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Pakistan may lose EU market as FTA rejected

The News (Pakistan) | 1 March 2007

Pakistan may lose EU market as FTA rejected

By Khalid Mustafa

ISLAMABAD: The 25-country European Union - the biggest market for Pakistani products - is likely to be closed down for Pakistan, as the EU refused to sign a free trade agreement (FTA), arguing that the size of Pakistan’s economy is not enough for such a trade deal, a senior government official told The News.

Against the backdrop of the EU refusal to sign the FTA, Pakistan would be the only country in the region in the years to come to lose its biggest market. On the other hand the EU has decided to ink the FTA with India, meaning that Indian products would capture Pakistan’s market at zero duty.

"Pakistan’s reliance on the EU market and the US is too much and in case the EU market is lost, Pakistan would stand nowhere with regard to exports," the official said. "Right now apart from India and Pakistan, all the Saarc countries as LDC contracting states are exporting their products to EU at zero duty and in case the FTA deal is struck with New Delhi, Indian products would also enjoy zero duty and capture the market of Pakistani products also." "This is really an alarming situation for Pakistan."

The government has decided to launch aggressive political and trade diplomacy with 25-member countries of European Union making way forward for the FTA. Islamabad, according to Foreign Office sources, has communicated to Brussels that Pakistan is the frontline state against terrorism and in case trade cooperation is not extended to Pakistan, terror activities would further increase because of poverty Pakistan is facing. "The poverty situation would worsen in the country if trade under the FTA is denied, the sources said.

"When contacted, Commerce Secretary Asif Shah said the EU in response to Pakistan’s request for the FTA has communicated that it strikes FTAs with countries keeping in view its economic considerations. He said the EU is of the view that since Pakistan’s tariff regime is liberalised, so it does not need a trade deal with Pakistan. Shah said this is sheer injustice to Islamabad that the EU thinks like this. He said a liberalised tariff regime is the plus point of Pakistan under the spirit of WTO.

Shah confirmed that the EU has decided to initiate FTA talks with India. "However, the process of talks, if initiated right now, will take three to four years to complete and by that time Pakistan would manage to convince and strike FTA with EU countries through its trade diplomacy," he was optimistic.

He admitted that the EU has also communicated that Pakistan’s size of economy is not big. "On this particular point we have successfully made EU top officials understand and convince them with facts and figures that Pakistan’s economy is growing with rapid pace in the region and the size of economy is also expanding." Shah disclosed the he and Commerce Minister Humayun Akhter Khan would soon visit EU countries separately.

 source: The News