Pakistan’s textile exports to EU have more than doubled to EUR 7.1 billion in 2022 from EUR 3 billion in 2014 with volumetric growth going up by 94 percent in the same period, according to the Annual Report issued by the State Bank of Pakistan (SBP).
Pakistan’s textile export volumes grew at a much faster pace after the introduction of GSP+ compared to the growth prior to joining the GSP+, during the period 2004 to 2014. In absolute terms, the volumes almost doubled in a span of ten years to 2022. On the other hand, the volumetric increase in textile exports of non-GSP+ competitor countries was relatively slower compared to the GSP+ countries + during the period.
Pakistan has remained one of the largest GSP+ beneficiaries since the initiation of the arrangement, and is presently one of the six Asian countries that has been awarded this special status. The current GSP+ status of all the beneficiaries is valid until December 2023; the renewal of this preferential scheme is subject to its approval from the EU Council.
The trade performance of Pakistan under the GSP+ status highlights its significance in giving impetus to exports of the country, particularly the textile exports. The preferential tariff rates under GSP+ have given a boost to Pakistan’s trade relations with the EU, enabling duty-free access to 66 percent of the product categories for exports, such as apparel and clothing; home textile; fabric and yarn; food products; leather apparel; and surgical goods, among others. Notably, more than 78 percent of Pakistan’s existing exports to the EU take place under preferential import tariffs offered in GSP+. In view of the conducive environment enabled under the GSP+, the EU market has emerged as Pakistan’s most important export destination in recent years, especially for textile and clothing, comprising 20 percent of our total textile sector exports globally—worth around EUR 7 billion.
The GSP+ program allows the eligible countries duty-free access to the EU market under the available tariff lines. The scheme involves complete elimination of import duties on the majority of the EU’s tariff lines for all GSP+ beneficiaries, including Pakistan along with six other member states.
The GSP+ status of the member countries is renewed periodically by the EU, which is contingent on satisfactory assessment regarding the implementation of 27 fundamental international conventions. In this context, the current GSP+ status of all the beneficiaries is valid until December 2023; the renewal of this preferential scheme is subject to its approval from the EU.
Therefore, in order to continue this preferential treatment for Pakistan, it is important to demonstrate compliance with the 27 core conventions, as well as some additional requirements pertaining to environmental safety and climate change, employment accessibility to individuals with physical disability, and abolition of child labour, the SBP report added.
