Pakistan and the US GSP Opportunity
This report titled “Pakistan and the US GSP Opportunity” is part of the Market Access Series 2020 – 21 published...
This report titled “Pakistan and the US GSP Opportunity” is part of the Market Access Series 2020 – 21 published...
This report titled “Pakistan and the US GSP Opportunity” is part of the Market Access Series 2020 – 21 published by the Pakistan Business Council (PBC). The report covers the following:
What prompted this Report?
In 2019, the United States of America (US) was Pakistan’s second largest export destination after the EU. Pakistan’s bilateral trade with the US was worth $6.60 billion in 2019 including exports of $3.95 billion. And while Pakistan at various stages in their 70 – year relationship has expressed a desire to sign a market access agreement, the US for domestic and strategic reasons has been lukewarm to the suggestion.
On the other hand, at various forums, US officials in both Islamabad and Washington have suggested to their Pakistani audiences to take a closer look at the US GSP program. Their reasoning being that while Pakistan continues to lobby for a trade agreement it should also try to exploit the opportunities provided under the GSP program which is a unilateral market access program.
This Report therefore looks as the US GSP program as a tool for increasing Pakistan’s exports to the US by creating greater awareness of the program.
What is the US GSP Program?
Who are the top beneficiary countries of the US GSP Program?
The major beneficiaries of the US GSP program along with GSP imports from these top beneficiaries is given in the table below:
|Beneficiaries||Ranking||Imports Under GSP (US$, Billions)|
Currently Pakistan is the 9th largest beneficiary of the GSP Program with exports of $345.0 million in 2019.
What are the major US imports under the GSP Program?
The top ‘10’ imports under the GSP program in 2019 are given in the table below:
|HTSUS Code||Description||Value (2019)||Growth Rate (2015-19)|
|71131929||Gold necklaces and neck chains (o/than of rope or mixed links)||452,485,602||23.63%|
|42029231||Travel, sports and similar bags with outer surface of MMF textile materials||441,701,831||–|
|42022215||Handbags, with or without shoulder straps or without handle, with outer surface of sheeting of plastics||324,437,527||–|
|40151910||Seamless gloves of vulcanized rubber other than hard rubber, other than surgical or medical gloves||319,510,922||6.58%|
|42022190||Handbags, with or without shoulder strap or without handle, with outer surface of leather, composition or patent leather, nesoi, over $20 ea.||302,397,401||–|
|20098970||Juice of any other single fruit, nesoi, (including berries), concentrated or not concentrated||285,212,102||–|
|71131950||Precious metal (o/than silver) articles of jewelry and parts thereo, whether or not plated or clad with precious metal,nesoi||265,896,117||28.23%|
|94053000||Lighting sets of a kind used for Christmas trees||264,225,933||61.50%|
|84159080||Parts for air conditioning machines, nesoi||259,545,784||-0.29%|
|21069098||Other food preps nesoi, incl preps for the manufacture of beverages, non-dairy coffee whiteners, herbal teas and flavored honey||254,936,872||–|
How is Pakistan currently benefiting from the GSP Program?
In 2019 total US imports from Pakistan under the GSP Program amounted to $344.6 million or roughly 8.72% of total US imports from Pakistan of $3.95 billion. The top ‘20’ US imports from Pakistan under the GSP Program in 2019 are shown in the table below:
|HTSUS Number||Description||Imports from Pakistan under GSP (2019)||Total Imports from Pakistan (2019)|
|71131950||Precious metal (o/than silver) articles of jewelry and parts thereo, whether or not plated or clad with precious metal,nesoi||69,265,741||69,265,741|
|39076100||Polyethylene terephthalate, having a viscosity number of 78 ml/g or higher||58,955,879||60,090,779|
|17023040||Glucose and glucose syrup, not containing fructose or in the dry state less than 20 percent by weight of fructose, nesoi||27,978,852||28,039,035|
|63079098||National flags and other made-up articles of textile materials, nesoi||25,190,670||27,482,108|
|39076900||Polyethylene terephthalate, having a viscosity number less than 78 ml/g||12,814,306||12,874,619|
|09109100||Mixtures of spices||12,253,845||12,364,258|
|42029215||Travel, sports and similar bags with outer surface of cotton, not of pile or tufted construction||11,461,582||12,150,483|
|42032180||Gloves, mittens and mitts specially designed for use in sports, nesoi, of leather or of composition leather||8,891,272||12,603,731|
|95069960||Athletic and sports articles and equipment nesoi, and parts & accessories thereof nesoi||7,845,920||9,074,058|
|39206200||Nonadhesive plates, sheets, film, foil and strip, noncellular, not combined with other materials, of polyethylene terephthalate||7,574,806||7,574,806|
|95069100||Arts. and equip. for general physical exercise, gymnastics or athletics and parts & accessories thereof||4,857,238||6,323,599|
|96039080||Brooms & brushes nesoi, mops, hand-operated mechanical floor sweepers, squeegees and similar articles, nesoi||3,968,766||4,218,957|
|39262030||Gloves specially designed for use in sports, nesoi, of plastics||3,966,435||4,668,929|
|94052080||Electric table, desk, bedside or floor-standing lamps, not of base metal||3,840,678||4,245,705|
|82119290||Knives w/fixed blades (o/than table knives, other knives w/rubb./plast. handles, or hunting knives w/wood handles)||3,813,556||4,590,702|
|10063010||Rice semi-milled or wholly milled, whether or not polished or glazed, parboiled||3,813,175||3,844,836|
|82142030||Base metal instruments for manicure or pedicure purposes, and base metal parts thereof||3,307,800||4,652,566|
|21039090||Sauces and preparations therefor, neosi||3,251,260||3,263,267|
|96091000||Pencils & crayons, with leads encased in a rigid sheath||2,657,670||3,272,844|
|62160046||Gloves, mittens & mitts, for sports use, incl. ski & snowmobile, of man-made fibers, not impregnated/coated with plastics or rubber||2,495,096||2,859,491|
What is the current potential for Pakistan to increase exports to the US under the GSP Program?
The indicative trade potential for Pakistan to increase exports under the US GSP Program is $2.4 billion (at the HS-06 level), and the indicative potential for the top ‘20’ products is $2.0 billion; these top ‘20’ products and their potential is given in the table below:
|HTSUS Number||Description||US Imports from Pakistan under GSP (2019)||US Imports from Pakistan under all Trade Programs (2019)||Pakistan’s Exports to the World  (2019)||US Imports from the World (2019)||Trade Potential|
|100630||Rice, semi-milled or wholly milled, whether or not polished or glazed||3,813,175||26,727,930||1,781,732,640||944,439,032||917,711,102|
|390761||Polyethylene terephthalate having a viscosity of 78 ml/g or higher||58,955,879||60,090,779||217,199,858||952,183,069||157,109,079|
|611610||Gloves impregnated, coated or covered with plastics or rubber, knitted or crocheted||1,299,546||34,325,538||144,386,609||679,837,947||110,061,071|
|080450||Guavas, mangoes and mangosteens, fresh or dried||230,139||230,139||101,375,961||600,369,069||101,145,822|
|420321||Gloves, mittens and mitts, designed for use in sports, of leather or of composition leather||9,733,237||13,917,439||84,172,742||227,991,510||70,255,303|
|410712||Whole hides & skins of leather, full grains, grain split, further prepped after tanning/crusting, of bovine/equine||144,950||283,607||68,581,136||92,539,498||68,297,529|
|070310||Onions and shallots, fresh or chilled||5,687||5,687||67,308,229||431,507,686||67,302,542|
|080410||Dates, fresh or dried||3,530,144||3,643,537||71,623,930||64,802,130||61,158,593|
|821420||Manicure or pedicure sets and instruments (including nail files) and base metal parts thereof||3,962,923||5,430,895||50,910,988||107,428,067||45,480,093|
|170410||Chewing gum, whether or not sugar coated||40,040||40,040||43,461,374||115,875,737||43,421,334|
|940490||Articles of bedding and similar furnishings (except mattresses and sleeping bags), fitted or stuffed etc.,||720,306||48,752,530||85,253,049||2,914,742,246||36,500,519|
|170490||Sugar confectionary (including white chocolate), not||1,323,783||1,585,879||35,050,666||1,827,070,220||33,464,787|
|611692||Gloves nesoi, mittens and mitts, of cotton, knitted or crocheted||508,090||6,631,694||36,476,843||49,468,183||29,845,149|
|410792||Leather, other, inc. Sides full grains, grain split, further prepped after tanning/crusting, of bovine/equine animals,||21,514||76,236||29,356,159||54,943,751||29,279,923|
|841451||Fans, table, floor, wall, window, ceiling or roof, with self-contained electric motor of an output not exceeding 125 w||21,511||21,511||28,718,421||1,698,498,331||28,696,910|
|210690||Food preparations nesoi||1,934,386||1,948,377||30,606,849||5,709,122,628||28,658,472|
|091091||Mixtures of two or more spices provided for separately in different headings of this chapter||12,253,845||12,364,258||64,890,554||35,492,909||23,128,651|
|761510||Aluminum table, kitchen or other household articles and parts thereof; pot scourers, scouring or polishing pads,||1,137,704||1,222,613||21,798,751||1,130,919,057||20,576,138|
|392062||Plates, sheets, film, foil and strip of plastics, not self-adhesive, non-cellular, not reinforced etc., of polyethylene||7,574,806||7,574,806||27,146,334||847,491,249||19,571,528|
What are the major recommendations for increasing exports to the US under the GSP Program?
Ensure GSP benefits are claimed through better dissemination of information: To fully benefit from the program, Pakistan needs to ensure better utilization of the GSP program. For 2019, over $27.1 million of US imports from Pakistan, eligible for GSP were assessed for duties unnecessarily. Duties were paid on articles such as leather sports gloves, mittens, and mitts; certain non-cotton pillows, cushions and similar furnishings; certain athletic articles and equipment; miscellaneous iron, and steel articles, and certain cotton fabrics coated, covered or laminated with plastics.
Diversify and focus on emerging industries: Analysis of Pakistan’s export performance reveals that its export base is quite narrow and highly concentrated in a few commodities, namely textiles, apparel, leather, rice, chemicals, pharmaceuticals, and sports goods. For Pakistan, it would be beneficial to use GSP as a market entry tool and focus on goods that are GSP eligible, such as; silk fabrics and apparel including dresses, women’s suits, scarves, hand-loomed cotton and fabrics, some types of gloves and mittens, national flags, and hand-loomed and hand-hooked carpets. However, importance also needs to be given to non-traditional export goods, some of which are GSP eligible and imported by the US in substantial quantities. These include items under jewelry, rubber goods, plastics, motor vehicle parts, electric fixtures, and fittings, etc which Pakistani manufacturers can look to exploit.
Trade Diplomacy could be the key for Pakistan: Even though US GSP imports from Pakistan are well below the Competitive Need Limit (CNL), in case Pakistan appears to be nearing any provision of the CNL, Pakistani diplomats need to monitor the CNL thresholds continually and engage in intense diplomacy to seek a waiver in case of a breach.
Use GSP for Market Diversification: At the HS-06 level, Pakistan has an aggregate trade potential to export more than $2.0 billion to the US for the 20-high potential GSP commodities. It has a further export potential of $246.8 million for 30 additional goods to the US. Given these figures at the HS-06 level, exporters can look to target the US market and shift resources/production to export goods at the tariff line that fall under the GSP scheme.
Pakistan exports certain goods to other countries, of which US is a significant importer. Many of these items are eligible for GSP treatment upon entering the US, such as; some footwear uppers and upperparts, parts and accessories of motor vehicles, leather handbags and gloves and certain types of plastics. There are also certain products under the category of fresh fruits and vegetables of which Pakistan exports significant quantities globally. Agri-exporters can focus on the US market and take advantage of the items eligible for duty-free access into the US. The following list is compiled according to commodities that indicate the highest potential to increase exports to the US, given Pakistan’s supply capacity and high global demand.
The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 83) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk
 Values taken from UN COMTRAD
 A detailed table consisting of all the GSP eligible goods at tariff line that fall under the above-mentioned product categories can be found in the Annexure under table 40E
 See table 42 in Annexure 2