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EU Trade concessions: BD retracts assurances given to Gilani, Khar

This failure is as much a reflection of the Pakistan’s continued faith in the 2-nation theory as enlightened self- interest on full display in Dhaka. Interestingly, this snub comes with about 30-days to go for the 40th celebration of the failure of two-nation theory and emergence of Dhaka as the free capital of a free country

Poreg View: This is an embarrassment Pakistan could have easily avoided. Pakistan cannot claim there was no writing on the wall. It was there very much in evidence during the SAARC summit in Maldives.  While every one of the seven leaders was having bilaterals on the sidelines, Prime Minister Syed Yousuf Raza Gilani made no move to meet his Bangladesh counterpart, Sheikh Hasina. The Bangladesh side also showed no particular interest in a one-on-one between Gilani and Hasina.  Surprising and indeed intriguing it was because from all accounts Pakistan has a vested interest in cultivating Hasina, who, unlike her predecessor, is known for her tilt towards India. More over Islamabad is looking to increase trade and market opportunities beyond India, and Bangladesh is a huge market after India in the South Asian Region.  

Foreign Minister Hina Rabbani Khar took upon herself or so it appears from reports in Pakistani media the task of cultivating Bangladesh. She used as much the trade card as the religion card to ensure that Bangladesh would not put any spokes in the way of European Union granting some concessions. These are no small concessions though.  

Islamabad has been egging European Union region to allow a two-year cut in tariffs to boost Pakistan’s economy shattered by the massive floods of 2010. The main beneficiary of these cuts will be the garment industry, which is one of the key forex earners. For Bangladesh garments too European Union is the biggest market after the US of America.

By the time SAARC summit took place, Pakistani leadership had neutralised opposition if any from India. And in synch with its present day approach of not standing in the Pak way whether it is membership of UNSC or trade, Delhi conveyed its NOC to EU.   Dhaka did not.

After talking to her Bangladesh counterpart, Hina Rabbani Khar told fanning journalists from home that Hasina government also would support Islamabad before the EU. Pakistan’s trade minister said in Islamabad that he would soon go to Dhaka to personally canvas for and thank B’desh support. Trade bodies also said so.

Upon her return from the Saarc summit, Hina Rabbani Khar was asked specifically whether she believed Bangladesh would deliver, she replied in the affirmative. She said B’desh leaders gave her an assurance in Maldives. It seems now that Bangladesh has no intention of upholding this promise.

In their excessive trade exuberance, they did not factor in relative inexperience of Khar to understand the diplomatic nuances laced with sub-continental niceties. This failure is as much a reflection of the Pakistan’s continued faith in the 2-nation theory as enlightened self- interest on full display in Dhaka. Interestingly, this snub comes with about 30-days to go for the 40th celebration of the failure of two-nation theory and emergence of Dhaka as the free capital of a free country.

The Bangladeshi commerce minister, M Faruk Khan, said in Dhaka, “Our position is clear. One should not mix aid with trade. We do not support any aid for trade programme for a country which is our competitor. We have formulated our strategy under which we oppose duty-free access of eight products because it will expose our exporters to competition. Exports over $100 million will be affected if the privilege is extended to Islamabad.”

Bangladesh is worried about the prospect of E U measures giving a price advantage to Pakistani textiles. The offer from the European Union would allow the import of 75 Pakistani items, earning the country millions of dollars for a two-year period. Both countries are in direct competition in European Union. In recent months, some leading Pakistani textile magnets have started migrating to B’desh either with their entire plant and machinery or to setup additional production units. The move is a sequel to the continued blood bath on account of targeted killings in Karachi, the home to most Pakistan garment units.  

WTO Council for Trade in Goods is scheduled to meet in Geneva later this month.  The WTO works by consensus and European Union all WTO members to give consent to the EU proposal. By its actions, Bangladesh has effectively stalled the EU move and pushed Pakistan to the back foot.  It is too early to say the last word on the standoff though the relations between Pakistan and Bangladesh are lukewarm at best as of now. The trade concessions from EU are something Pakistan will be loath to forego. How it will go about wooing a reluctant Bangladesh will interesting to watch in the days ahead.

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