India agrees to duty-free Pakistani exports to EU: Report

India had raised objection against the EU's decision, fearing it might hurt India's exports to the 27-member block.

Pakistan's foreign and commerce ministries had sought help from  Federation of Indian Chamber of Commerce and Industry (FICCI) secretary general Rajiv Kumar, who assured to take up the matter with Indian Prime Minister Manmohan Singh.

Pakistani High Commissioner to India Shahid Malik has been informed that Manmohan Singh has agreed to withdraw India's objection at the WTO's forthcoming meeting in October, the Daily Times reported.

A formal announcement was expected at the forthcoming meeting of the commerce ministers of the two countries in New Delhi Sep 28-29.

The duty-free exports of textile and leather products from Pakistan will benefit EU countries as they will get the finest products at the cheapest price in the world, the web news portal said.

The EU has exempted Pakistan's leading value-added textile and leather products from custom duty for the next three years.

It will benefit 65 textile products, excluding bed linen. Four out of 10 EU imports in that category already come from Pakistan, heading the exemption list, which also includes six lines of leather goods and three of footwear.

"Though the custom duty exemption will benefit these sectors, the huge beneficiaries will be European countries as they will sell finest products of the world on huge interest," said cotton products analyst Shakeel Ahmad.

Ahmad said the EU free custom duty offer was applied for Jan 1, 2011, designed as an aid-linked package to help recover the country from the flood catastrophe. Last year's devastating floods had severely affected more than a quarter of Pakistan's population.
He said the falling Pakistani rupee against the dollar and other major currencies, and exports of  etxtile and leather goods at cheaper rates would greatly benefit the EU countries.

He said the lifting of duties would result in an increase of EU imports to a tune of about $140 million. Exports from Pakistan are currently worth about 3.3 billion euros annually, of which 900 million euros come from the 75 items.

The package will be presented for approval to EU member states and the European Parliament in the next few days and will only come into effect if WTO partners grant a waiver.

"We will become cost effective to an extent of 50 percent in the international market and if the government provides cheaper power without interruption and other incentives, we will double our leather and leather products exoports," said Agha Saiddain, member of the Pakistan Tanners Association.

He said the package was exclusively designed for Pakistan, and not available to other countries, including India, Bangladesh and Turkey.

Saiddain said India had expressed concerns with WTO over the issue but now it has decided to do away with the complaint.

The list of 75 Pakistani products included dried mushrooms truffles, cotton yarn, cotton fabric, woven cotton fabrics, twill weave cotton fabric, overcoats and anoraks.