The European Union (EU) has urged Pakistan’s business community to make better use of the Generalised System of Preferences (GSP) Plus status and diversify their exports from textiles towards neglected sectors like value-added leather. There is some logic in this advice. It is very important that a country, before it can even come to the stage of sustained growth, generate a diversity of products. Diversity engenders competition and innovation as well as provides the domestic market with sustainable products. From this diversity rise, the firms who have been highly competitive who can then be aided by state policy to export and expand.

This is the model that Japan followed in the 1960s, where the state encouraged diversity, and then the state picked sectors that were the most lucrative and helped them expand to become global titans (like the semi-conductor and automobile industry). Economic logic in Pakistan is in reverse, where we have, decades ago, picked our specialisations, and locked ourselves in. This includes a focus on cotton, which we are increasingly losing out on in the international markets as we are not exporting value added textile goods, as well as select fruits and crops.
The EU Ambassador to Pakistan Jean Francois Cautain stressed that the business community needed to explore opportunities in sectors other than textile and leather, in a bid to take advantage of the GSP Plus scheme. The GSP Plus status will allow almost 20 per cent of Pakistani exports to enter the EU market at zero tariff and 70 per cent at preferential rates. With such an incentive, the state must focus on policies that can get local manufacturers to the EU markets. Such deals can help make the oft-repeated mantra of “trade not aid” a reality. This is the maximum that European states will do for us, especially in the current global environment of insecurity and mistrust. 406 members of the European Parliament expressed their support for Pakistan while 186 lawmakers voted against the status, which has been granted till 2017. There is not much time till 2017, and foreign aid to Pakistan has been decline in the past few years. We live in a world now where alliances are strategic and unless a state can be economically sustainable, it will not survive.