Business

Pakistan gets trade waiver for European Union markets

A worker at a textile factory in Pakistan
Image caption Textile are one of the biggest drivers of growth for Pakistan's export sector

Pakistan's efforts to revive its export sector have received a big boost after some of its goods were given duty free access to the European Union (EU).

The World Trade Organization (WTO) has approved the EU's move to waive duties on 75 Pakistani products, including textiles, for two years.

The waiver was granted on humanitarian grounds after Pakistan's manufacturing was hurt by floods in the country.

The EU is one of Pakistan's biggest trading partners.

"I'm very happy. It was a long drawn out exercise, and something of a success for diplomacy," said Shahid Bashir Pakistan's ambassador to the WTO.

'Some flexibility'

The EU waiver will apply to some of Pakistan's most crucial exports such as textiles and leather goods.

The value of goods that are affected by the waiver is expected to be around 900m euro ($1.2bn; £748m), almost 27% of Pakistan's total exports to the trading bloc.

The EU move had seen other countries from the region such as Bangladesh, Indonesia and India, which compete with Pakistani manufacturers, raise objections to the waiver.

However, these nations dropped their reservations after the EU amended the waivers to include a tariff rate quota (TRQ) on some products, limiting the amount of exports that are eligible for duty waivers.

The quota will be calculated based on the average exports from 2008 to 2010.

Mr Bashir explained that the quota was very simple. If the export volume was under the set limit there would be no tariff implement, but if it exceeded the limit, Pakistan will have to pay the normal applicable tariff.

"We have at least 25% margin over and above our 2011 exports. It gives us some flexibility," he said.

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