PET Exports to EU – Polyethylene terephthalate (PET) Eu Pakistan - Arhive

There has been a certain combination of hue, cry and pats on the back regarding the countervailing duties imposed on Pakistan’s polyethylene terephthalate (PET) exports to the EU. Popularly known as resin, PET is bottle-grade polyester chip that is used in the production of disposable bottles for beverages.

In 2010, the European Commission imposed a definitive countervailing duty rate of 5.1% (€44.02 per ton) on Pakistan’s PET exports to EU, which expired in 2015. The basis of this duty was the finding by the European Commission that Pakistan’s PET exports to the EU were “causing a material injury to the Community industry”.

The Government of Pakistan took the case to the World Trade Organisation (WTO) dispute settlement system a few months before its expiry, possibly because traditionally the EU does not renew trade restrictions of this sort if they have been challenged in the WTO.

Early this month, the WTO ruled in Pakistan’s favour, stating that the measures applied by the Commission on Pakistan’s PET exports were inconsistent with the Subsidies and Countervailing Measures Agreement (SCMA) of the WTO.

This ruling has been hailed as a victory and a diplomatic success by trade experts, with the hope that Pakistan’s PET exports will rise. However, in the hue and cry, Pakistan’s PET exports composition and opportunity in other markets seems to have been overlooked. Admittedly, Pakistan’s PET exports to EU consisted of a major chunk of Pakistan’s total exports till 2010. Post implementation of the countervailing duty in 2010, Pakistan’s PET exports to EU declined but overall PET exports to the world increased by 22%. This is because PET exports to Turkey increased by $21 million, from 2010 to 2011. Since then exports to Turkey have declined steadily. Over the last 5 years, PET exports to Turkey have declined by 82 percent because of the imposition of safeguard duty by Ankara from 3 percent to 8 percent.

Chemicals are one of the main items of export to Turkey of which PET is one. This point should be remembered in the next round of negotiations for the Pakistan-Turkey FTA that is in the works.

Another important market for Pakistan’s PET exports is USA. Over the last 10 years, Pakistan’s exports to US have been increasing steadily. US’s total imports of PET stood at $1 billion in 2016 of which Pakistan’s share was 4%, implying that there is a lot of potential for Pakistan’s exports to USA to grow.

EU’s total PET imports in 2016 were $3 billion, thus there is a reason to applaud the removal of countervailing duties. However, USA and Turkey are also big markets that have a lot of potential and in the hue and cry of duties imposed by the EU; their potential seems to have been overlooked.

While working on making the best use of the GSP Plus offered to Pakistan, the opportunity to develop other markets should not be missed.