Introduction to GSP Plus Status

and its Impact on Pakistan’s

Economy
HUMAIRA IRSHAD
A.S. # 124
SEQUENCE OF PRESENTATION
• What is GSP?
• GSP plus Status
• Eligibility criteria
• GSP plus Status and Pakistan
• Implications for Pakistan’s Economy
• Challenges
• Conclusion
• Recommendations
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WHAT IS GSP?
• European countries introduced GSP(Generalized System
of Preferences) Scheme in1971 for developing countries
• Tariff preferential regime
• International trade leads to International development
• Three-tier system
• GSP
• GSP Plus
• EBA

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GSP PLUS STATUS
• Allows the approved countries to pay less or zero duties
on specific products entry into EU markets
• Special incentive arrangement for sustainable
development and good governance of developing
countries
• Carrot of preferences given on certain conditions
• 10 developing countries given this status

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ELIGIBILITY CRITERIA
• Ratification of 27 international conventions in the fields
of core human and labor rights, the environment and
good governance
• Implementation of these conventions and their regular
monitoring
• ‘Vulnerability criteria’
• Low income
• Low level of exports(less than 2%)
• Lack of diversification

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GSP PLUS STATUS AND PAKISTAN
• Effective from Jan 1, 2014 to 2017
• 20 per cent of Pakistani exports to enter the EU market at
zero tariff and 70 per cent at preferential rates
• Pakistan is 2nd country in South and South East Asian
region to have duty-free access into EU
• EU is one of the largest trading partners of Pakistan

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IMPLICATIONS FOR PAKISTAN’S ECONOMY
• Pak-EU trade in 2011 was $7bn (Source: Trade related technical assistance
programme)

• Increased exports with Textile sector as largest beneficiary as

textiles sector continues to account for 75% of Pakistan’s
exports to the EU
• Instigator for investment –both domestic and FDIs
• Employment opportunities
• Enhanced productivity
• Increased revenue
• Inculcation of best practices

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CHALLENGES
• Energy bottlenecks
• Increased cost of production
• Volatile security environment
• Implementation of 27 conventions
• Lack of coordination among federal and provincial
governments
• Quality control and delivery inefficiencies
• Local competitors
• Textile lobbies

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CONCLUSION
• “We have listened to Pakistan’s plea for more trade and
not just aid, while there is every reason to celebrate this
milestone in EU-Pak relations, this GSP Plus regime calls
for Pakistan to fully implement its commitments under
27 international conventions on human rights, good
governance, labor and environmental standards.”
(EU’s Ambassador to Pakistan, Lars-Gunner Wigemark )

• Tariff cuts: only catalyst

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RECOMMENDATIONS
• Non-disruptive supply chain management
• Supervisory body to coordinate with provincial
governments
• Maintained quality standards
• Cost competitiveness
• Demand driven export strategies(83% of Pakistan’s
exports to the EU are made up of just two sectors)
• Proper implementation of 27 conventions
10
THANK YOU

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