Pakistan Could Lose €732 Million EU Trade Benefit for Shocking Reason

The European Union has said Pakistan continues to benefit significantly from the GSP+ trade scheme but warned that the country has made uneven progress in meeting the human rights, governance, labor and environmental commitments required to retain the preferential trade status.

In its fifth monitoring report on the implementation of the Generalised Scheme of Preferences (GSP), jointly released by the European Commission and the EU High Representative for Foreign Affairs and Security Policy, the EU said Pakistan experienced limited positive change during the 2023 to 2025 monitoring period while regressing in several key areas.

Pakistan has been the largest beneficiary of the EU’s GSP+ scheme since joining in 2014. The report said the country exported EUR 7.5 billion worth of GSP+ eligible goods to the EU in 2024, mainly textiles and clothing, benefiting from an estimated EUR 732 million in tariff exemptions. Pakistan’s exports to the EU have increased by more than 91 percent since receiving GSP+ status, while exporters utilized more than 95 percent of the available trade preferences.

The report acknowledged progress in several areas, including legislation to establish a National Commission for Minorities, narrowing the scope of the death penalty, maintaining a de facto moratorium on executions, implementing rules under the Anti-Torture Act, and introducing domestic violence legislation for Islamabad. It also highlighted Pakistan’s first marital rape conviction, ratification of the ILO Protocol on Forced Labour, expanded labor inspections and updated provincial action plans to tackle child labor.

However, the EU said most of these improvements remain legislative or administrative and have yet to translate into meaningful changes on the ground.

The report expressed concern over increasing enforced disappearances, alleged extrajudicial killings, restrictions on freedom of expression and declining judicial independence. It also pointed to continued challenges in addressing forced labor, child labor, violence against women, discrimination against minorities and corruption.

To maintain GSP+ eligibility, particularly under the revised framework that will take effect in 2027, the EU urged Pakistan to strengthen accountability for human rights violations, improve prison and capital punishment reforms, protect freedom of expression, eliminate child labor and child marriage, enforce laws against forced labor, safeguard minority rights and strengthen the independence of anti-corruption institutions.

The report also noted that Pakistan’s political and economic challenges, including security concerns, climate-related disasters and governance issues, have affected its ability to fully implement its international commitments. It highlighted the country’s recovery from the economic crisis of 2023, continued poverty, and the impact of major floods in recent years on implementation capacity.

The European Union remains Pakistan’s largest export market, accounting for around 28 percent of the country’s total exports, with textiles and clothing making up roughly three quarters of shipments to the bloc.

Around 90 percent of Pakistan’s exports to the EU qualified for GSP+ preferences during the 2022 to 2024 period.