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PR No.259 Commerce Minister’s Interview in ‘Politico’ Islamabad: January 27, 2017

Politico an influential global news and information organization with its publications based in Washington, D.C., New York and Brussels has published in its Editionof 26th January 2017 an interview of  Commerce Minister of Pakistan Engineer Khurram Dastgir khan conducted by its senior reporter Hans von der Burchard during the visit of Commerce Minister to Brussels. Following is the link and text of interview, says a Press Release received from Brussels here today.

A tariff-cutting accord for Pakistani exports to Europe is an essential tool in the country’s fight against terrorism and illegal migration, according to Commerce Minister Khurram Dastgir Khan.

Pakistan obtained GSP+ three years ago, granting it tariff-free access to the EU market for almost two-third of its exports.

Khan pointed to “encouraging developments” in an interview ahead of a meeting with European Commissioner for Trade Cecilia Malmström in Brussels this week. Yet the conflict-plagued country must still tackle widespread corruption and rights violations if it is to maintain the trade status quo and push for a broader deal on market access for its goods in the next decade.

“We are just coming out of a very difficult 10-year period full of violence, energy shortages and uncertainty for business,” Khan said. “2015 was the first year with a positive turnaround … We are now focusing on more growth and social improvements.”

Pakistan mostly sells textiles, leather and footwear to the EU. Since 2013, the last year before the GSP+ (Generalised Scheme of Preferences) deal, exports to Europe have increased from €4.5 billion to €6.1 billion in 2015, according to EU Statistics m EU exports to Pakistan — such as machinery or chemicals — also grew slightly.

The jobs this creates in Pakistan “are a vehicle to fight poverty and extremism,” Khan said. “We are now seeing in many cities that more and more women are being employed in the garment sector, which has truly beneficial socio-economic effects.”

“All this is crucial to fight the root causes of terrorism,” which has long plagued Pakistan, with Taliban insurgents destabilizing the country’s northern Waziristan region, the minister continued. Improving people’s economic prospects also reduces the motivation to try and reach the EU illegally, he argued.

 

Commissioner Malmström this week argued cutting EU tariffs “can help developing countries diversify their economies and move higher up the value chain.” That, she said, represents “leverage we can use to shape globalization.”

“The promise of getting better trade access to Europe — or the threat of losing it — is a powerful incentive to reform,” Malmström said, mentioning Europe’s determination to fight for better labor and environmental standards and tackle corruption.

Khan admitted his country still has work to do. “There are concerns, and we are acting on those concerns,” he said, adding his government is well aware that it can lose the preferential access to the EU market if its doesn’t deliver on reform targets

Islamabad is also keen to use the multilateral forum of the World Trade Organization “to raise, together with the EU, a joint voice against protectionism” and to support the EU’s plan to establish multilateral court of investment disputes, Khan said.

In 1959, Pakistan was the first country to accept a controversial arbitration mechanism in a treaty with Germany allowing companies to sue the government over public policy decisions that put them at a disadvantage.

However, Khan said his country’s recent experience of such clauses, which are abhorred by opponents of modern trade deals, “hasn’t been very positive.”

“Many multinational companies have an annual turnover that is bigger than Pakistan’s, so it is difficult to fight their claims,” he said.

The EU’s multilateral court — championed by Malmström — with dedicated judges, transparent procedures and an appeal mechanism, would better shield the country from unwarranted claims, he said. At the same time, he emphasized his country must do more to attract European investors, which is why the government will work this year on making the taxation system “more predictable.”

Provided it meets the EU’s reform targets, Pakistan’s GSP+ status remains in place until 2023. By then, Khan expressed hoped his country’s development will have allowed it to strike a full-fledged trade agreement with the EU.

“A more ambitious trade agreement is very much on our radar,” he said.

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