EU Seeks Indian Waiver for Duty-Free Imports from Pakistan.

NEW DELHI: The European Union has sought India’s support for its proposal to give Pakistan duty-free access to a number of goods into the European market as part of its flood relief package , a demand that has not gone down with the trade and textiles ministries.

“So many countries, including India, are hit by calamities all through the year. We don’t see such packages for them,” a commerce department official told ET, but indicated that a final call on the issue is yet to be taken.

If implemented, the package could give a big blow to India’s textile exports, as more than 64 items of the identified 75 products, belong to the textile category.

Since the sops would go against the most favoured nation treatment clause of the World Trade Organization, which lays down that all countries have to be treated the same, the EU has to obtain a waiver.

According to EU’s proposal on Pakistan, it would allow duty free import of 75 items for three years starting January 2011 amounting to almost 900 million euro in import value.

“The fact that the aid is being given by taking away business from other nations is unacceptable,” the official said. Textile industry has already sent a representation to the textile ministry highlighting the problems it would face if the proposal gets through as Indian exports would continue to face a tariff barrier of 6-12 %.

A final call on the issue may be taken by the Prime Minster’s Office. “Although the commerce ministry has already expressed its objection, the EU is keeping up the pressure in hope of a favourable verdict,” the official added.

India has the power to spike the proposal, which will be discussed at the WTO this week, by not giving its consent.

India had in 2005 opposed a proposal by the 27-country group to give duty free access for textiles to 12 countries including Pakistan as a reward for controlling drug trafficking. The EU was, consequently, forced to withdraw the sop.

“Instead of absorbing additional imports from Pakistan, the zero duty access will only substitute imports from other countries like India with imports from the country,” DK Nair, Confederation of Indian Textiles Industry secretary general, said.

India exported textiles and clothing worth $5.9 billion to the EU in 2009 while Pakistan’s exports totalled $2.2 billion.

Source : economictimes.indiatimes.com