GSP+ is not a gift. Pakistan can lose it

Pakistan's most valuable trade arrangement, GSP+, is set to be renewed on stricter terms than before. This agreement, which grants Pakistan preferential access to the European Union market, will undergo a reassessment in 2027. The EU will scrutinise whether international conventions ratified by Pakistan are actually being implemented effectively.

The stakes are considerable, as the European Union accounts for more than a quarter of Pakistan's exports, with textile and clothing goods being the largest contributors. In 2024 alone, €7.5 billion worth of GSP+ eligible goods were purchased by the EU, with Pakistani exporters saving around €732 million in duties. Without this arrangement, Pakistani garments would face tariffs of approximately 12%, a significant margin in a trade where orders are influenced by even a few cents.

In June, the EU introduced a new Generalised Scheme of Preferences, which will apply to all current GSP+ countries from 2027 to 2036. Upon reapplying, Pakistan must ratify 32 conventions, including two International Labour Organisation (ILO) conventions on labour inspection and tripartite consultation between government, employers, and workers.

The Paris Agreement has replaced the Kyoto Protocol, granting unions, NGOs, and workers the right to lodge complaints directly to the EU. The EU's July monitoring report has already highlighted Pakistan's shortcomings, with child labour being identified as a major challenge despite new action plans. However, the government maintains that progress has been made, primarily through legislative measures.

This gap between legislation and enforcement is particularly evident in the factory sector, where labour inspection has been weakened over the years. Province-level departments lack sufficient inspectors, and audits conducted by foreign brands often reveal workers not registered for social security and pension benefits. The irony lies in the fact that Pakistani exporters already generate ample proof of compliance through various certifications and data reporting.

However, this evidence rarely reaches the EU's assessment. Competitors such as India and Bangladesh enjoy duty-free access to the EU market, further widening the competitive gap. Pakistan now has an opportunity to prove its commitment to compliance by addressing three key areas. Firstly, consolidating factory-level data into a national compliance record, showing Brussels the progress made in meeting wage, hours, and safety standards.

Secondly, strengthening enforcement mechanisms through digitalized, transparent labour inspection, registration of social security, and involving worker representation in tripartite councils. Lastly, engaging European buyers as partners in the compliance process, sharing audit findings, and collaborating on remediation efforts. The EU's shift in approach from expecting promises to requiring tangible change on the factory floor underscores the urgency for Pakistan to demonstrate genuine progress.