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India gets WTO to stop textile sops for Pak under drugs cover

India gets WTO to stop textile sops for Pak under drugs cover

Author: Manoj Mitta
Publication: The Indian Express
Date: December 3, 2003
URL: http://www.indianexpress.com/full_story.php?content_id=36494

Even as the two neighbours have been offering diplomatic sops to each other, India has pulled off a major victory over Pakistan and the European Union in a trade dispute before the World Trade Organisation (WTO).

The dispute arose because of what India called the EU's ''discriminatory'' decision last year to grant duty concessions in textiles to Pakistan ostensibly to help it check drug trafficking.

Brussels and Islamabad argued that with the collapse of the Taliban-which had banned opium trade-there was an upsurge in drug trafficking in Pakistan. And that these special concessions which boosted Pakistan's exports by $300 million would indirectly help it wean away people from the illegal narcotics trade.

Rejecting this yesterday in a 150-page ruling in Geneva, the WTO's dispute settlement body (DSB) upheld India's complaint and ruled that the EU had violated trade rules by granting this preferential treatment to Pakistan-and 11 Latin American countries-at the expense of other developing countries.

Restoring parity in concessions, the DSB refused to buy the EU's explanation linking the Taliban's collapse with the drug trade in Pakistan. Citing statistics of drug seizures made over the years, the DSB said: ''The situation affecting Pakistan has been serious at least since 1994'' and therefore held that the EU had no ''objective criteria'' for suddenly giving benefits to that country last year.

The EU has lost the case despite Pakistan's claim that duty concessions in textiles helped it increase exports and create 60,000 more jobs. ''Consequently, a vast majority of those possibly tempted by drug trafficking have been provided with alternative sources of income,'' Pakistan claimed.

On India's contention that duty concessions couldn't be expected to affect drug trafficking, the EU said: ''India appears to suggest that the only appropriate and necessary response to the drug problem is the enforcement of criminal laws.''

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