EU struggles to agree trade breaks

Six weeks after Pakistan was ravaged by floods, the European Union is still struggling to decide how to help beyond emergency aid, with a plan to offer lucrative trade concessions locked in dispute. Last month, the EU’s foreign affairs chief, Catherine Ashton, urged member states to consider granting Pakistan more favourable trade terms as a means to support its economy and shore up the leadership of President Asif Ali Zardariin the struggle against Islamist militancy.

Britain and Germany – two of the EU’s most powerful countries – have strongly backed the proposal. But it is now bogged down in disagreement over how it could be implemented, the impact it would have on India and other trade partners and, critical for several EU members, the impact it would have on industries that compete with Pakistan exports.

Ashton will again raise the issue with EU foreign ministers at a meeting in Brussels on Friday, aiming to secure a general agreement that can be put to EU leaders at a September 16 summit. But ahead of Friday’s meeting it remains far from clear that an agreement can be reached, with trade, aid and foreign affairs diplomats at odds over the details, even if all are agreed that they would like to do something to help Pakistan.

“The proposals are there on the table, it’s just a question of whether everyone can agree how to help,” said an EU diplomat involved in the talks, emphasising that a deal was critical to the EU maintaining credibility and influence in the region. What is clear is that any deal is likely to be far short of what Ashton had originally hoped for – a move to grant Pakistan access to the EU’s enhanced trade status for developing states, known as the Generalised System of Preferences-Plus (GSP+).

That is something Pakistan has long coveted, but does not qualify for on at least two counts. First, its exports to the EU, worth 3.02 billion euros ($3.84 billion) in 2009, are already too large, and secondly it has not met the human rights and good-governance criteria that usually go along with GSP+.