KARACHI: Pakistan's Generalised Scheme of Preferences Plus (GSP+) status with the European Union, set to expire in 2028, is a critical economic priority, emphasized Mian Zahid Hussain, President of the Pakistan Businessmen and Intellectuals Forum. The GSP+ status, in place since January 2014, has allowed thousands of Pakistani products to benefit from zero or preferential tariffs in European markets, contingent upon Pakistan's adherence to international conventions on human rights, labor rights, and environmental standards.
According to Pakistan Businessmen and Intellectuals Forum, the GSP+ has significantly bolstered Pakistan's textile and garment sectors. However, Pakistan's overall goods exports saw a 5.93 percent decline to $30.139 billion in FY2025-26, while imports rose by 8.14 percent, resulting in a trade deficit of approximately $39.62 billion. Despite these challenges, exports to European countries remained relatively stable, with a slight 0.18 percent decrease to $9.089 billion in FY2025-26. The European Commission noted that Pakistan was the largest beneficiary of the GSP+ scheme in 2024, with Pakistani exports worth around €7.5 billion eligible for GSP+ preferences.
Despite the benefits of the GSP+, Pakistan's exports account for only 0.3 percent of the European Union's total imports. The seafood sector, in particular, has struggled due to stringent European Sanitary and Phytosanitary (SPS) standards. With restrictions relaxed in 2013, only a limited number of processing units could resume exports. Improving infrastructure and meeting SPS requirements are crucial for tapping into the sector's potential.
Italy, Germany, the Netherlands, and Spain remain Pakistan's primary European export markets, but diversification into Central, Eastern, and Northern Europe is necessary. Prime Minister Shehbaz Sharif's diplomatic efforts with the EU have highlighted the importance of GSP+, while Field Marshal Asim Munir's role in regional stability further supports Pakistan's trade diplomacy.
The EU's 2026 GSP+ review recognized Pakistan's legislative progress but noted areas for improvement. With new GSP regulations requiring compliance with 32 international conventions from 2029, Pakistan faces increased demands. Additionally, the India-EU Free Trade Agreement poses a significant challenge by granting Indian exporters lower or zero tariffs, potentially undermining Pakistan's competitive advantage.
To secure the continuation of GSP+ beyond 2028, Pakistan must enhance productivity, labor conditions, environmental standards, and develop internationally recognized brands. Aligning regional stability efforts with economic interests and focusing on innovation and sustainability will be key to Pakistan's future economic growth and export strength.