Since 2014, Pakistan has enjoyed preferential access to the European Union (EU) under the Generalised Scheme of Preferences Plus (GSP+), allowing tariff-free entry for the majority of its exports. This arrangement has been central to Pakistan’s trade with the EU, especially for the textile sector. However, recent developments signal that this crucial benefit may be at risk.

GSP+ at a Glance

The GSP+ scheme is granted to vulnerable developing countries that commit to implementing 27 international conventions related to human rights, labor rights, environmental protection, and good governance. For Pakistan, GSP+ has been an economic lifeline, but persistent compliance violations have put its continuation in jeopardy.

Key Data on Pakistan’s GSP+ Access

Aspect	Details
Start of GSP+ Access	2014
Share of Duty-Free Exports (2023)	88% of eligible exports entered EU duty-free
Export Value (2023)	€6.2 billion
Main Beneficiary Sector	Textiles (largest share of exports)
EU Concerns	Human rights, labor rights, environment, governance
Recent EU Action	Suspension of ethanol preferences (June 2025)
Previous Extensions	Status extended until 2027 despite earlier resolutions for review
Current Status	EU white paper urges suspension proceedings due to “serious violations”

Compliance Violations Highlighted by the EU

• Human Rights: Misuse of blasphemy laws, enforced disappearances, torture, and persecution of minorities.
• Labor Rights: Child and bonded labor, weak trade unions, poor enforcement.
• Environmental Concerns: Pollution mismanagement, deforestation, lack of climate adaptation policies.
• Governance Issues: Political interference in anti-corruption agencies, erosion of judicial independence.

Economic Implications of Losing GSP+

1. Increased Export Costs
   • Without duty-free status, Pakistani exporters would face tariffs, making products less competitive compared to other suppliers.
2. Reduced Export Volumes
   • Particularly for textiles, which dominate exports to the EU, volumes could sharply decline.
3. Market Dependency Risks
   • With 88% of exports currently duty-free, Pakistan risks losing a major share of its EU market access.
4. Foreign Investment Decline
   • Lower export potential could deter investment in export-driven industries.
5. GDP and Employment Impact
   • Export contraction may slow economic growth and lead to job losses in labor-intensive industries.

Social and Political Consequences

• Job Losses: Workers in textiles and related industries could be disproportionately affected, raising poverty and unemployment levels.
• Political Pressure: The government would face both domestic and international pressure to implement meaningful reforms.
• Reputation Damage: Losing GSP+ could undermine Pakistan’s credibility in future trade negotiations.

Long-Term Outlook

While the potential suspension poses immediate challenges, it could also serve as a turning point. Pakistan may be forced to undertake structural reforms in human rights, labor, and environmental management to regain EU trust. In the long run, compliance could improve governance and strengthen its global trade standing.

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In essence, Pakistan’s GSP+ status is at a critical crossroads. The EU’s increasing scrutiny, coupled with recent trade suspensions, signals a pressing need for reforms. Failure to address compliance gaps could cost Pakistan billions in exports, jobs, and investment opportunities, while decisive action could ensure sustainable access to one of its most vital markets.