EU ambassador warns Pakistan of risks to GSP+ trade preferences

Amid an ongoing intense engagement between Islamabad and Brussels over a trading scheme and its future, the European Union’s ambassador has cautioned that GSP+ benefits cannot be taken for granted.

The cautionary note comes as the current EU Generalised Scheme of Preferences framework is set to expire at the end of this year, and Pakistan is required to seek inclusion in the successor regime, which would carry more stringent requirements.

“The government will need to take steps towards improving the situation, which will also be very important in the reapplication process,” EU Ambassador Raimundas Karoblis told Dawn.

“The situation is not certain. And, of course, GSP+ preferences cannot be taken for granted.”

Though the new trading framework will take effect with the turn of the year, Pakistan and other existing beneficiaries will continue to receive preferences during a two-year transition period ending on Dec 31, 2028.

But the transition does not amount to an automatic continuation of the facility for the two-year period, or a roll over into the new scheme.

A European Commission assessment covering the years 2023-25, released in July this year, concluded that Pakistan had faced compliance issues with its obligations, regressed in a number of areas and made limited positive change.

Moreover, while acknowledging legislative and administrative measures, it noted that much of the progress had yet to translate into improvements on the ground.
The report had identified significant concerns relating to enforced disappearances and extrajudicial killings, freedom of expression, journalists’ and minority rights, judicial independence, access to justice and forced labour.

“There are areas of regression, and of course, this means that the government needs to address them,” Mr Karoblis said, adding that this applied both to the implementation of the current GSP+ convention, and its reapplication for the new scheme.

Diplomatic discussions between Pakistan and the EU suggest that Islamabad is aware of the gravity of the situation, though questions remain over whether it has yet moved decisively towards addressing the concerns that Brussels has repeatedly raised.

At last week’s press briefing, Dawn asked outgoing Foreign Office Spokesperson Tahir Andrabi about how that dialogue is progressing, and how he viewed the EU’s assessment of Pakistan compliance.

In response, the spokesperson said that while Pakistan appreciated the commission’s recognition of its continued compliance under 27 international conventions, he maintained that the report’s overall narrative did not present “a sufficiently balanced picture of Pakistan’s performance”.

“GSP+ remains central to Pakistan’s economic relationship with the European Union, and we will remain constructively engaged with the EU and remain committed to the effective implementation of the international conventions underpinning the GSP framework,” he said.

Since GSP+ commitments straddle a wide array of sectors, Dawn sent written queries to the federal ministers for information, law and commerce last week to gain holistic perspective on how Pakistan is approaching the matter with the EU.

However, neither the ministers nor their ministries responded to Dawn’s requests for comment.

Pakistan’s challenge is twofold. It will have to demonstrate that it qualifies for the new framework while also ensuring that the deteriorations identified in the latest report do not jeopardise its existing status during the transition period.

Talking to Dawn, the European envoy acknowledged serious unease within the European Commission, which plays an influential role in monitoring compliance and decisions concerning the execution of the scheme.

“Indeed, both from reading the report and from discussions with experts, there are serious doubts within the European Commission about the effective implementation of these conventions,” he said.

The EU’s GSP+ regime is tied to compliance with international conventions on human rights, labour rights, environmental protection and good governance, which Islamabad has already signed up. Pakistan has remained a beneficiary since 2014 and is the scheme’s largest beneficiary.

The stakes for Pakistan are, therefore, considerably high.

In 2024, the country received nearly €732 million in tariff exemptions under GSP+, while €7.115 billion worth of its exports utilised the preferential access. Of Pakistan’s total €8.275bn exports to the EU that year, €7.482bn were eligible for GSP+ preferences.

The EU accounts for about 28 per cent of Pakistan’s total exports and nearly 90pc of its exports to the bloc are GSP+ eligible.

The dependence on the trading scheme is particularly high in the textile and clothing sector, which accounts for between 70pc and 76pc of Pakistan’s exports to the European market. Clothing, textiles, leather products, prepared foods and beverages are among the major beneficiaries.

Loss of preferential access would, therefore, have consequences beyond the immediate value of tariff exemptions and products such as textiles and clothing could lose competitiveness in one of the country’s most important export markets.

The fear of losing the preferential access is quite real, as the scheme provides for partial or full temporary withdrawal of preferences in cases of serious failure to comply with the underlying conventions. There are precedents at both ends of the spectrum, with Bolivia facing partial withdrawal and Sri Lanka previously losing its preferences altogether.

Mr Karoblis, however, said no determination had so far been made in Pakistan’s case.

“So far, it requires further investigation as to whether the regression in these specific areas has already reached the threshold concerning the implementation of the regulation, and whether it has reached the level that could trigger a partial or full temporary suspension,” he said.

The envoy nevertheless made clear that the absence of such a determination should not be construed as a free pass.

“If the government is ready for cooperation and to make progress, let’s expect that the current conditions, situation and findings will not trigger this mechanism,” he emphasised. (Dawn)

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