EICC tears into EU’s GSP policy on Pakistan as it contradicts founding principles of FATF

Europe India Chamber of Commerce (EICC) has asked the European Commission to review its GSP policy on Pakistan as it contradicts founding principles of Financial Action Task Force. In a letter addressed to the EU Trade Commissioner Mr. Phil Hogan, EICC Secretary General expressed his concern about policy deviation by EU on GSP and expressed concern that this might have adverse impact on Eu-India relations.

“The recent extension granted by the European Commission of European Union’s Generalised Scheme of Preferences (GSP) plus trade privilege to Pakistan for another two years contradicts several founding principles and values of the EU and especially in view of the fact that despite several warnings issued by the Financial Action Task Force to Pakistan government to combat money laundering and terror financing, Pakistan has failed and as a result it continues to be in the “Grey List” of Financial Action Task Force”, Secretary General of the Chamber Sunil Prasad stated in his letter.

Brussels based Europe India Chamber of Commerce, the Apex Chamber of Europe promotes trade and economic relations between EU and India.

EICC in the letter said that for well over a decade, Pakistan has been a country of particular concern to the FATF which has continuously monitored the country and found several deficiencies in its rules that still allow blatant terror financing and money laundering to go on. This is of concern in any country, but in case of Pakistan, it becomes even more critical as the nation continues to be the single biggest hotbed and exporter of terror.

It said that while India has been on the receiving end of terrorists trained and financed by Pakistan for decades, the EU may do well to remember that even its own people and borders have been infiltrated by terrorists that have found been trained or inspired by Pakistan. Even as recently as on February 21, 2020, the last physical and full meeting of FATF, Pakistan was maintained in the list of ‘Jurisdictions under Increased Monitoring’.

The FATF, the Global Watchdog, has expressed grave concern over Pakistan’s failure to meet its commitments to curb terror finance and said that unless Pakistan adhered to the action plan on addressing strategic deficiencies by next Plenary, which was to be held in June, FATF would put the country on the blacklist. The plenary was postponed due to coronavirus pandemic and Pakistan has managed to escape the blacklist.

Prasad said that Pakistan has not been able to significantly limit major terror outfits like Lashkar-e-Taiba (LeT) and Jaish-e-Mohammad (JeM) from funding, recruiting and training their fighters on its soil. Fighting some Jihadists while embracing others is self-defeating and shows that Pakistan has no real desire or no capacity to meet its commitments and fulfil its obligations. He added that Pakistan has a long history of catching and releasing terrorists operating from its soil. In the international eyes, Pakistan is seen as a DNA of terrorism and home of all shades of darkness, and its neurotic behaviour has resulted in its decline to a nearly failed state with a very weak economy and a highly radicalised society.

EICC Secretary General reminded EU that Pakistan was expected to fulfill certain commitments under international agreements in order to retain the benefit of holding the GSP plus status, and a focal requirement of the EU regulation required Pakistan to ratify and effectively implement 27 international Conventions. The various Conventions deal with human rights issues, labour rights and environmental standards broadly.

Passing the laws and other subordinate legislation is a low-hanging fruit on the path to compliance with global concerns when it comes to the misuse of Pakistan’s financial system by terrorist groups. Furthermore, reporting and compliance mechanisms has not been helpful which may have helped the country to remain in the privileged list. In other words, Pakistan has failed in all yardsticks of compliances which includes attaining only 14 of the 27 targets, EICC stated.

Though the EU’s GSP privilege to Pakistan was granted to Pakistan in 2014, the country did not bother to respect or fulfill its obligations under GSP benefits. Only after being placed under “Grey List”, Pakistani government has this year acted on eight bills for legislation on anti-money laundering and terror financing with a view for Islamabad to move from the grey list to the white list.

Therefore, according to EICC Secretary General, what was surprising was that even though Pakistan’s status as a dubious jurisdiction in terms of terror finance and money laundering has been clear for long, and the country has stayed on the grey list of the FATF due to ‘strategic deficiencies’ in its anti-money laundering and terrorism financing regime, the 3rd Biennial Assessment of GSP of the EU was published by the European Commission on February 10, 2020, and the EU extended the GSP+ status to Pakistan till 2022. He asked EU does this mean that EU is not convinced about FATF’s observations or that EU is not concerned with the FATF observations or shall we say that FATF observations don’t matter in the EU’s GSP policies?

In a critical reminder to the EU, Prasad said “In the light of the European Commission’s comprehensive approach to strengthen the EU’s fight against money laundering and terrorist financing, further enhancing engagement with third countries and ensuring greater cooperation with the Financial Action Task Force (FATF), where does this GSP plus benefit to Pakistan stand? We strongly urge the European Union to direct Pakistan to cooperate with FATF and global community to completely satisfy obligations failing which EU should take steps to terminate the privilege. If EU fails to act, continuing this privilege to Pakistan sends a wrong message to the present beneficiary countries of this scheme and to the countries who would in future seek such benefits”.

EICC strongly urged the EU to set up an exhaustive independent Commission of Fact-Finding Investigations to review the progress made by Pakistan on the promises it has made during last six years to the EU specifically and the international community as a whole.

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