13 June | 2024

Lahore, Pakistan

US trade preference program critical to trade ties, growth

US can increase market access for Pakistan’s textiles and other products whose trade is directly dependent on agriculture

By Masood Khan

Pakistan joined the 27-member Alliance of GSP Countries in calling on the United States Senate and the House of Representatives, in a letter, for their bipartisan support to expedite legislation for the renewal of US Generalized System of Preference (GSP), a trade preference program through which Washington seeks to help developing countries expand their economies. Pakistan also co-signed the letter along with the alliance of other 26 ambassadors. We hope there is a window of opportunity for bipartisan legislation renewing the Generalized System of Preference.

Pakistan is an active member of the alliance besides Algeria, Argentina, Bolivia, Brazil, Cambodia, Ecuador, Egypt, Fiji, Georgia, Indonesia, Kazakhstan, Kyrgyz Republic, Lebanon, Moldova, Mongolia, Myanmar, North Macedonia, Nepal, Paraguay, Philippines, Serbia, Sri Lanka, Thailand, Tunisia, Ukraine and Yemen. The GSP Program, authorized by the Trade Act of 1974, came into effect on January 1, 1976 and had been providing preferential duty-free entry to 5,000 products from 119 beneficiary developing countries (BDCs) and 44 least developed beneficiary developing countries (LDBDCs) into the US market. Legal authorization for the GSP program expired on December 01, 2020.

So renewal of GSP Program is critical to enhanced market access for the developing countries in the United States. The Program is a conduit to ensuring robust ties with the United States bearing hallmark of strong economic sinews and currency. By enabling developing and the least developed countries in having better access to the US market, the program has not only served the beneficiary countries but has also facilitated US economy and businesses, both small and large companies, by importing products, including raw material, and maintaining comparative advantage.

COVID-19 and the war on Ukraine had impacted supply chains and resulted in food and energy shortages and consequent hyperinflation. The renewal of the program would help in spurring growth in multiple sectors of the economy and thus lessen the severity of ongoing challenges. After devastating floods in Pakistan last year and the vast destruction of cropland, Pakistan is hoping that the United States would increase market access for its textiles and other products whose trade is directly dependent on agriculture.

Many other climate-vulnerable countries are also facing similar challenges because of food and energy hyperinflation which provided compelling justification for the revival of the GSP program. Urgent re-authorization of GSP program has become a central piece of the trade agenda of the alliance. With a bilateral trade volume of $12 billion, the United States remains the largest export market for Pakistani products. The country is among the top 10 beneficiaries of the program. Approximately 6-8% of US imports from Pakistan are being made under the GSP arrangement. The revival of the program would help Pakistan and the United States to realize huge existing trade potential which has remained untapped so far.

Masood Khan is Pakistan’s Ambassador to the United States