ISLAMABAD: In a bid diplomatic success to Pakistan, World TradeOrganisation (WTO) ruled in favour of Pakistan, rejecting the appeal of theEuropean Union (EU) in the famous Polyethylene Terephthalate (PET)countervailing duty case, in Geneva on Wednesday.
The WTO Appellate Body, which is the highest dispute settlement forum ontrade issues at global level, is regarded as the “World Trade SupremeCourt” in trade dispute litigation. PET, popularly also called Resin, isbottle-grade polyester chip, which is used in production of disposable PETbottles for mineral water beverages.
The three-member bench, while rejecting the appeal of the second largesttrading block, the EU — representing 28 nations of Europe, upheld thedetermination of the WTO Panel which had ruled in Islamabad’s favour onJuly 6, 2017.
The forum upheld the panel decision, which had ruled that measures adoptedby the European Commission on export of PET, – a chemical used in themaking of mineral water bottles, against WTO law and rules. The panel ofWTO adjudicators had categorically held that measures applied by EU onPakistani PET were inconsistent with the Subsidies and CountervailingMeasures Agreement (SCM) of the WTO. The EU had appealed against theinitial decision.
This is being seen as a big diplomatic success of Pakistan at themultilateral forum in Geneva by trade experts. The report was released bythe WTO apex body in Geneva. The EU way back in 2010 imposed a cripplingcountervailing duty on Pakistan’s PET being exported to Europe. As perconservative estimates, the unfair trade protection measures imposed by EUseven years ago caused a loss of approximately 300 million Euros toPakistan’s nascent chemical industry.
Pakistan had filed a case of unfair trade practices in March 2015 against28-country EU. International trade law experts have labelled it as asuccess of Pakistan’s trade diplomacy, which will have far reaching effectsin protecting Pakistan’s exports globally.
Pakistan built the case that the EU’s countervailing measures wereinconsistent with their obligations under the General Agreement on Tariffsand Trade (GATT) and the Agreement of Subsidies and Countervailing Measures(SCM Agreement). The US and China participated in the case as third-partyobservers. Pakistan was represented during the proceedings by the PakistanMission to the WTO and the Advisory Centre on WTO Law (ACWL).
Pakistan’s Ambassador to WTO Dr Syed Tauqir Shah told The News fromHangzhou, China, where he is leading a Pakistan delegation on e-commerce:”By the grace of Allah, this is an extremely positive development forIslamabad’s trade in particular and multilateral trading system in general.
“In an era when protectionism is looming large on the global trade horizon,this decision strengthens global trading community’s trust in multilateraltrading system. A developing country like Pakistan getting a decision fromthe highest adjudicating body against economic giant like EU, is a triumphof global rule of law and invaluable institution called WTO.”
The ambassador, who personally led and coordinated the effort to defendPakistan’s position at WTO, said that in present times, WTO and its crownjewel the dispute system is under tremendous pressure due to policies andactions of one of the big economic powers. A decision like this is atestimony to utility and value of the system, and gives confidence andstrength to developing members of WTO, which form 80 percent of themembership, he said.
He added that contesting a case at the international dispute forum is ateam work, and joint effort of many national agencies and private sectorexporters, particularly Ministry of Commerce, National Tariff Commission,State Bank of Pakistan, Federal Board of Revenue and Pakistan’s WTO GenevaMission. He hoped that the findings of the WTO panel would boost Pakistan’sexports and also help ward off future trade restrictions being based onsimilar trade remedy practices.
The EU had imposed countervailing duty thereby challenging Pakistan’sManufactured Bond Scheme (MBS) administered by the FBR, the long-termfinance given for export-oriented projects (LTF-EOP), and many prevailingcommercial practices in Pakistan, Dr Tauqir Said.
“As a result, this ruling will dissuade and restrict other member countriesfrom applying such trade restrictive measures against Pakistani exports andhas sanctified our schemes and their administration, namely MBS andLTF-EOP. This decision has systemic implications for all trading nations,and is being viewed by experts with a lot of interest. Pakistan has alwaysmet its WTO obligations, and this decision of the Appellate Body clearlydemonstrates that the Pakistan’s trade policies are strictly in accordancewith the WTO rules”.