ISLAMABAD: Pakistan now faces the possibility of being able to export Polyethylene Terephthalate (PET) to the European Union (EU) as the EU did not re-impose the countervailing tax (CVT).
This exemption comes after Pakistan’s successful dispute settlement proceeding in the World Trade Organisation against the EU.
A senior officer in the Ministry of Commerce, who was part of the negotiations, said the EU has decided in principle to not re-impose the CVT on Pakistan’s PET export after arguments that the imposition of the duty is based on flawed investigations.
The EU had imposed the CVT on the Pakistani PET in December 2010 after it initiated an investigation against imports of PET originating in Iran, Pakistan and the United Arab Emirates (UAE).
The complaint was lodged in July 2009 by the PET committee of plastics in Europe on behalf of producers representing more than 50% of the EU production. The CVT was imposed in 2010.
Before imposition of the CVT, PET from Pakistan to the EU was a major value-added product and accounted for 1% of Pakistan’s total exports.
The PET resin exports of Pakistan to the EU in 2008-09 and 2009-10 were over 85,000 tons, approximately worth $124 million, before the imposition of CVT.
However, subsequent to the imposition of CVT, PET exports to the EU have reduced from over 85,000 tons to below 15,000 tons per annum.
Pakistan was involved in a dispute in December 2014 at the WTO on the grounds that the move was against EU’s commitment. Pakistan considered the move a result of flawed investigation conducted by the EU.
EU has imposed preliminary and final countervailing duties due to which Pakistan has lost approximately $615 million PET exports to EU in five years as the annual exports are less than 15,000 tons despite the fact that PET is covered by the GSP Plus status.
Published in The Express Tribune, October 23rd, 2015.
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