H.E. Androulla Kaminara
EU Ambassador to Pakistan
8 September 2021, Serena Hotel,
Islamabad
Excellencies,
Representatives of SMEs, Moderators, and distinguished guests.
It is an absolutely and special pleasure for me to welcome you here today. The holding of this Business Forum is an idea I have been pursuing for well over a year but due to the Covid-19 pandemic, we needed to postpone a couple of times but finally, I am delighted that it is taking place all together making it happen.
With this Business Forum, we are bringing together two of the strongest pillars of EU cooperation with Pakistan:
- the EU development cooperation which has had an average budget of close to 100 Mio EUR in the last 7 years;
- and the EU-Pakistan trade relations and in particular GSP+ trade regime.
Due to the preferential access to the European Single Market that GSP+ efforts, Pakistan’s exports to the EU grew at an impressive pace. Since Pakistan 2014 when the GSP+ status entered into force until the global economic shock due to Covid-19, Pakistan’s exports registered a cumulative increase of 66%. The EU is the most important export destination for Pakistani goods – representing about 30+% of Pakistani exports, double the percentage from the next export destination.
But the beauty of GSP+ is not only expressed in trade figures. If Pakistan continues to take advantage of the greater market access to the EU and to implement the 27 International Conventions covered by the scheme, it will
- of course have faster economic growth;
- but equally importantly it will support Pakistan in improving the rights of all citizens, accelerate reforms towards more modern state structures to the benefit of all. And these two aspects are mutually reinforcing. Compliance with the Conventions will generate better economic opportunities and vice versa.
The existing trade between Pakistan and the EU under the GSP+ has two main characteristics:
- Even though the preferences cover 66% of all tariff product categories, Pakistani exports are concentrated on just a type of products – 78% of all Pakistani exports concern textiles – which of course is very positive for the textile manufacturers
- The other characteristic is that Pakistani exports tend to come from a relatively small number of quite big companies.
So what we see is both a strong positive message, but also a question mark:
- Exports to Europe constitute a huge potential for the Pakistani economy, not the least thanks to GSP+ preferences – the window is wide and it is wide open;
- Why have Pakistani companies not availed of this opportunity more broadly?
And it is this question that made me initiate the EU-Pakistan Business Forum.
Distinguished guests,
SMEs are an important engine of a sustainable economy and they represent by far the biggest opportunity for employment in Pakistan. There are 3.3 milion SMEs. They provide employment for large parts of the population, are part of the local social and economic fabric. They are drivers of innovation. Many SMEs are owned and managed by women and are thus an important factor of women’s empowerment. Focusing on SMEs gives opportunities for exports to those parts of the economy, which have more of a need for support and the least knowledge on average of how to proceed. At the same time, they offer the biggest potential. This is why today’s Forum is focusing on SMEs.
Our meeting today is reflective of both these points. We want to promote SMEs contributing to the country’s exports and simultaneously help Pakistan diversify its export base making better use of GSP+ to the benefit both of the EU and Pakistan. Since we could not cover all sectors of business activity, we decided to focus on 4 sectors that have a huge potential and learn from this event and expand the list of sectors in the future. Therefore we chose some other sectors that can be accessed under the GSP+ status and these are Handicrafts and Fashion, Information Technology, Gems, jewellery and mining, and Travel and tourism.
In addition, these sectors have great potential also for women entrepreneurship through SMEs.
Our goal is to support Pakistan diversify and develop even more efficient partnerships between the EU and Pakistani SMEs. Only a mutually beneficial trade regime between the EU and Pakistani firms can lead to a bilateral sustainable trade regime. Through this Forum, we very much look forward to demonstrating potential solutions and identifying solutions to obstacles for even higher exports.
The increase in the EU-Pakistan trade is a witness to the fact that the potential is immense. SMEs, if included in the export regime will directly address poverty at the grassroots, bring more jobs to the market and be competitive in the world trade arena. Digitalization and e-commerce tools are a catalyst in this regard. We recently developed an e-business platform for SMEs to help them shop online using WhatsApp and Facebook applications, which was presented earlier. I strongly believe that a huge potential exists, provided the network between industries and SMEs is developed and they are exposed to the new techniques of business development and prepared for absorbing technology transfer.
Ladies and gentlemen,
The present Business Forum is just the opening and the start of a conversation. We envisage having two more subsequent forums – one in Lahore and the other one in Karachi. We will add new sectors like auto-part manufacturing and dairy products in Lahore and Karachi.
The broad aim of this set-up is to know the difficulties that are faced by small and medium businesses in Pakistan and how the EU could support some of the needed solutions. Difficulties could be due to trade barriers, non-tariff regimes, standards and other competitiveness related issues. But we are trying to address networking and awareness as well, emphasize technology transfer for SMEs to flourish rapidly and become export-oriented.
That is where the second, strong pillar of the EU-Pakistan engagement comes in: the development cooperation. We are at the start of a new 7-year period, which defines our priorities in terms of development cooperation. Harnessing the potential of SMEs will be an important element. The observations and recommendations of the EU-Pakistan business forum will feed into the initiatives, which will be funded by the European Union in the coming years. We are aware that we will not be able to address all the challenges that SMEs are facing. But in cooperation with our Pakistani partners, we will identify some which we believe we can tackle and thus contribute to the sustainable development of Pakistan.
Before I conclude, let me make a few more points on the current status of GSP+ and of its future:
The current GSP+ regulation expires at the end of 2023 and Pakistan will carry on with the present regime as long as it continues to demonstrate its tangible commitment to the 27 international conventions but that in any case – and for all countries under this regime is only available until the end of 2023. The last report that the EU made public on GSP+ progress of Pakistan identified both the progress in some areas but also some areas for which there was very little progress as well as a few areas that backtracking was seen. It is hugely important to continue progress and to address the concerns raised in order not to have any negative consequences before the end of 2023.
Currently, a lot of work is being carried out in Brussels in order to draft the proposal for a new, successor trade regime which will be in place from 2024. This new regulation is being finalised as we speak. The new regime will be continuity as regards to the basic principles of GSP+ with the 27 Convention and possibly add some additional ones. However, it is important to know that if Pakistan – or any other country for that matter wishes to avail itself of the benefits of the new regime – it will have to re-apply again under the new system, an exercise which signifies heightened scrutiny by the European Institutions.
Finally, I would like to thank you all for your participation and interest and I am confident that together we can expand the benefit of GSP+ and identify new beneficiaries and new sectors to lead to more mutual benefit for both Pakistan and the EU.
I reiterate that the European and Pakistani SMEs can act together as engines of development and partnership, which is strong and mutually beneficial.
I thank you all for your attention.