The recently announced duty-free access for Pakistan’s exports to the European Union is welcome, and this opportunity should be fully capitalised. But we should also read the fine print of the EU enactment, which has a number of safeguard clauses.

The current EU enactment, first of all, protects its own industry from ‘losses, unemployment or closures’. It also has provisions by which a surge in the export of any single item will lead to its exclusion from duty-free concession.

The General Safeguards Article 22 clearly states: “where an article…is imported in volumes and/or prices which cause or threaten to cause serious difficulties to Union producers of like or competing products… normal tariffs shall be reintroduced”.

We have had cases in the past where the EU imposed anti-dumping duties on our bed linen exports. Let us hope we don’t face such difficulties under this clause.

The most disturbing clause is Article 29 under the ‘Safeguards in Textiles, Agriculture, and Fisheries Sector’. This article clearly states that all items in Annexure 5 and Annexure 9 will be subject to this clause. Annexure 5 and 9 include most of our value-added textiles, which have the best chance of increasing our exports.

The clause states, in simple terms, that if any item shows a growth rate of more than 13pc in sales to the EU in any one year as compared to the previous year, then it shall be excluded from the duty exemption regime.

Similarly, if any item’s share exceeds 6pc of total imports of that item into the EU, it will also be excluded from the exempt list. If total imports to the EU from any country enjoying GSP A status exceed 2pc of the EU’s global imports, then that whole country would lose duty-free access.

These are particularly low limits and low thresholds. In some years, in the field of terry towels, for example, we have seen growth of as much as 20pc. Although towel exports in the last few years have been languishing, another spurt of 20pc is entirely possible. After all, if an item is exempted from duty, there should be a substantial increase in its sales, as it would now be cheaper than it used to. That is the whole point of the concession.

So, it seems rather bizarre that if the given concession brings about the desired results, then that concession would be withdrawn! The measure’s success brings about its own demise. As duty-free concession is granted, a surge should be expected. So, a 25pc surge in all items should have been permissible in the first year, followed by the desired 13pc growth in subsequent years.

Similarly, a total market share of 6pc of total imports of an item also does not seem realistic. Here again, an industry should be allowed to develop and consolidate itself — so, a 12pc limit would have been more appropriate.

And the provision that if a country as a whole supplies more than 2pc of total imports by the EU, then it would go out of the concession basket — is also not realistic. The share should have been determined by the size of the exporting country. For a small economy, with a population of like, say, the Maldives, 2pc is a lot — probably much more than the entire GNP of that country.

But for a big country like Pakistan, a two per cent threshold is not much. We are already at 1.5pc. Two good years will definitely see us cross that threshold. We must keep in mind that the EU economy is almost static, and growing, at best, at 1pc per annum.

Now, if all these limits are applied for the year 2014, then there is a danger that whatever segment does well in this year, will get its concessionary status withdrawn in 2015 — which will be a big disappointment. We should definitely request that these caveats should only apply from 2015. So, if the growth in volume in 2015 is over 13pc over 2014, then the concession could be withdrawn in 2016.

First of all, this will give us two clear years for all items. Secondly, we could establish a good base in segments in 2014 where our performance is strong. So, say, if an item being exported is at 100 in 2013, and duty-free status leads to a jump in its exports of, say, 20pc, it will go to 120 in 2014. Then the limit for 2015 shall be a 13pc increase over 120, i.e. 136.

If these measures are really for the purpose that they say they are, then they must be made more realistic. ‘Alleviation of poverty’ could not be achieved by taking small, hesitant steps, but by bold initiatives. What I am advocating is not that we reject these concessions; we should welcome them. But we should also quietly begin to work to tackle these caveats and get limits enhanced, so that we enjoy duty-free access for at least five years.

We should keep in mind that duty-free access is already being enjoyed by many of our competitors, like Turkey and Egypt, who are at a higher level of development and income than we are. There are many others who have enjoyed duty-free access that lasted two decades — like Bangladesh.

We need to monitor our exports closely on a quarterly basis to see if there is a sudden surge in any item. We should also monitor the prices charged, so that there is no dumping by any large manufacturer. If a problem is arising, we should know it well before the EU authorities start contemplating taking some action. It would be a pity, for example, if an item shows a growth of 14pc in any one year, and then looses its duty-exempt status.

When a problem arises, we — the stakeholders — should get together and try to find solutions before the axe falls. After all, we have lived with a quota regime for decades, so a bit of restraint will be better than losing the duty-free status. If we are careful and mindful, we should hope to enjoy this status for the foreseeable future, rather than just for a year or two.

The writer is the chairman of Towel Manufacturers Association of Pakistan