The World Trade Organisation has approved the European Union waiver of duties on 75 Pakistani products, a scheme intended to help Pakistan recover from the 2010 floods by boosting textile exports. The waiver is temporary, and does not create a precedent. Though initially India and Bangladesh objected, their objections were withdrawn. However, their intervention had meant that the EU had amended its original liberalization proposals to giving Pakistan tariff rate quotas, and setting them at 20 percent above the average of exports in 2008, 2009 and 2010. The waiver will apply from 1 January 2012 to 31 December 2013, but can be extended by the EU if it considers the Pakistani economy still in need of help.
The government invested significant effort into the waiver, including giving India MFN status, in the hope that this would mean a boost to Pakistani economic activity. Such a wish will remain unrealized if there is no effort to overcome the energy shortages that bedevil Pakistani industry. The government should understand that the uncertainty of the law and order situation in Karachi has meant that industry is shifting to the Punjab, where Faisalabad had already been the centre of the textile industry. If the Punjab is discriminated against solely for narrow partisan and parochial ends, in the provision of energy, electricity as well as gas, the purpose of obtaining the trade waiver from the EU will be defeated. The trade waiver was designed to create more jobs. However, if exporters get no power and they cannot produce, they will not receive, or be able to fulfil existing orders. It is probably because of this that India withdrew its objection to the waiver for Pakistan, knowing full well that Pakistan’s power shortage would prevent any use of the waiver.
Though there is a certain understandable triumphalism in Pakistan’s reaction to the WTO favourable decision, the government should understand that the real task has only just begun. The full exploitation of the concession, does not just mean a proper taxation regime, but also the provision of electricity and gas, by whatever means possible. Since the waivers are temporary, the government does not have the luxury of time. Its claims that the power projects it is working on are products of long gestation, are unsatisfactory answers. It should have implemented power projects, like the Kalabagh Dam, which have been left hanging for so long, instead of playing the politics of parochialism and inter-provincial hatred.