India, Pak head for clash at WTO today

NEW DELHI: India and Pakistan are set to clash at the World Trade Organization, or WTO, on Monday over the European Union proposal to give duty-free access to Pakistani textiles as a flood relief measure.

While Pakistan has put its entire political weight behind the issue, India maintains that assistance should not be given by breaking trade rules.

The proposal has also been opposed by Sri Lanka, Peru and Bangladesh. They have argued that EU can directly help Pakistan in cash and humanitarian aid.

Last month, the WTO committee on trade in goods had deferred a decision to allow the EU to side-step global trade rules to eliminate duties on a number of products from Pakistan to help the crisis-hit country.

It will examine the EU's request and the arguments put forward by competing countries once again such relaxation this week.

"We appreciate the fact that Pakistan needs all possible help to deal with its crisis. But help should be given directly by developed countries in cash and by rehabilitation of flood-affected areas and not at the cost of other developing countries," a government official told ET.

Pakistan has lobbied hard to get approval for the package that would allow duty free entry to 75 items, 64 of them textile products, into the EU countries for three years.

Pakistan's commerce minister, Makhdoom Amin Fahim, recently visited Bangladesh to persuade it not to oppose the proposal any further while commerce secretary Zafar Mahmood met Sri Lankan officials to discuss the same issue.

India, Bangladesh, Sri Lanka and Peru are all competitors for the EU market and any preferential access to Pakistan could hit their shipments.

These imports into the EU are levied duties between 6% and 12%.

India's garments and textiles exports to the EU in 2009 was $ 5.9 billion while Pakistan's shipments were worth $ 2.2 billion.

The EU cannot give duty concessions to Pakistan till the WTO waives its obligation of treating all member countries the same, known as the most favoured nation clause.