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News Clips 4 June, 2013

[ Pakistan could merge its EU exports ]
[ EU reassures Dhaka of continued support ]
[ USA: GSP verdict may be delayed ]
[ ILO Prepares Building Safety Guidelines for Indonesian Garment Factories ]

Pakistan could merge its EU exports   [ top ]

BUSINESS RECORDER, Iqbal Mirza, June 04, 2013
Revisions in the European Union's (EU's) import tariff preferences (GSP) scheme, to become effective from January 2014, contain provisions that provide Pakistan with the opportunity to merge its EU exports with an identified development agenda, enabling enhanced economic growth with matching social development.

The European Union (EU) is not only Pakistan's largest export destination and trading partner; it is also engaged in multiple levels of social and economic development activities. The latter, especially in the area of working conditions for labour, will facilitate Pakistan's integration into a rules based global economy which is dominated by the inter-linked elements of buyer-driven compliance and cross-border supply chains.

According to the brief summary prepared by Geneva based International Trade Centre (ITC) on "benefiting from EU GSP plus scheme 2014 through enhancing competitiveness in the qualified sectors", Pakistan's exports to the EU are seen to have climbed steadily, but not spectacularly, since 2003, with the share of EU in Pakistan's overall global exports declining by nine percent over this period.

Given its natural resource base, manpower and entrepreneurial skills and the size of the European import market (2011 imports from rest of the world were US $1.54 trillion) Pakistan's export volumes to EU do not reflect their potential. The performance gap arises from known domestic sector inadequacies, one of the outcomes of which is the inability to diversify the export products basket.

As a result, Pakistan's exports to the EU remain supply-driven rather than demand-driven. Except for goods covered by Chaudhry 61 and 62, the top six sectors that constitute almost 90 percent of Pakistan's exports to EU do not find a place in the top 45 EU import products. This mismatch extends also to GSP, where only three of Pakistan's top 20 exports to the EU find a place in the EU's top 20 GSP imports, as against eight from India and six from Sri Lanka.

Other least developed and lower middle income countries, with less production facilities, have used the GSP tariff preferences to identify sectors where they can compete for markets in developed countries. For example, Mauritius was dependent on sugar for 85 percent of its exports in 1975, but by 1999 four other sectors (clothing, jewellery and watch dials, seafood, preserved foods) made up 75 percent of its exports and the share of sugar in total exports was down to 14 percent. Bangladesh has used duty free/quota free access to build up a US$14 billion diversified clothing sector market in the EU and in the process has developed a domestic yarn and fabrics production base that now meets 60 percent of its clothing sector requirements.

During an earlier duty-free concession period in 2002-04, the prevailing MFA quota regime had put a cap on Pakistan's textile exports; despite this, the country did manage a 20 percent increase in overall exports between 2003 and 2004 indicating that focus on sectors other than textiles presents good growth prospects. The expected market access, which could result from GSP+, may be viewed as a timely chance for Pakistan to catch up with lost opportunities.

On Technical Barriers to Trade (TBT) & Sanitary/Phyto-sanitary (SPS) measures, ITC has suggested that Pakistan has to ready itself for meeting TBT and SPS requirements in the products and sectors identified in the trade analysis. These include, but are not limited to, a number of product- and production-related technical, social and environmental measures in the textile, leather and ethanol sectors in particular and SPS, HAACP measures in the food items sectors.

In addition to the TBT and SPS measures directly imposed on Pakistan's exports, internal regulations such as REACH will impact Pakistani producers. REACH is the European Community regulation on chemicals and their safe use (EC 1907/2006). It deals with the registration, evaluation, authorisation and restriction of chemical substances. The law entered into force on June 1, 2007.

Challenges identified to Pakistan's compliance in these sectors include costs of compliance, lack of accredited national testing and certification resources and facilities, lack of awareness amongst producers of the need to certify products, intellectual property rights including lack of local branding, meeting environmental and labour standards (HSE), and increasing the use of voluntary sustainability standards.

Some general recommendations, made by ITC, for meeting these standards are given below:

-- Increased capacity building and awareness raising amongst industry stakeholders, particularly SMEs, through FPCCI, relevant chambers of commerce, professional bodies on the subjects of social and environmental compliance for country-level implementation of the 27 conventions on human rights and sustainable development

-- Renewed mapping activities and capacity development through PSQA, TRTA, TDAP, Unido, Ministry of Science and Technology of more testing and certification facilities either private or housed at academic facilities

-- Technical capacity development programs with regional beneficiary countries, China, Bangladesh, India, etc for standardisation

-- Marketing help-desk through the relevant chambers and professional associations to assist brand-development and labelling of local products

-- Publicising and highlighting best practices amongst industries implementing Voluntary Sustainability Standards (VSS), and 27 Conventions to be ratified and implemented for GSP+ qualification.

EU reassures Dhaka of continued support   [ top ]

DHAKA: The European Union (EU) has reassured Bangladesh of its continued support in trade and development sectors and said it has no interest in stopping programmes in Bangladesh.

EU High Representative for Foreign Affairs and Security Policy Catherine Ashton conveyed the assurance while meeting Bangladesh Foreign Minister Dr Dipu Moni in Singapore on the sidelines of Asia Security Summit, popularly known as Shangri La Dialogue.

Catherine Ashton said, “We’ve no doubt about your commitment. We want trade and investment to flourish in a stable environment. Therefore, the EU has no interest in stopping programmes in Bangladesh.”

Both the ministers discussed the initiatives undertaken by the government to address the gaps in the RMG Sector, according to a message received here on Saturday.

Dipu Moni briefed the EU High representative on the comprehensive work plan taken by the government of Bangladesh with all stakeholders to ensure better compliance in the RMG sector, including the amendment to the Labour Law and the wage board being formed.

She has also informed the EU representative on the current political situation and the dialogue initiatives taken by the government to discuss the modalities of the polls-time interim government.

They expressed their hope that the upcoming general election would be held in a free, fair and inclusive manner.

The EU High representative praised the government of Bangladesh for the steps taken to reform the RMG sector and ensure better compliance.

Ashton expressed EU’s commitment in working with Bangladesh in the interest of millions of workers most of whom are women. While commending Bangladesh on its achievements in the economic as well as social sectors, she stressed avoidance of any form of violence.

In response to the invitation of Bangladesh Foreign Minister, the EU High Representative agreed to visit Bangladesh before the upcoming general election at a mutually convenient time.

Dipu Moni is currently attending the Shangri-La Dialogue in Singapore along with high-profile ministers and dignitaries from the Asia–Pacific region.

She has attended the high-level plenary sessions and spoke on Bangladesh perspective on the ‘Afghan Drawdown and Regional Security’.

Bangladesh High Commissioner to Singapore Mahbubuzzaman, Additional Secretary of the Foreign Ministry Jishnu Roy Chowdhury and Director General (South East Asia) Golam Sarwar were present at the meetings.

USA: GSP verdict may be delayed   [ top ]

DAILY STAR, Refayet Ullah Mirdha, June 4, 2013
The United States Trade Representative might delay the verdict on whether Bangladesh will continue to enjoy the generalised system of preferences in the US market, an official said yesterday.

Commerce Secretary Mahbub Ahmed said the USTR, the chief trade negotiator for the US president, is taking time to observe the developments after the Rana Plaza collapse.

“This may delay the verdict.”

Bangladesh attended a USTR hearing on the continuation of the trade benefit on March 28 in Washington.

The verdict was supposed to come in the first week this month.

“We are yet to get any response from the USTR,” Ahmed told The Daily Star by phone.

A 14-member team led by Ahmed attended the hearing after the American Federation of Labour and Congress of Industrial Organisation (AFL-CIO) along with some Senators put pressure on the USTR to discontinue the duty-waiver scheme for Bangladesh.

The AFL-CIO, the largest trade union in the US, and some other quarters came with the call alarmed by a devastating fire at Ashulia-based Tazreen Fashions that killed around 112 workers in November last year.

“I don’t know when the USTR verdict will come. But I can say the verdict will be in favour of Bangladesh as we presented our position strongly at the hearing,” Ahmed said.

Bangladesh enjoys duty-free benefit for some selected goods such as plastic products and ceramics under the GSP scheme, but the amount is only 0.54 percent of the total export of $5 billion to the US market a year.

Yet, the GSP issue is important for Bangladesh, as some other countries, where Bangladesh is now enjoying the benefit, might be influenced by any negative move by the US, Bangladesh had said at the hearing.

ILO Prepares Building Safety Guidelines for Indonesian Garment Factories   [ top ]

JAKARTA GLOBE, Erwida Maulia, May 28, 2013
The Indonesian office of the International Labor Organization on Tuesday said it was preparing new infrastructure safety assessment guidelines for Indonesian garment factories in the wake of a building collapse in Bangladesh that killed over 1,100 people.

The ILO said it was drafting the new infrastructure assessment criteria under its Better Work Indonesia program, and would use it to appeal to Indonesian garment makers to ensure the safety of their factories.

“In a country that is prone to earthquakes and other natural disasters, it is imperative that employers ensure their buildings are structurally sound by regularly making sure that their buildings are in line with government regulations,” BWI program manager Simon Field said in a press statement on Tuesday.

BWI senior enterprise adviser Muhammad Anis Nugroho said that Indonesia already has comprehensive regulations on building safety, but admitted that implementation was always an issue.

“A public works minister regulation on this [building safety], for example, is quite detailed — there should be regular inspections, and so on,” Anis said. “But it uses phrases only experts on the matter can comprehend.”

The new ILO guidelines, Anis said, are expected to help factories comply with the existing regulations by translating the technical terms into “practicable” guidelines.

He said that it was still unclear how well the government has followed its own regulations.

However, he added, companies should want to improve the safety of their work environments following the collapse of the eight-story building that housed five garment factories in Bangladesh, dubbed the world’s worst garment industry disaster.

“We will involve the government in the creation of the guidelines,” Anis said. “In the end, we want this to help the government carry out inspections.”

Indonesia earned $12.5 billion from textile exports last year. The figure is expected to increase to $13.5 billion this year, with the United States and Europe remaining the country’s main markets. In comparison, Bangladesh, the world’s second largest apparel exporter after China, records $20 billion annually from textile exports.