Pakistan finds it difficult to benefit from EU’s super-GSP

Due to rising domestic costs and fierce international competition, it is difficult for Pakistani value-added textile exporters to truly benefit from the EU’s Super GSP. Pakistani industry insiders said that before the EU granted Pakistan super-GSP treatment, EU importers had to pay a 14% tax on Pakistani-made clothing, thus driving down import prices and resulting in low-profit exports of Pakistani clothing. After Pakistan received super-GSP treatment, on the one hand, domestic electricity prices and labor costs increased significantly. On the other hand, EU importers were unwilling to share the benefits of tax incentives with Pakistani exporters and still required Pakistani exporters to export at low prices, resulting in Pakistan’s export profits have not increased, and even value-added textile exports declined in September this year. It is recommended that the government set a minimum export price to ensure export profits. Other analysts say that the Pakistani government’s reduction or exemption of export subsidies more than ten years ago has actually promoted the domestic industry to improve its competitiveness. The current EU super-GSP treatment has become another kind of “subsidy” that makes exporters indulge and squander.