The FATF, an international organisation committed to combating terrorist financing, has had Pakistan on its ‘grey list’ for years. Certain terrorist organisations are able to thrive openly in Pakistan, as their government is clearly ambivalent and sentences to deter such activities are never imposed, as was the case with Hafiz Saeed, founder of Jamaat-ud-Dawa and included on the UN list of suspected international terrorists.
Despite Pakistan’s lack of effort towards tackling Islamism, the EU continues to provide it with substantial support. In 10 years, EUR 600 million has been given to Pakistan and on 6 October, EUR 150 million of further support was announced to help with the COVID-19 crisis. Pakistan is benefitting from the generalised scheme of preferences (GSP), which exempts it from customs duty on imports into the EU.
On 30 October 2020, French Members of the European Parliament (MEPs), France Jamet, Jean-Paul Garraud, Herve Juvin, Catherine Griset, Annika Bruna, Maxette Pirbakas, Jean-François Jalkh, Hélène Laporte, Gilbert Collard and Julie Lechanteux of the Identity and Democracy Group, posed a written parliamentary question to the European Commission.
MEPs asked the Commission “what is the estimated overall trade value of the benefits acquired by Pakistan under the GSP+?” and “will the EU remove Pakistan from the GSP+ owing to its non-compliance with the arrangements?”
On 23 December, Executive Vice-President Dombrovskis responded on behalf of the European Commission.
He reported that “in 2019, Pakistan’s exports under the EU’s Special Incentive Arrangement for Sustainable Development and Good Governance (GSP+) totalled EUR 6.3 billion, accounting for 86.3% of total exports to the EU” and “these exports entered the EU duty free, resulting in import duty savings (by the importers) of around EUR 640 million”.
Executive Vice-President Dombrovskis stated that “the 2018-2019 Report on the Generalised Scheme of Preferences (GSP) was accompanied by an assessment of the implementation by Pakistan of the 27 international conventions in the areas of human rights, labour rights, environment and good governance covered by GSP+”. He explained that “the report shows that GSP+ is effective as Pakistan is making progress over time in areas such as the elimination of honour killings, the protection of transgender persons, and the protection of women’s and children’s rights”.
Executive Vice-President Dombrovskis highlighted that “shortcomings still remain, including deficiencies related to the prevention of money laundering and terrorist financing, leading to Pakistan’s inclusion on the grey list of the Financial Action Task Force (FATF) in June 2018”.
He underlined that “Pakistan took a high-level political commitment to address these deficiencies by the implementation of the FATF Action Plan” and “Pakistan was added to the EU list of high risk third countries on 27 July 2018” He added that “in the FATF plenary in October 2020, significant improvements were noted, but Pakistan was urged to swiftly complete its full action plan by February 2021”.
Finally, Executive Vice-President Dombrovskis declared that “the EU will continue to closely monitor and encourage further progress on these issues” and “a temporary withdrawal of GSP preferences under Article 19 of the GSP Regulation would be a measure of last resort”.
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