Report of the Stakeholder Outreach Workshop on the Mid-Term Evaluation of the EU s Generalised Scheme of Preferences (GSP)

Transcription

1 This prject is financed by the Eurpean Unin Reprt f the Stakehlder Outreach Wrkshp n the Mid-Term Evaluatin f the EU s Generalised Scheme f Preferences (GSP) Islamabad Marritt Htel, Pakistan 16 May 2017, 8:30-18:30 Objectives f the Wrkshp T bring tgether stakehlders frm the natinal and reginal administratins, businesses, and scial rganizatins in Pakistan t disseminate infrmatin abut the EU s GSP+; t discuss the preliminary findings f the Mid-Term Evaluatin with respect t Pakistan; and t prvide stakehlders with the pprtunity t share their views n the impact and applicatin f the GSP+ in Pakistan with high-level fficials frm the Eurpean Cmmissin and the Prject Team. Main Pints f Discussin The fllwing are the key pints raised by speakers and panellists (sequenced accrding t the Wrkshp Agenda). The Outreach Wrkshp was chaired by Dr. Peter Hlmes, Senir Ecnmic Expert, DEVELOPMENT Slutins Eurpe Limited and Ms. Emily Hemmings, Prject Manager, DEVELOPMENT Slutins Eurpe Limited. Opening Remarks H.E. Mr. Jean-Françis CAUTAIN, Ambassadr and Head f Delegatin, Delegatin f the Eurpean Unin t Pakistan The GSP+ arrangement has had a psitive impact n the relatinship between the EU and Pakistan. This Wrkshp is part f a wider exercise t evaluate the effectiveness f the GSP Regulatin, and is nt specific t Pakistan nly. It is intended t retrieve cntributins n hw the GSP+ is benefitting Pakistan. Cntributins will feed int the Final Reprt. Frm a plitical perspective, the GSP+ has had a psitive impact. It has strengthened cperatin and has led t a mre mature relatinship between the EU and Pakistan. The 5-year engagement framewrk guides plitical cperatin between the parties, f which the GSP+ is ne f the main elements. Frm a trade perspective, there have als been psitive imprvements. There has been a 38% increase in exprts frm Pakistan t the EU since 2014, althugh verall Pakistani exprts t the wrld have decreased. There is still untapped ptential in nn-traditinal sectrs and in traditinal sectrs, nly large cmpanies benefit frm the GSP+. There is thus a windw f pprtunity fr increased utilisatin and exprt diversificatin. Frm the perspective f fundamental rights, the situatin is nt always very clear, thugh there have been imprvements n the institutinal/legislative side. In terms f the institutinal framewrk, the establishment f the Treaty Implementatin Cell is seen as an innvative idea. It remains t be seen if this mdel can be replicated in ther GSP+ cuntries. The extent t which the GSP+ has led t imprvements in the lives f rdinary Pakistani peple is difficult t assess. It may be challenging t track, but the trends can be mnitred. The EU has t manage its expectatins. T sme extent, the GSP+ has increased natinal fcus n human rights in Pakistan. It is seen as a useful tl t prmte human rights. 1

2 This prject is financed by the Eurpean Unin With regards t the implementatin f the 27 cnventins, there are mechanisms t be imprved. It wuld be gd t find ut if the 2016 Eurpean Cmmissin Reprt n the GSP+ 1 truly reflects stakehlder pinins n the GSP+ in Pakistan. Opening Remarks H.E. Mr. Ashtar Ausaf ALI, Attrney General fr Pakistan and Chair f the Treaty Implementatin Cell The GSP+ assists Pakistan in implementing bligatins that are already entrenched in its Cnstitutin. The emblem f partnership between Pakistan and the EU has been scaled up as a result f the GSP+ arrangement. The trade incentives granted t Pakistan as it implements the 27 required internatinal cnventins have imprved trade relatins between the EU and Pakistan. There are incentives fr bth sides. Exprts frm the EU t Pakistan have increased, especially in terms f machinery. Such machinery has been used t prduce quality prducts fr exprt t the Eurpean market. There are still prblems in the area f human rights. Hwever, this is nt just an issue in Pakistan, but this can be fund all ver the wrld. Human rights have been prmised t the Pakistani peple as per the Cnstitutin. The Eurpean develpment mdel is t be emulated. Exchanges f infrmatin and gd practices are t be encuraged. The Gvernment f Pakistan is cmmitted t infrmatin exchange in a chesive manner. One example is the establishment f the Treaty Implementatin Cell, which exists nt nly at the federal level but als at the prvincial level. There is need fr cntinued dialgue amngst NGOs, INGOs, state-institutins, civil sciety and trade unins n pertinent issues, including imprving the situatin f trade unins and eradicating child labur. There have been huge leaps especially in the use f technlgy in the mnitring prcess. Mbile phnes have been utilised fr nting where things are ging wrng, cllating the data and using the data fr imprvements. There is need t put ur minds tgether fr a better wrld, and especially fr peace in the regin. This can nly be achieved when there is ecnmic stability. EU s GSP+: Ratinale frm the EU s perspective Mr. Andreas JULIN, Senir Expert, Directrate-General fr Trade f the Eurpean Cmmissin The EU s GSP emerged in 1971 as a result f an UNCTAD initiative and the WTO s Enabling Clause. The current GSP Regulatin entered int frce in Its main bjectives are t cntribute t pverty eradicatin and t prmte sustainable develpment by prviding preferential tariffs t develping cuntries. There have been a number f revisins t the GSP Regulatin ver the years. Hwever, the bjectives have always remained the same - pverty eradicatin, ecnmic grwth, and industrialisatin thrugh better access t the EU market. Frm 1971 nwards, the EU has placed significant emphasis n sustainable develpment. It is imprtant that trade makes a significant cntributin t sustainable develpment jbs, grwth, human rights, envirnmental prtectin, labur rights and prsperity. These issues als frm part f the glbalisatin debate in the EU nt nly at the EU level but als at the level f the Member States. 1 Eurpean Cmmissin. (2016). The EU Special Incentive Arrangement fr Sustainable Develpment and Gd Gvernance ( GSP+ ) cvering the perid SWD (2016) 8 final. Available at: eme_f_preferences_during_the_perid_ pdf 2

3 This prject is financed by the Eurpean Unin The current Regulatin aims t fcus n cuntries mst in need, reducing the number f beneficiary cuntries frm arund 180 cuntries t 80 cuntries. There have been imprvements in prduct cverage, the inclusin f safeguard clauses t better prtect the EU s interests, as well as the imprvements t ensure greater stability and predictability. This exercise is intended as an evaluatin f the GSP Regulatin and is nt specifically abut Pakistan. It is imprtant t find ut hw Pakistan s experience can cntribute t this verall exercise. One key questin t be asked is if the GSP+ arrangement has been beneficial r nn-beneficial fr Pakistan. Pakistan was chsen as a case study cuntry in this Evaluatin as it is by far the largest beneficiary f the GSP+. EU s GSP+: Ratinale frm the Lcal Gvernment s perspective Mr. Asad HAYAUDDIN, Additinal Secretary, Trade Diplmacy, Ministry f Cmmerce f Pakistan The nature f the Pakistan-EU relatinship is best envisaged in the cperatin that the tw sides have extended t each ther in the cntext f the GSP+. Trade cncessins allw Pakistan t cmpete n a level-playing field in the EU market. Cperatin with the EU is enabling Pakistan t meet its cnstitutinal bligatins in case f gd principles, gd gvernance and sustainable develpment as required by the 27 internatinal cnventins. The 2005 withdrawal f preferences hurt Pakistan significantly in the EU market. During this time, cmpetitrs such as Vietnam and Bangladesh were able t increase their cmpetitiveness in a significant way. Pakistan is clser t being a LDC than a develping cuntry based n the Human Develpment Indices f Pakistan, yet it is categrized as a develping cuntry. It is critical that this dilemma is understd. Pakistan s glbal exprts have decreased by 12% in 2015/16 cmpared t the previus year, while Pakistan s exprts t the EU have increased by 38% in the same perid. It is fair t say that the GSP+ is the nly engine f grwth at present. Pakistan s glbal trade deficit has increased by arund USD 30 billin. This presents a serius prblem if trade is t be used as an engine f grwth as ppsed t freign aid. Pakistan faces enrmus challenges as a result f high prductin csts. This is partially due t investments in energy and the shrtages f energy. The cst f energy is ntably higher than Bangladesh, Sri Lanka, Vietnam and Turkey. The minimum wage in Pakistan is als increasing. Treaty Implementatin Cells have been instituted at the prvincial level t ensure that the benefits t be derived frm GSP+ are shared acrss all strata f sciety withut discriminatin. As a result f trade under the GSP+ arrangement, Pakistani exprts f textiles have increased by 55% in 2016 cmpared t Textiles garments and hme textiles exprts increased by 76% and 16% respectively. Intra-EU trade fr Pakistani exprts has als increased in the same sectrs that cnstitute Pakistan s trade t the EU. Withut GSP+ preferences, the decline in Pakistan s glbal exprts wuld have been steeper. It is challenging fr Pakistan t maximise its gains under GSP+ as exprts frm its cmpetitrs (Bangladesh, Vietnam and Turkey) are als increasing. These cuntries have very stable market access arrangements with the EU. The EU s GSP is unique Pakistan has accepted the challenge t partner with the EU t develp ethical supply chains, t enhance its prductin capacity, as well as t fulfill its cnstitutinal and internatinal cmmitments. N cuntry can claim t be 100% cmpliant with the implementatin f these internatinal cnventins. Hwever, it is imprtant that prgress is witnessed. 3

4 This prject is financed by the Eurpean Unin One key questin remains: What is envisaged beynd GSP+ fr predictable and sustainable Pakistan-EU trade? Stakehlder Discussins in this Sessin Pakistan s utilisatin rate f the GSP+ is high. Hwever, these benefits are cmpletely neutralised given slw prgress in pverty reductin and implementatin f standards, particularly cre labur standards. The Tripartite Frum shuld evaluate perfrmance n labur standards and shuld be respnsible fr reprting and engaging the tripartite stakehlders. The screcard mechanism shuld als be mre transparent. Civil sciety has nt been privy t the key elements incrprated n these screcards. The effective participatin f civil sciety is necessary. Respnse by Mr. Andreas Julin, Eurpean Cmmissin: Screcards are cnsidered t be cnfidential cmmunicatin with partner cuntries. Cnfidentiality is essential in building a trustful relatinship with beneficiary cuntries. The screcards are shared with Member States and the Eurpean Parliament. GSP+ beneficiary cuntries shuld rganise their wn apprach t cnsultatins twards the implementatin f cre labur standards under the GSP+ arrangement. The Internatinal Labur Organizatin (Pakistan Cuntry Office) and the Labur Federatin f Pakistan are invited t and are partners f the Treaty Implementatin Cell. The GSP Evaluatin: Methdlgy and Main Interim Findings Ms. Emily HEMMINGS, Prject Manager, Mid-Term Evaluatin Prject Team The bjectives f the EU s GSP are three-fld: t cntribute t pverty eradicatin; t prmte sustainable develpment and gd gvernance; and t safeguard the EU s financial and ecnmic interests. Ratinale fr GSP refrm: T better reflect the current glbal landscape; t fcus n the cuntries mst in need; and t reduce the ersin f preference margins. Current GSP Regulatin Regulatin (EU) N. 978/2012 in frce since 1 January The Prject Team will assess the current GSP scheme n its effectiveness, efficiency, cherence and relevance. This evaluatin is nt specific t Pakistan. Key questins that the Evaluatin seeks t address include: 1. T what extent are the bjectives f the GSP n track t be achieved? 2. What has been the impact f GSP in develping cuntries? 3. What unintended cnsequences are presented? 4. T what extent is the current GSP efficient? 5. T what extent is the current GSP scheme relevant t the develpment needs which it is intended t address? Bth quantitative and qualitative analyses n the functining f the current GSP Regulatin is t be undertaken: Quantitative analysis based n previus studies using updated trade and tariff data, case studies n specific EBA (Bangladesh and Ethipia) and GSP+ (Pakistan and Blivia) cuntries as well as n key sectrs (textiles and machinery); ecnmic analysis t capture preference utilisatin rate, diversificatin, real incme indicatrs, amng thers; scial and envirnmental analysis t cver indicatrs such as gd gvernance, pverty reductin, wmen equity, climate change, amng thers. Stakehlder engagement via questinnaires, interviews/meetings, nline public cnsultatin, civil sciety dialgues, wrkshps, scial media and website interactin. 4

5 This prject is financed by the Eurpean Unin Stakehlder Discussins after Presentatin There are different institutinal framewrks in beneficiary cuntries. Cuntries are at differing stages f develpment. The same mnitring mechanism cannt be applied acrss all cuntries. There needs t be a deeper understanding f respective cuntry situatins. A tripartite cnsultative mdel is imprtant at the industry, prvincial and federal levels. GSP+: Preliminary findings and intrductin t the case study Mr. Peter HOLMES, Senir Ecnmic Expert, Mid-Term Evaluatin Prject Team The purpse f the Wrkshp is t retrieve feedback n the effectiveness f the GSP Regulatin. One key questin is: what can we learn frm Pakistan s experiences in rder t imprve the applicatin f the GSP in the future? The Evaluatin is in the initial stages. There is need fr feedback frm stakehlders s that the analysis can be refined. Pakistan is the main beneficiary f the EU s GSP+ arrangement. Its exprts accunt fr 69% f all GSP+ exprts t the EU. The EU is the main exprt destinatin fr Pakistani exprts. In recent years, exprts and the share in Pakistan s glbal exprts have steadily increased. Relatively lw diversificatin f exprt base: RMG exprts represent almst 65% f Pakistan s exprts t the EU in Nn-RMG exprts maintain a relatively small share in the EU market. Pakistan faces cmpetitin frm Vietnam and Sri Lanka (Standard GSP) and Bangladesh and Cambdia (EBA), wh are steadily increasing their share in the EU market. Scial prgress has been nted in the fllwing areas: increased life expectancy, educatin, healthcare and reprduced ppulatin grwth. A number f challenges remain t be addressed. Federal and prvincial gvernments have made cnsiderable effrts t expand and ensure labur rights fr every wrker. There has been a devlutin f pwer t prvincial gvernments thrugh the 18 th Cnstitutinal Amendment. GSP+ and labur rights: Pakistan is largely cmpliant with the reprting bligatins under the ILO cnventins, with ne ut f cycle request fr Envirnmental prtectin in Pakistan is imprtant due t vulnerability t climate change and degradatin as a result f bilgical and sci-ecnmic prcesses. The Gvernment has adpted numerus plicies t address the detrimental effect n the envirnment. GSP+ and envirnmental prtectin: There is a lack f cmpliance with reprting requirements under sme f the UN cnventins, but Pakistan has made an effrt t catch up n reprting since Envirnmental impact f the textile industry: increased use f pesticides and fertilisers t prduce cttn, inadequate waste management and water pllutin due t prcessing. Human rights are set in a difficult cntext. The Gvernment adpted an Actin Plan fr human Rights t imprve the prtectin f human rights and the implementatin f internatinal cnventins. A few cases f capital punishment, death penalty and restricted freedm f expressin are reprted. GSP+ and human rights: The Gvernment had t withdraw a number f reservatins n the Cvenant n Civil and Plitical Rights and the Cnventin Against Trture in 2011 t be eligible fr GSP+. Pakistan has made effrts t catch up n its reprting since GSP+ and gd gvernance: Pakistan had ratified all required cnventins and has created the necessary authrities t cmbat crruptin and drug trafficking and use. 5

6 This prject is financed by the Eurpean Unin Stakehlder Discussins after Presentatin Pakistan was granted GSP+ status in Hwever, mst f the GSP+ cnventins were ratified by Pakistan prir t applicatin fr GSP+ status. Hence, there was n cmpulsin by the EU. These cnventins were ratified in rder t imprve the well-being f the Pakistani peple. In the areas f human rights and the implementatin f labur laws, there have been imprvements but there is still a lt t be dne. Pakistan cannt be cmpared t any Eurpean cuntry as it is a develping cuntry. Pakistan has issues that need t be addressed.until these are addressed, there will nt be prgress n ecnmic develpment. Sme prpsals fr imprvement include: 1. Greater fcus n capacity building initiatives; 2. Increased technical supprt frm internatinal agencies such as the ILO with a special emphasis n imprving labur law implementatin and strengthening labur inspectins. Penalisatin is t be avided as this will hamper grwth and hurt the ecnmy. Unifrmity f labur laws t be prmted at the prvincial level as currently, sme variatins exist; 3. Increased gvernment initiatives t facilitate buyers frm EU cuntries; 4. Cntinued availability f skilled and trained manpwer; and 5. Cntinued interactins and dialgue with stakehlders. It is believed that trade preferences may actually hamper develping cuntries effrts t diversify. Because f supply-side cnstraints in Pakistan, manufacturers tend t fcus n ne market. Unilateral preferences can assist any develping cuntry t becme cmpetitive glbally. Bangladesh s exprts are predminantly sent t the EU because f duty-free access fr a wide variety f prducts. The Gvernment f Pakistan des nt view human resurces bligatins as an impediment fr pushing fr develpment. The EU s GSP has brught mre fcus n the idea f mre inclusive grwth acrss sectrs. The GSP is discussed as a trade prmtin prgramme. Hwever, the Regulatin says that it is a tl t achieve the prmtin f gd gvernance and sustainable develpment thrugh effective implementatin f the 27 internatinal cnventins. If the Gvernment f Pakistan has signed n t the GSP+, there must be a cmmitment t effectively implement the required cnventins. It is imprtant that benchmarking and linkages are prperly defined. Key questin: Hw can trade filter int scial, human rights and envirnmental imprvements? It is a very difficult task t measure prgress after 2 and 3 years in the current evaluatin cycles. The majrity f benefits tend t be cncentrated in the tw prvinces where textiles are manufactured. It wuld be gd t identify whether the impact is greater in these tw prvinces r whether it is all-inclusive. There seems t be mre f a debate n Pakistan s implementatin f the cre cnventins. Hwever, there is a greater need t analyse the ecnmic benefits f the GSP+ in Pakistan as critics tut that there are n knwn ecnmic benefits. It is felt that Pakistani exprts may simply be diverted frm ther destinatins int the EU market, resulting in trade diversin rather than trade creatin. It is estimated that abut 36% f trade with the EU might be trade diversin. There is need fr this situatin t be examined in greater detail. The textiles sectr is a preferred sectr. The industry has received significant incentives in the dmestic market as well as in the internatinal market thrugh the GSP+. There needs t be dialgue n hw the Gvernment f Pakistan can build its capacity s that there will be demand driven interventins. Mre interventins are needed t help the 6

7 This prject is financed by the Eurpean Unin Gvernment t address the trade deficit. This is where the Gvernment needs the mst help. Sci-ecnmic impact f GSP+ in Pakistan Dr. Safdar SOHAIL, Executive Directr General, Ministry f Cmmerce f Pakistan The GSP Regulatin has cmbined the ethical and sustainability aspects f trade with the develpment impact f trade. It has attracted a lt f interest and has had a lt f impact. Pakistan has fashined its trade plicy n the mdels f Western cuntries. The linkage between trade and develpment has been adpted as a frmal pillar in Pakistan s trade plicy. With the intrductin f GSP+, the prcess f engagement has been enriched and is mre rbust. Hwever, it remains t be seen if mre can be delivered. Des this tl wrk well fr Pakistan r des it have limitatins? Shuld there be mre tls at Pakistan s dispsal t g frward? Pakistan s exprts have been declining. In 2016, there was a recrd high trade deficit f arund USD 30 billin. Exprts barely crssed USD 20 billin, while imprts amunted t arund USD 50 billin. Cmpetitiveness is the majr prblem. What is the ptential fr deeper trade integratin? GSP+ is seen as a stepping stne. Hwever, has the EU-Pakistan trade relatinship been reduced t cmpliances with the GSP+ cnventins? The EU has been averse t attend t any ther agreement in the Five- Year Engagement Plan than the GSP+. There is need fr engagement and regulatry dialgue n cmprehensive trade issues. Critics see the GSP+ arrangement as a type f freign aid initiative with several cnditinalities attached. There is a fear that the EU is becming rather irrelevant t discussins in Pakistan. There is the pssibility that there was trade diversin in the first year f Pakistan s entry int the GSP+ arrangement. The 2-year evaluatin cycle that the EU emplys is rather limited. Furthermre, there needs t be mre fcus n medium t lng-term plans. As it currently stands, t much time is spent n filling ut screcards. Cmpliance is very strict n nn-firm based institutins. There is need t fcus n firmbased cmpliances. The textile value chain is ne f the highest plluters in Pakistan. This prblem is nt with the state but with the firms. If the EU and Pakistani authrities were t invlve these actrs in the prcess, there wuld lead t better results in the area f cmpliance. It is prpsed that the EU emply sanctins at the sectral level. Stakehlder Discussins after Presentatin There are claims that the GSP may actually be used as a prtectinist measure by the EU. It is prpsed that the Prject Team carefully assesses trends where the GSP Regulatin has been used fr strategic bjectives n behalf f cuntries r sectrs interest. State cmpanies tend t be cmpliant with the implementatin f labur laws. Hwever, nn-cmpliance is mst nticeable amngst SMEs. It wuld be gd t assess the extent f cmpliance f SMEs that are invlved in exprting t the EU. It is utrageus t think that the EU shuld be invlved in regulatry refrms at the sectral level. This is squarely the respnsibility f the Gvernment f Pakistan. Respnse frm Dr. Safdar Shail, Ministry f Cmmerce f Pakistan At the very brad scale, Pakistan institutins are prducts f exchange with the free wrld. Ideally, this regulatry refrm shuld be undertaken by the Gvernment f Pakistan. Hwever, there is n harm if there is assistance frm the internatinal cmmunity. As there are pressures frm the cmpliance side, engagement frm EU actrs is welcme. It is nt 7

8 This prject is financed by the Eurpean Unin unheard f fr the EU t have regulatry dialgue with develped cuntries, e.g. Japan. The EU des take interest in the dmestic trade plicy f its partners. The EU is nt keen t upscale the level f strategic engagement with Pakistan in the area f trade. The Jint statements f the EU-Pakistan Cmmissin tend t fcus n security, migratin, anti-terrrism, narctics and nuclear nn-prliferatin nly. The prpsal fr firm-based cmpliance is welcmed. There is need t fcus n the sectrs that are benefitting the mst frm the GSP+ arrangement. The textiles industry emplys 15 millin peple and is the biggest beneficiary f the GSP+. Mre shuld be dne t ensure that these firms are GSP+ cmpliant. Respnse frm Mr. Andreas Julin, Eurpean Cmmissin: There is currently a tpdwn apprach t the implementatin f the cnventins. Hwever, the cnventins have impact frm the bttm-up. The debates in the EU Parliament are nw fcused n getting cmpanies t d the right thing. Hwever, there are ther views that the gvernment has t regulate these cmpanies. The impact f the GSP+ n Pakistan s exprts and the way frward Mr. Ehsan MALIK, Chief Executive Officer, Pakistan Business Cuncil Manufacturing as a percentage f GDP is declining. There is a fear that Pakistan is becming a natin f traders. Nne f the FTAs that Pakistan has signed have created a trade advantage fr Pakistan. The largest trade agreement is with China and Pakistan has an enrmus trade deficit. Pakistan s exchange rate tl has nt wrked t bst exprts r t manage imprts. The Pakistan rupee has als appreciated against ther majr currencies such as the eur, the pund and the yen, ultimately making their exprts mre expensive. This situatin cmes in the face f the depreciatin f currencies f surcing cmpetitrs such as India, Turkey and Sri Lanka. Pakistan s share in wrld exprts has declined, mving frm 0.16% in 1998 t 0.14% in On the ther hand, Bangladesh s share in glbal trade has grwn frm 0.1% in 1998 t 0.21% in In terms f abslute exprts, Pakistan s exprts have witnessed almst three-fld grwth, while Bangladesh s exprts have seven-flded. There seems t be mre strategic and exprt riented plicies in Bangladesh cmpared t the fragmented plicy emplyed in Pakistan. Pakistan s tax rates are nt cmpetitive against the Asian cmpetitrs. Ttal tax rate amunts t 40% - rughly twice the Asian average f 22%. High tax rates encurage mre peple t remain utside f the tax base. The tax burden is placed squarely n the manufacturing industry in Pakistan. There is need t strengthen dmestic industry nly then will the cuntry be able t generate emplyment, which is badly needed. Unemplyment has als been impacted by years f pwer shrtage, and even if pwer shrtage is addressed, electricity supply is nt available at cmpetitive rates. Trade deficit is grwing at an alarming rate 40.2%. Exprts have decreased by 2.3%, while imprts have grwn by 20%. Remittances have revealed a dwnward trend and external balances are at risk. Textiles are the backbne f the ecnmy, emplying 40% f the industrial labur frce. Textiles represented 55% f Pakistan glbal exprts in 2013, mving t 60% in Ttal wrld exprts have declined. In like manner, Pakistan s exprts t the wrld have declined. Hwever, exprts t the EU have been grwing, while exprts t China an FTA partner - have been declining. This reveals that even withut FTAs, Pakistan can grw its exprts. The EU s share in Pakistan s exprts was 30% in 2016 cmpared t Pakistan s share in EU imprts %. The latter mved upwards frm 0.11% in This psitive mvement has been as a result f the GSP+. 8

9 This prject is financed by the Eurpean Unin GSP+ has been a psitive impact as it has increased exprts. On the cntrary, the GSP+ has made the dminant exprts - textiles exprts - mre GSP+ reliant. It was nted that 41% f Pakistan s textiles exprts are GSP reliant. Pakistan s exprts t the EU are largely finished gds, while thse t China are largely raw materials. Then, China cmpetes with Pakistan in the market fr finished prducts in the EU market. Pakistan is encuraged t exprt mre value-added gds. Pakistan s share in ttal EU imprts has risen but t a lesser extent than its majr cmpetitrs, e.g. Bangladesh. A key questin remains: Why has Pakistan nt been able t take greater advantage f GSP+ preferences? Besides bed linen exprts, Pakistan des nt have a significant share in linen items t the EU market. Even if there was a majr diversin f all exprts under a particular categry, there wuld nt be the attainment f a significant market share in the EU market. It is prpsed that mre cttn is grwn in Pakistan in rder t prduce mre finished gds fr exprt t the EU market. It was nted that Pakistan s cttn prductin has remained stagnant ver the years. Labur csts in Pakistan are significantly higher than in cmpeting cuntries. Additinally, electricity and gas csts are very high. Althugh textiles represented 60% f Pakistan glbal exprts in 2016, textiles nly represent 6% f wrld trade. Therefre, there is need t diversify exprts in general. There is ptential t expand exprts in the fllwing sectrs: ftwear, glves, leather, medical and surgical instruments and sprts equipment. Hwever, there is need fr mre stringent testing standards in rder t meet the requirements f the EU market. Brexit can be seen as a threat and an pprtunity. The UK represents 24% f Pakistan s exprts t the EU. Therefre, these exprts will n lnger benefit frm GSP+ access t the UK market after Brexit. Hwever, Pakistan culd lbby fr a similar arrangement t be instituted in the UK. Whatever trade cncessins Pakistan can receive will be very imprtant fr the cuntry. Pakistan is still nt fully able t take advantage due t cmpetitiveness and capacity issues. Nt a fragmented but a strategic plicy framewrk is required. There shuld be active buy-in f all the ther ministries, nt just ne particular ministry. Stakehlder discussins after this Presentatin The extent t which trade preferences will suprt Pakistan depends n the level f attentin that is placed n addressing bth capacity and cmpetitiveness cnstraints. Respnse frm Mr. Ehsan Malik, Pakistan Business Cuncil: With regards t the key cmpnents f a gd FTA, trade cmplementarity between the parties is a necessity. The impact f the FTA shuld nt nly psitively impact the trade balance, but shuld als psitively impact emplyment and value-added exprts. There is divergence between plicies emplyed in exprt-riented industries and dmestic industries. The Gvernment has nt been able t effect prper standards fr dmestic cmmerce. This is the time t bring internatinal standards int the dmestic industries as this cntributes t firm-level cmpetitiveness and better perfrmance n a glbal scale. One f the majr impediments t mving twards firm-based cmpliance is the size f the infrmal sectr. If mre cmpanies are able t be brught int the tax base, then they culd be held accuntable fr their actins. There is a tendency fr Pakistani businesses t be dependent n cncessins and subsidies. There is need fr businesses t be mre cmpetitive. Respnse frm Mr. Ehsan Malik, Pakistan Business Cuncil: Cmpetitiveness is an issue that must be directly addressed by Pakistani businesses. Hwever, public plicy plays a key rle. 9

10 This prject is financed by the Eurpean Unin The scial impact f GSP+ in Pakistan Ms. Ingrid CHRISTENSEN, Cuntry Directr Internatinal Labur Organizatin (ILO) Pakistan The ILO is invlved in the GSP+ thrugh standard setting, the supervisry mechanism, technical assistance in supprt f effective implementatin, the Treaty Implementatin Cell and thrugh the implementatin f EU and dnr funded capacity building prjects. RMG sectr is imprtant in Pakistan. It makes up 47% f ttal wage emplyment in the manufacturing sectr. Abut 37.4% are paid belw the minimum wage. The federal and prvincial capacity t address labur matters and t mnitr and reprt n prgress has been strengthened. Hwever, the remains rm fr imprvement. Since Pakistan s admissin t the GSP+ arrangement, there has been significant labur law develpment at the prvincial level. This is due t devlutin f labur law implementatin t the prvincial level. There are fifteen labur laws under develpment. The ILO is assisting the Gvernment f Pakistan t becme mre internatinal labur law cmpliant. The tripartite cnsultatin mechanism has been utilised in this regard. The implementatin and enfrcement f labur laws are challenges fr many cuntries, including Pakistan There are still issues t be addressed in the area f labur inspectins; hwever, there have been psitive develpments. Database systems are being used by labur inspectrs in Lahre, which assists with data cllectin and transfer. Technlgy is als being used t supprt the ablitin f child labur in Punjab. There are natinal capacity building prgrammes fr labur inspectrs in which the ILO and ther dnrs are invlved. There are signs f imprvement in the area f labur inspectins. Larger prvinces are extending labur prtectin t hme-based wrkers / dmestic wrkers. There is lw trade uninisatin and a lw trade unin membership amngst wrkers. Amng gvernments, private sectrs and scial partners, there is a high awareness f the GSP+ and the bligatin t cmply with fundamental principles and rights at wrk. There is a need t mve twards a crdinated, cmprehensive and cnsistent lng-term labur law refrm. There is furthermre need fr cnsultatin and scial dialgue, implementatin and enfrcement, effective applicatin in the infrmal ecnmy and cnsistency acrss Pakistan. Challenges related t the GSP+ are the implementatin f cnventins in a devlved scenari, the lack f cmprehensive mnitring and evaluatin, difficult benchmarking f screcards and a strict fcus n a selected number f cnventins. Furthermre, the CEARC bservatins and direct request merely indicate pssible challenges in implementatin, but d nt necessarily shw the quantitative scale f it. Recmmendatins in this respect are t supprt scial dialgue at different levels, supprt scial partners, incrprate feedback frm emplyers, wrkers and thers at wrk, develp a cmprehensive mnitring and evaluatin system, fllw imprvements n different levels, crdinate with the Sustainable Develpment Gals and t supprt gvernment and scial partners t develp a strategy t enhance the decent emplyment 10

11 This prject is financed by the Eurpean Unin pprtunities f the GSP+. Furthermre, it will be imprtant t ensure increased data capability. The envirnmental impact f GSP+ in Pakistan Ambassadr Shafqat KAKAKHEL, Chairpersn, Sustainable Develpment Plicy Institute Pakistan has ratified the 8 multilateral envirnmental agreements (MEAs) under the GSP+ arrangement and has maintained its ratificatin. Pakistan has been participating at varius levels f the Cnference f the Parties at these 8 MEAs and their subsidiary bdies. Pakistan has frmulated plans f actin t implement the 8 MEAs. The GSP+ has added urgency t these plans. Capacity and resurce cnstraints have affected Pakistan s ability t fulfil its bligatins. The Mntreal Cnventin has been nted as the mst successful f all the 8 cnventins as it has been easy t implement given its in-built financial mechanism. The UN Framewrk Cnventin n Climate Change (UNFCCC) is nted as the mst imprtant Cnventin fr Pakistan as it is highly vulnerable t the impacts f climate change rising sea levels, melting f the glaciers, and high temperatures that impact plants, animals and human beings. Pakistan was slw t develp a natinal climate plicy and adpted this nly in Defrestatin and frest degradatin in Pakistan are taking place at an extrardinary speed. It is difficult t assess the crrelatin between the GSP+ and envirnmental prgress in Pakistan. The establishment f the Treaty Implementatin Cell is cnsidered t be beneficial. The GSP+ als serves as a significant incentive fr the Gvernment t abide by its bligatins. The frmulatin f natinal actin plans prvides natinal benchmarks and targets, as well as they prvide the basis fr the budgetary exercise and planning exercise. Additinally, they serve as carefully crafted plans fr transmissin t external partners. Deteriratin and degradatin f natural resurces in Pakistan can be directly attributed t the near six-fld increase in the ppulatin ver the past 7 decades. One f the daunting challenges related t the prtectin and cnservatin f natural resurces and ecsystems is the lack f reliable data. Civil sciety and envirnmentalists have welcmed the GSP+ and the assciated linkages t the implementatin f these 8 MEAs. Pakistan s civil sciety cnsiders a EU-Pakistan partnership fr sustainable develpment nt nly as means f facilitating increased financial assistance but als as a vehicle fr plugging the gaps in the cuntry s scientific, technical, and technlgical and human resurce capacities, which are indispensable fr achieving sustainable develpment. Stakehlder Discussins in this Sessin Greater dialgue with the EU regarding capacity-building initiatives will g a lng way with the implementatin f the cnventins. Need fr mre trained prfessinals at the Ministry f Climate Change. The prvinces may be lacking in capacity mre than the Ministry f Climate Change. Fr example, the Punjab Gvernment has highlighted that they d nt have sufficient capacities fr the implementatin f the required envirnmental cnventins. Gvernance prblems are als an impediment t the implementatin wnership. Interinstitutinal and ministerial cherence needs t be imprved as well. All ministries have t cme tgether t frm a cherent natinal respnse. 11

12 This prject is financed by the Eurpean Unin Gvernment has dne much thrugh the ratificatin f cnventins and the develpment f actin plans, but what is needed nw is t fcus n filling the gaps. A natinal stakehlder partnership is needed t see what the gains are and where the gaps are. Prgress n the implementatin f the envirnmental cnventins cannt be talked abut in islatin as Pakistan is still far ahead f ther cuntries. There are certain legislative tls that are currently being develped, and a number f lcal laws that have been passed twards the implementatin f the GSP+ bligatins. Ensuring stakehlder input int the GSP Evaluatin: Cncerns, prgress and pprtunities Panel discussin with speakers frm civil sciety and industry Mr. Gulzar FIROZ, Chairman, Standing Cmmittee n Envirnment & GSP Plus, Federatin f Pakistan Chamber f Cmmerce & Industry The GSP+ was nt a gift t Pakistan. Pakistan wrked hard t earn GSP+ status. Pakistan s share in EU imprts is lw - 0.3%. There is need fr mre discussins n hw t increase this share. The annual grwth rate in Pakistan s exprts t the EU is 19.5%. Immediately after gaining GSP+ status, Pakistan significantly increased its exprts t the EU. Hwever since that time, the rate f increase in exprts has nt been as high. The United Kingdm dminates as the main EU imprter f Pakistani exprts. Pakistani exprts t Belgium are als ntewrthy (ranked as the 6th largest imprter f Pakistani exprts). There is need t find ut why there is lw imprtatin f Pakistani prducts in certain Eurpean cuntries. Sme ptential exprts t be expanded include: jewelry, fruit juices and fruits. Pakistan s share in ttal EU imprts in textiles such as HS cdes 63 (textile sets clthing), 61 (apparel accessries nt knitted r crcheted) and 55 (man-made staple fibers) is very lw. As Pakistan benefits frm tariff cncessins under the GSP+ where duties f 3-8% wuld have applied, India has increased their duty-drawback frm 3-11% in the dmestic setting, and has given incentives t their exprters. Therefre, Pakistani exprters are n a level playing field with their cmpetitrs Leather and textile industries are majr envirnmental pllutants. 90% f leather cmpanies lcated in Karachi and Lahre have established their wn treatment plants, which has led t significant envirnmental imprvements. Energy and labur csts are high, which lead t higher csts f prductin. In general, there is a lack f awareness f the GSP+ regime in Pakistan amngst business peple. They may knw abut tariff cncessins, hwever, they are generally unaware f the cnditinalities. The GSP+ arrangement has had a psitive impact n Pakistan. Mst industries are trying t cmply with labur laws and minimum wages. Pakistan s private sectr is wrking hard twards cnfrmity. If labur and human rights are vilated, then it shuld nt affect the GSP scheme as a whle. Punitive actins shuld be taken against the sectrs that are in vilatin nly. Mr. Syed Ayb QUTUB, Executive Directr, Pakistan Institute fr Envirnment- Develpment Actin Research It is very difficult t crrelate the GSP t envirnmental management in Pakistan. GSP + has had a minr rle t play in Pakistan s envirnmental management and, as it is currently cnfigured, will have a minr rle in the future. 12

13 This prject is financed by the Eurpean Unin If we lk at the 8 MEAs that are mnitred under GSP+, nly 3 are related t trade in a minr way (CITES, Mntreal, and Basil Cnventins). Additinally, traders and industrialists d nt knw abut the link between such cncessins and the implementatin f cnventins, neither d they think it cncerns them. At present, the biggest envirnmental cncern in Pakistan is the impact f CPEC n the muntain terrain as well as the impact f il future. At the level f principle and cncept, the EU is well-psitined t assist Pakistan twards the achievement f SDG12 - sustainable cnsumptin and prductin. This will undubtedly assist Pakistan n its path t resurce efficiency and sustainable livelihds/ lifestyles In terms f mre practical and immediate assistance, there can be increased sectral mnitring, especially within the textile industry. There needs t be greater supervisin and plicy enfrcement at the sectral level. Effective interface can begin t be built frm the bttm-up. The EU can prmte the use f decentralised waste treatment plants in Pakistan. These systems use n energy and chemicals, and can be fabricated with lcal material. Mr. Zulfiqar SHAH, Executive Directr, Pakistan Institute f Labur Educatin and Research (PILER) There is a general appreciatin frm the civil sciety t the EU fr initiating the GSP+ arrangement. The implementatin f the 27 cnventins is seen as a package fr the demcratisatin f Pakistan. These cmmitments are seen as part f Pakistan s cnstitutinal bligatins as rightly stated by the Attrney General. Labur rights picked up after Pakistan gained GSP+ status in The main fcus f the Mid-Term Evaluatin shuld be n imprving the things that are wrking and addressing the things that are nt. The aim shuld nt be t cme up with anything new. It is als agreed that the burden f cmpliance shuld be shared by firms. There is need fr the use f benchmarks and indicatrs. As the system currently stands, it is hard fr civil sciety t address what areas have imprved and what areas are still deficient. There is need fr a mre frmal rle fr civil sciety in the GSP+ reprting prcess. At the same time, there is need t re-package the reprting prcess s that it is less threatening. It is generally felt that if peple d nt say that things are mving in the right directin, then there is a risk that the preferences will be revked. The GSP+ is als viewed psitively as there is mre leverage fr labur unins and civil sciety t negtiate with the gvernment n very sensitive issues. This is particularly welcmed as space t discuss civil sciety issues is shrinking. Mr. M. Zahr AWAN, General Secretary, Pakistan Wrkers Federatin (PWF) A Reprt n the GSP+ and Labur Standards in Pakistan (Interim Reprt 2016) has been recently published with the supprt f Friedrich Ebert Stiftung, and has been published in bth Urdu and English. The cmprehensive views f the Pakistan Wrkers Federatin n the GSP+ are cntained within this dcument. Less than 3% f Pakistani wrkers are uninised. As a result, wrkers have less cllective bargaining strength. In cases where wrkers are nt ffered appintment letters r where the terms and cnditins f emplyment are nt presented in emplyment cntracts, this may be referred t as frced labur. These wrkers represent 73% f the infrmal labur frce. 13

14 This prject is financed by the Eurpean Unin Surveys have revealed that in the majr districts where there are significant exprts under GSP+ - Lahre, Faisalabad and Sialkt wrkers rights tend t be abused. The ILO has identified a deficit in decent wrk in Pakistan. Since gaining GSP+ status, labur inspectrs have nt increased. Less than 300 inspectrs serve the entire cuntry in cmmercial, industrial, and ther establishments. Wrkers are prperly secured when they are uninised since there is scial dialgue. As a result, there is n need fr labur inspectins The scial safety net situatin has shwn mdest imprvements ver the past year. Many wrkers are still excluded frm scial security, the pensin scheme and welfare facilities. Less than 20% f wrkers are cvered under the scial safety net. Pakistan s minimum wage is apprximately 15,000 rupees. This is extremely lw given the large size f husehlds. In sme sectrs, wrkers d nt receive the minimum wage. This is a deprivatin f the right t enjy life. It is necessary t determine the extent t which wrkers have t sacrifice their basic human rights and uninisatin fr ecnmic gains. Befre attracting mre FDI, there need t better the quality f life fr wrkers. It is imprtant that Pakistan des nt emerge as a supplier f cheap labur and a merchant f human miseries. Well-defined labur standards shuld be insisted upn. Clsing remarks Mr. Andreas JULIN, Senir Expert, Directrate-General fr Trade f the Eurpean Cmmissin The GSP Regulatin is a main trade plicy tl fr supprting ecnmic develpment in develping cuntries. As a result, there is a need fr effective implementatin and mnitring. Hw can the GSP+ be used fr psitive leveraging? Hw is it driving things that the gvernment has set ut t d anyway? These are sme f the questins that have been fleshed ut in the Wrkshp. Assessment f the benefits shuld nt be limited t the implementatin f the 27 cnventins, but there is a need t fcus n the ecnmic gains that have been accrued t Pakistan. The discussins indicated that there may have been sme trade diversin frm Pakistan's ther exprt destinatins and that the GSP+ trade preferences may nt have been fully utilised, including fr greater diversificatin. Exprts t the EU are increasing, while glbal exprts are decreasing. It was suggested that this was due t a number f factrs negatively affecting the cmpetitiveness f Pakistan's industry. It was mainly the respnsibility f the Gvernment t put int place plicies that were cnducive t bth increasing exprts and emplyment. There have als been prpsals fr brader engagement with industry in view f cmpliance requirements. The discussins during the Wrkshp came with several prpsals t imprve the GSP+, including the reprting prcess, the use f benchmark and indicatrs and clser and mre structured invlvement f civil sciety. The EU is grateful fr the active participatin and the lively discussins aimed at cntributing t the imprvement f the way the GSP+ wrks and hw it can psitively cntribute t sustainable ecnmic develpment. Clsing remarks Mr. Ahmed Fasih, Deputy Secretary, Eurpe, Ministry f Cmmerce Debate reflects the ripples that the GSP+ is creating acrss all industries. It is a very imprtant debate in a develping cuntry like Pakistan. 14

15 This prject is financed by the Eurpean Unin Human rights, labur rights are independent f any additinal incentives The Gvernment f Pakistan is bund by the cnstitutin t prvide these fr their peple. Hwever, the Gvernment has t wrk cntinually t imprve these standards. The GSP+ is a unique arrangement. There is n parallel like this in any ther scheme. The fact that cuntries have decided t take up this respnsibility, given challenges f develpment in s many different areas, reflects jint partnership between them and the EU. The cmplaints that have been viced tend t be genuine. Hwever, everything has t be seen in cmparisn. Minimum wage is lw, but s is per capita incme as well as the pprtunities fr decent emplyment. Hwever, the Gvernment is nt cmplacent in fulfilling its bligatins t the Pakistani peple. There is a need fr Pakistan t strengthen plicy. It takes time t fully develp and strengthen demcratic participatry institutins. In this sense, the GSP+ came at the right time fr Pakistan. T mnitr Pakistan s prgress n the implementatin f the cnventins, the Gvernment has invlved civil sciety thrugh the Treaty Implementatin Cell. Civil sciety is bradly represented in the Treaty Implementatin Cell and is able t have frank discussins and exchanges n the implementatin f cnventins. There is a need fr prper benchmarking and higher standards t gauge imprvements. The review system allws the Gvernment t see the impact f the GSP+ in Pakistan. Pakistan and the EU shuld start talking abut mre lng-term and deeper integratin agreements. 15