Transcript Presentation on GSP Plus benifits

Pakistan Institute of Trade and Development,
Islamabad.
Scheme of the Presentation:
(Contnd)
 Introduction
 Qualification Criteria
 Pakistan’s
Criteria
Position
under
Qualification
 List of GSP+ beneficiary countries
 Pakistan’s Export Profile to EU
 Sectoral Coverage under GSP Plus
 Potential for Pakistan’s Exports under GSP
Plus along with tariff rates vis-a-vis other
countries
2
Scheme of the Presentation:
 Key Advantages
 Rules of origin in EU
 Required Standards and Regulations
in EU
 Opportunities for Pakistan
 GSP+ Challenges
 Sector Specific Challenges
3
Introduction:
(Contd)
 GSP+
is a scheme of preferential tariffs, unilaterally
extended with the objective of increasing trade capacity
among developing nations.
 The EU GSP is extended through three arrangements: GSP,
GSP Plus and Everything But Arms (EBA).
 GSP+ is not extended automatically, countries have to apply
and then it is subject to the EU Parliament’s approval under
the given eligibility criteria which is binding on the
requesting state.
 The EU Parliament passed the Scheme and final count of
voting was 409 in favor and 182 against.
4
Introduction:
 Government of Pakistan through its diplomatic and trade
circles made intensive efforts to get this legislation passed
through EU Parliament
 Under GSP Plus, 6274 tariff lines are eligible, of which 6269 are
duty free. Textile products are classified as “sensitive” (HS
Code chapters 50-60 and 61-63) under GSP Plus.
 GSP Plus will result in duty free access in EU for 91% of its
total imports
 GSP
Plus beneficiaries must ratify
international conventions. click here
and
implement
27
 GSP Plus status will be awarded for a period of 10 years and its
status is reviewed after every three years.
5
GSP Plus: Qualification Criteria
 Tariff
preferences are conditional to commitments for
ratification and implementation of 27 international
conventions * (16 relating to human rights and labor rights
(11 relating to governance and development issues).
 GSP Plus is extended to countries considered “vulnerable” in
their trade profile.


Share of seven largest GSP sections: For exports to the
EU, the share of top 7 sections should be greater than 75% of
the total exports of that country to EU
Share in the total GSP imports to the EU: In order to
remain eligible for GSP Plus the share of total imports from
one country to EU should not be more than 2% of the total
imports of EU.
6
Pakistan’s Position under Qualification
Criteria
GSP + criterion
Pakistan’s position
The exports of beneficiary
94.6%
country for seven largest
sections should be greater than
75%
Per capita income to be less
US$ 1,260
than US$ 4000 (Not to be high
middle income country)
Import Vulnerability threshold
(2%)
1.60%
7
List of GSP+ beneficiary countries
 Armenia
 Pakistan
 Azerbaijan
 Mongolia
 Bolivia
 Paraguay
 Cape Verde
 Peru
 Costa Rica
 Georgia
 Ecuador
8
Pakistan’s Export Profile to EU
 The total Pakistani export to the European Union in 2013
was US$ 6.58 billion.
 Total imports of EU-27 countries in 2012 was US$ 5.71
trillion.
 Pakistan has been struggling to improve its exports to the
EU as compared to other developing countries.
 Grant of GSP Plus status is a significant development and
big opportunity for Pakistan to enhance its exports to EU.
9
PAKISTAN-EU BILATERAL
TRADE
YEAR
EXPORTS
(US $ MILLION)
IMPORTS
(US$ MILLION)
TRADE
BALANCE (US$
MILLION)
2001-02
2,770.50
2,050.80
719.70
2002-03
3,066.80
2,049.00
1,017.80
2003-04
3,726.90
2,390.80
1,336.10
2004-05
4,073.40
3,138.80
934.50
2005-06
4,247.70
4,966.80
(-) 719.10
2006-07
4,627.30
4,756.50
(-) 129.20
2007-08
5,185.40
5,222.00
(-) 36.60
2008-09
4,412.40
5,645.40
(-) 1233.40
2009-10
4,599.54
4,542.32
57.22
2010-11
6,181.00
4,383.90
1797.10
2011-12
5,358.42
4,518.46
839.96
10
Sectoral Coverage under GSP Plus:
 The GSP+ provides tariff concessions in 6200 plus
tariff lines. These products fall in the following
sectors:
 Agricultural Products
 Mineral Products
 Chemical and Related Products
 Non - Consumable Animal and Plant Products
 Textiles and Apparel
 Non - Metallic Mineral Products
 Metals and Manufactured Articles Made Mostly of Metal
 Other Highly Manufactured and Special - Purpose Goods
11
Chapters covered under GSP Plus with
Pakistan’s exports and tariff
 Pakistan’s Exports to EU for Chapters covered under GSP
Plus is US$ 5.27 billion and chapter wise tariff and Exports
are given. Click here
12
High Potential Chapters for Pakistan covered
under GSP Plus (MFN tariffs are above 15%)
All Values in USD Million
Top three competitors
S. No
EU's total
Pak's Exports
Imports in
to EU in 2012
2012
Total ad
Peru's
Ecuador's Costa Rica's
valorem
Exports to EU Exports to EU exports in
equivalent
in 2012
in 2012
2012
tariff
Product code
Product label
1
'04
Dairy products, eggs, honey, edible
animal product nes
0.05
39817.05
38%
0.16
0.00
0.00
2
'02
Meat and edible meat offal
0.07
45853.05
38%
0.00
0.00
0.00
3
'17
Sugars and sugar confectionery
9.97
15386.19
34%
0.89
3.61
3.89
4
'24
Tobacco and manufactured tobacco
substitutes
4.12
18238.76
29%
0.74
14.39
0.15
5
'20
Vegetable, fruit, nut, etc food
preparations
8.79
26084.93
22%
231.95
75.57
99.55
6
'01
Live animals
0.00
10156.67
22%
0.08
0.00
0.00
7
'11
Milling products, malt, starches,
inulin, wheat gluten
1.42
5266.70
20%
2.53
0.44
0.01
8
'10
Cereals
67.87
23514.88
16%
14.93
0.98
0.00
'16
Meat, fish and seafood food
preparations nes
0.90
20564.35
16%
36.31
525.58
0.48
'07
Edible vegetables and certain roots
and tubers
5.31
26154.46
15%
164.29
26.37
98.50
231037.02
451.88
646.94
24.02
13
128.10
9
10
Total
Considerable Potential Chapters for Pakistan'
covered under GSP Plus
 32 chapters covered under GSP Plus where MFN
tariff ranges from 5% to 15% and Pakistan is
tapping the EU market of US$ 3.74 billion.
Where as the total EU imports of these chapters
are of US$ 1.39 trillion. The list of trade, tariff
and competitors for these chapters can access
here
14
Average Potential Chapters for Pakistan
covered under GSP Plus
 45 chapters covered under GSP Plus where MFN
tariff ranges from 0% to 5% and Pakistan is
tapping the EU market of US$ 1.42 billion.
Where as the total EU imports of these chapters
are of US$ 3.62 trillion. The list of trade, tariff
and competitors for these chapters can access
here
15
Key Advantages of GSP Plus:
 The scheme will no longer end every 3 years,. Rather,
it will last for 10 years.
 Better focus on those countries most in need
 By getting preferential access to the Union market,
the scheme will assist developing countries in their
efforts to reduce poverty and promote good
governance and sustainable development
 The
scheme’s tariff preferences should focus on
helping
developing
countries
having
greater
development, trade and financial needs.
16
Rules of Origin under in EU under GSP+
 Products originate in a particular beneficiary
country if they are:
 - wholly obtained in that country, or
 - sufficiently worked or processed there.
 In general terms, products are wholly obtained in a
particular beneficiary country (or in the EU, in the
case of bilateral cumulation)
 Globalization of manufacturing processes has resulted
in many products being made from parts, materials
etc. coming from all over the world. Such products are
not of, course, wholly obtained but they can
nevertheless obtain originating status.
17
Rules of Origin in EU under GSP+
WHAT IS THE EU GSP PROOF OF ORIGIN?
There are three principal forms of proof used in the context of the EU GSP:
I.
The certificate of origin Form A, used as proof of origin at import into the
EU and in regional cumulation
II.
The Invoice Declaration, and which can be used for low value GSP exports
III. The Movement Certificate EUR, which may be used as may an invoice
declaration, when goods are exported to beneficiary countries from the EU
in the context of bilateral cumulation
HOW ARE THESE DOCUMENTS USED?


The Form A and invoice declaration are used by importers in the EU for GSP
imports as evidence in support of their request that the goods be imported at
preferential rates of customs duty.
They are therefore important documents and have a value equal to the amount
of customs duty that is waived by the EU.
18
European Union Standards
 Registration, Evaluation and Authorization of
Chemicals (REACH):
REACH requires all chemicals produced or imported into
the EU in volumes above 1 ton per year to be registered.
 CE Marking:
To sell certain products in the 28 EU member states, as
well as in Norway, Liechtenstein, Switzerland, Turkey and
Iceland, U.S. exporters are required to apply CE
Marketing whenever their product is covered by specific
product legislation.
 EU Flammability Requirements:
There are no harmonized EU flammability requirements
for home and house textiles.
19
European Union Standards
 Product Liability and Product Safety:
The General Product Safety Directive (GPSD) aims to
ensure that products placed on the market are safe, and
places the obligation to place only safe products on the
market on producers and to some extent on distributors.
 Biocidal products:
Whenever biocidal products are added to textile and
apparel products to give them specific properties (e.g.
repel insects or avoid allergens) the provisions of the
Directive 98/8/EC must be followed.
 Emission Trading System (ETS):
The European Emission Trading System aims to improve
and extend the greenhouse gas emission allowance
trading scheme of the Community.
20
Testing and Certification Mechanism in Pakistan
 Pakistan National Accreditation Council (PNAC) has
achieved a milestone of Mutual Recognition
Arrangements (MRAs) with International Laboratory
Accreditation Cooperation (ILAC) and Asia Pacific
Laboratory Accreditation Cooperation (APLAC).Now
Pakistan is included in the list of countries having
equivalence status for accreditation of testing and
calibration laboratories all over the world.
Accredited In Pakistan, Accepted Everywhere In The
World can access here
21
Opportunities for Pakistan (Cntnd…)
 Pakistan can earn more than USD 1 billion worth of goods by
expansion of product lines through the GSP Plus duty-free status.
 Competitors in the T&C sector; China, India, Vietnam, Thailand,
Indonesia have no duty free access as well as no preferential access –
10% to 14% duty advantage.
 In chapters 61 and 62 (knitted and woven apparel), an additional
US$280 million can be earned in the first year (13.5% of current
exports of products within the 6% threshold.
 In leather products (chapters 41 & 42), an additional US$97.1 million
(17.5% of existing import levels) in the first year can be earned.
 For all other products, an additional US$ 250 million in the first year
(17.5% of current exports) can be earned.
22
Opportunities for Pakistan
 Massive opportunities to provide employment due to increase
in exports.
 Increased revenue for the exchequer in form of taxes from
enhanced trade opportunities.
 Massive possibilities to earn foreign investment by inviting
entrepreneurs from China and other countries to invest in
industries with potential for rapid export expansion through
GSP Plus.
 China’s dwindling share in the global textile and clothing
business, because of surging cost of production there, and
Pakistan’s expected duty-free access to the European Union
(EU) from next year, are being viewed by the textile industry as
a ‘once-in-a-lifetime’ kind of opportunity for the country.
23
Challenges…
 Pakistan has been a large supplier of textile and leather goods
to the EU for long time but quality control and product
standards remain a concern
 Product concentration in textiles and clothing sector and
leather sector
 The key challenges to increasing Pakistan’s exports to the EU
are found to lie primarily within the border. Which include
 costs of production
 lower productivity
 volatile prices of raw materials in the textiles and plastics
sectors
 difficulty in achieving the required market standards
 costs of certification
 lack of customer confidence due to the poor security
environment
24
GSP Plus: Sector Specific Challenges
Textile sector
 Voluntary
Social
Standards
(VSS)
are
compliance challenge for manufacturers and
exporters
 Quality standards and certification
 Oeko-Tex 100 certification is awarded in four
product classes only




textile items for babies
textile items for babies
textiles used away from the skin
furnishing materials
 Increasing demands for the EU Eco-Label
25
GSP Plus: Sector Specific Challenges
Tanneries and leather sector
 NTB, Product standards are imposed on HS 4201,




HS 4202, HS 4203.
Lack of harmonization at the HS 8 digit level in
leather goods and garments sectors
Maximum Residue Levels (MRLs) standards
Labor and environment related standards
social accountability standards
26
GSP Plus: Sector Specific Challenges
Plastic sector
 Lack of production compliances
 Testing and certification facilities
 Costs of compliance
 Heath Safety and Environment (HSE) and
Occupational Health and Safety (OHAS)
Frequent Asked Questions
 Click here for FAQ’s
27
Thank You
28