India Blocks EU Proposal on Allowing Duty-free Entry to Pakistan Textiles

India blocked a $900-million European Union proposal at the World Trade Organization on May 3, 2011 to give duty-free access to the textile exports from Pakistan.

The firm opposition to the proposal, pitched as a relief package for the devastating floods in Pakistan, should dispel concerns in India that the government may take a soft stand on the issue after the breakthrough in trade secretary-level talks.

"We are not dictated by emotions but facts," a commerce department official told ET.

India told the General Council of the WTO, the organisation's topmost decision-making body, that the package would affect the exports of competing countries that would have to continue to pay 6%-12% import duties on textiles in the EU.

India also argued that the relief did not help flood victims in any way. Bangladesh, Peru and Vietnam supported India at the Council, which took up the matter after a lower level 'Goods Council' could not take a decision within the specified period of 90 days.

"The EU has said it will continue consultations with opposing members and hopes to resolve the issue by the next goods council meeting later this month," a WTO official told ET.

The 27-member bloc has time till the end of the month to build a consensus or else the proposal will have to be dropped. The EU will give duty-free access to 75 products from Pakistan, 64 of them textiles, for three years.

The propsoal has to be endorsed by other members of the WTO as the multilatral trading rules require all countries be treated equally.

"There were some fears that India may take a soft stand on the issue after the bilateral commerce secretary level talks in Islamabad last week," an industry official, who did not wish to be named, told ET.

The Pakistan media had also reported that getting the flood relief package approved by India would be high on the country's agenda during the talks.

"Pakistan did not even raise the issue (of the flood relief package) as it knows very well what our stand is on such matters," the commerce department official said.

In response to a letter written by the Pakistani trade minister earlier, India had said it had no objections to EU giving direct assistance to the country as a flood relief measure.

The package would only help the textile industry and not the flood victims, India said justifying its stand.

"EU's proposal for granting trade concessions to Pakistan on the ground of last year's floods is totally unjustified," D K Nair, secretary general, the Confederation of Indian Textiles Industry, said.

EU textile and clothing body Euratex, too, is opposed to the waiver, claiming that there was no economic or even humanitarian reason to give these concessions.