BRUSSELS: In the proposal for the new GSP-Generalized System of Preferences presented yesterday by the EU Commission it is foreseen an increase in the Vulnerability Threshold of GSP+ from the current 1% to 2%. This change, which at first stance looks anodyne, will have a severe impact on EU Textile and Clothing.
Commenting on the Proposal EURATEX President, Mr. Alberto Paccanelli, said "This increase in the vulnerability threshold of GSP+ was tailored made in order to include Pakistan among the beneficiary countries. If this proposal is approved Pakistan will be allowed to export to the EU without paying any duty." We recall this is not the first time EU envisages to grant duty free access to Pakistan.
A change in the Vulnerability Threshold of GSP+ was already under consideration last year and there is still the Waiver proposal pending in WTO. In this context Mr. Alberto Paccanelli stated "Pakistan is among the top world exporters in T&C and the 4th EU supplier. In 2010 its Exports to the EU have increased by more than 20% in value and 6% in volume.
For some products Pakistan has already a dominant position- Bed Linen and Cotton Fabrics. This decision, apart from having a negative impact on EU Industry, will erode the preferences of the countries in need in favour of a stronger and already prevailing market player".
Although recognizing that the GSP Proposal has some positive aspects, in particular the withdrawal of some high income and emerging economies from benefits or the possibility to exclude countries which systematically go against WTO Rules, in our sector these cannot counterbalance the negative impact of the GSP+ change.
Mr. Paccanelli recalled "Euratex recognizes that overall the Commission proposal makes an effort to concentrate the preferences in the countries that need them. Unfortunately in our sector this effort was precluded for political reasons as we choose to benefit a country which does not need any special treatment".
EURATEX hopes that during the discussions with the Council and the European Parliament this negative aspect can be offset through a reduction in the vulnerability threshold and an improvement in the existing Textile Safeguard Clause, making it applicable both to Textiles and Clothing and reducing the launching threshold.