‘Exports to EU countries decreasing despite initial growth’

KARACHI: Despite initial growth in exports to the European market after acquiring the GSP Plus facility to export duty free products, Pakistani exports have started declining to EU countries since last July owing to persistent appreciation of Pakistani currency against Euro, said former finance minister Dr Hafeez A Pasha on Monday.

According to Dr Pasha, Pakistani rupee’s depreciation is essential to increase the exports, which would also generate more employment and cause development of industries and exports. “There is a lot of profit in imports, but we must move from import-based economy toward production-based economy.”

He was speaking as keynote speaker at a multi-stakeholders’ consultation on “Two Years of GSP+ Status: A Stakeholders’ Review of the Conventions’ Implementation” organised by Pakistan Institute of Labour Education and Research (PILER) at Jahangir Siddique Auditorium at IBA City Campus, Karachi.

Pakistan had acquired the status of Generalized System of Preference Plus (GSP+) scheme to export its products to European markets without paying any duties.

Dr Pasha pointed out that the main competitor of Pakistani products in Europe is Turkey, which sells products to European markets due to its close proximity and close relationships with Europe but its currency has depreciated by 40% against Euro. “How can you sell your products in the European markets cheaper when you have kept your currency stronger,” he added.

He said that during the initial two years of the scheme, Pakistani exports to Europe increased by 21%, first year exports to Europe increased to 16%, but it remained dull at only 5% during the second year. “It has started declining since July 2015. Interestingly, despite increase in exports to Europe, the total exports of Pakistan did not increase during the two years,” he added.

Dr Pasha opposed privatisation of Pakistan International Airlines and said due to decrease in oil prices in the international market, PIA is now earning profits, adding that it was making losses from 2004-09 because of sharp increase in fuel prices.

He pointed out that Air India was also making losses, but Indian government has never talked about its privatisation, adding that the national carrier has a responsibility to continue its flights in far flung areas of the country even if it is making losses. “In case of the privatisation of PIA, all the loss-making remote routes like Gilgit and Gwadar would be closed down by the new private management,” he added.

He appreciated the struggle of the workers’ unions of PIA against privatisation of the national carrier, and said the excuse of excessive employment is uncalled for as the wage component in PIA is less as compared to employees in other international airlines.

Quoting Labour Force Survey, Dr Pasha said that some positive developments have occurred regarding workers’ situation in Pakistan. Overall unemployment rate has decreased to 5.9% against 6.2% previously. Similarly, he said the women participation in the employed has increased by three times.

Talking about participation of workers in the trade union movement in Pakistan, he said trade unions are in declining mode in Pakistan. Maximum 1 or 2% workers are registered in the trade unions, where as in India 37% workers are engaged in the trade unions, he added.

During the last two years, Dr Pasha said policy and legal framework exists and there is no need of introducing new laws, but implementation of the older laws. Treaty Implementation Cell has been established in the Prime Minister House. These types of cells are also established in the provinces as well.

Although there are some concerns regarding establishment of military courts and end of moratorium on
death penalties among European countries, but they also understand that major challenge for Pakistan is terrorism.

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