European Union (EU) proposal at World Trade Organization (WTO) to allow duty-free textile exports from Pakistan totaling $900 million, towards the flood relief package, has been blocked by India.
Rather than providing direct assistance to the flood hit Pakistan which caused devastation in some part, EU wanted to go for trade liberalization for a period of 3 years during which Pakistani textile industry can export their products to European union without paying import duties.
There was apprehension that after the secretary level meeting between two countries, India may take mild stand against this proposal. This packaged deal is opposed by India, Bangladesh, Peru and Vietnam.
Euratex, the largest clothing and textile body of Europe and represents 27 members countries of Europe, has urged India and other countries to keep blocking the deal as there is no humanitarian ground for this kind of concessions and this would help the highly performing textile industry of Pakistan and not the flood victims of Punjab and Sindh province as no major textile industry is located in the north western part.
The EU needs a waiver from these countries at the WTO to pass on the concessions to Pakistan, as any such concession would be against the rules of the trade agreement that says all members have to be treated alike.
India has urged EU to provide the direct assistance to the flood victims to recover from the large scale destruction as any trade related concession would be against the trade law which treats every member state equally. The European Union package includes 75 items of which 64 are textile related.
EU wants to refine their proposal to include the objections from Indian side and discuss it at WTO forum to help find a solution to support Pakistan which lost 2% of GDP and 2 billion dollar in export revenue.