether to offer trade concessions to Pakistan, following the discovery that Osama bin Laden was living in an Islamabad suburb, sources said.

At the WTO, India, along with Brazil, Vietnam, and Peru, among others, have opposed the waiver on the ground that it would set an unhealthy precedent by allowing industrialised countries to distort global trade rules, particularly the most-favored-nation treatment under which all countries are treated on par.

They argued that while any generous assistance from the EU or other rich countries to Pakistan's flood-victims is to be welcomed, members must refrain from changing well-established trade rules with divide-and-rule intentions, said a trade official from these countries.

"The EU proposal, as currently framed, appears deeply flawed, both in terms of its likely potential to help the flood-affected victims and help in the reconstruction effort, as well as the near certainty of its causing collateral systemic and commercial damage to the MFN principle and the poor workers in other developing countries respectively," India said during a meeting of the Goods Council last year when the EU raised the issue for the first time.

Apparently, Pakistan's Commerce Secretary raised the issue of India's continued opposition to the EU's waiver at the WTO during a meeting with his Indian counterpart last week.

India is understood to have maintained that the waiver would raise serious "systemic" implications in global trade, suggesting that the two countries must work together in strengthening multilateral trade rules, sources said.