EU pushes to grant trade aid

BRUSSELS (September 11 2010): Europe sought to help Pakistan battle flood devastation and the fear of rising Islamist extremism by pushing trade favours on Friday, despite vehement industry opposition. “If we want to stabilise Pakistan, so that it doesn’t degenerate into extremism and fundamentalism, we have to address the economic consequences of this natural catastrophe,” said German Foreign Minister Guido Westerwelle.

“What we’re worried about of course is that floods will lead to political and security instability and that’s what we’re trying to avoid,” underlined Finland’s Foreign Minister Alexander Stubb. European Union diplomatic chief Catherine Ashton wants special exemptions from trade tariffs to be offered, after the floods turned some 21 million lives upside down and so far killed 1,760 people.

She outlined to foreign ministers meeting in Brussels plans to “link together” policies from anti-terror assistance through humanitarian aid to trade. These would require a decision to “suspend duties temporarily… for a limited list of products where Pakistan would be the main beneficiary.

“The proposed measure could be time bound, limited, targeted, and be relatively quickly implemented,” she wrote to colleagues. Ashton also said she supported calls by Britain and Germany for status changes under World Trade Organisation rules, but acknowledged likely opposition from neighbouring trade rivals such as India.

The European Commission, which polices EU trade matters, asked ministers to consider ditching tariff barriers on 13 types of textile product, in an effort to kick-start an economic fightback. “We cannot stand on the sidelines,” said Belgian Foreign Minister Steven Vanackere, after the issue of “how we’ll do it” was passed up from trade to foreign ministers.

The idea of preferential treatment caused consternation within the industry. A European association of textile producers articulated fierce resistance. Euratex told EU trade commissioner Karel De Gucht on Thursday that the “Pakistani government is (repeatedly) using all sorts of excuses to demand free access to the EU market,” citing the “fight against terrorism, economic crisis and now the floods.” It said Pakistan is “already a major world player” on a par with India or China, and warned that unilateral EU moves “will certainly be attacked” in the WTO and could “seriously jeopardise” negotiations on a free-trade deal with New Delhi.

According to an EU source, though, the list of product areas qualifying for exemptions was drawn up with likely objections in mind, and aimed at providing some 25 million euros of annual benefits to Pakistan. Despite the difficulties with economic rivals, other significant EU voices including Polish Foreign Minister Radoslaw Sikorski, also said they were backing the moves.

He said he would be “arguing to help Pakistan,” a “key country” in all foreign policy matters. Europe has also been criticised by humanitarian organisations for struggling to produce a coherent, collective position on Pakistan. -brecorder