Pakistan faces uphill GSP+ battle

Pakistan is facing a challenging battle to secure its inclusion in the EU's restructured Generalised Scheme of Preferences (GSP+) framework. The EU ambassador in Islamabad has emphasized that the benefits of GSP+ cannot be taken for granted, as the current scheme is set to expire at the end of this year and Pakistan must reapply for the successor program, which comes with more stringent requirements.

During a recent press briefing, the EU ambassador cautioned that the government will need to take steps to improve the situation in order to be considered for the new scheme. This is crucial as Pakistan and other beneficiaries will continue to receive benefits during a two-year transition period ending on December 31, 2028, but this does not guarantee an automatic rollover into the new scheme.

A European Commission assessment released in July 2023 reported that Pakistan had faced compliance issues with its obligations, regressed in certain areas, and made limited positive changes. The report highlighted serious concerns related to enforced disappearances, extrajudicial killings, freedom of expression, journalists' and minority rights, judicial independence, access to justice, and forced labor.

The European envoy acknowledged that these issues have not been adequately addressed, and Islamabad remains engaged in discussions with the EU regarding the effective implementation of international conventions.

Pakistan has been a beneficiary of the GSP+ scheme since 2014 and is its largest beneficiary. In 2024, the country received nearly €732 million in tariff exemptions under GSP+ and its exports utilized the preferential access worth €7.115 billion. The EU accounts for about 28% of Pakistan's total exports, with nearly 90% of its exports to the bloc being GSP+ eligible. The textile and clothing sector is particularly dependent on the scheme, as 70-76% of Pakistan's exports to the European market fall under this category.

The stakes for Pakistan are high, as the loss of GSP+ preferential access could have severe consequences. The EU has the authority to impose partial or full temporary withdrawal of preferences in cases of serious non-compliance with international conventions. Previous examples include Bolivia, which faced partial withdrawal, and Sri Lanka, which lost its preferences altogether.