Islamabad: The European Union (EU) on Wednesday extended General System of Preferences (GSP) plus status for Pakistan, with six new Conventions.

The EU has expressed its concerns about situation of human rights, press freedom, death penalty and child labour related issues.

The European Commission’s (EC) new conventions pertain to greater accessibility for people with physical disability, the eradication of child labour and environmental safety.

Pakistan will continue to enjoy GSP plus status till 2022, after which the EU will announce new criterion to qualify for the scheme. The EU has raised issues like human rights, death penalty, restrictions on media etc.

The EU is Pakistan’s second most important trading partner, accounting for 14.3% of Pakistan’s total trade in 2020 and absorbing 28% of Pakistan’s total exports.

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In 2020, Pakistan was EU’s 42nd largest trading partner in goods accounting for 0.3% of EU trade. Pakistani exports to the EU are dominated by textiles and clothing, accounting for 75.2% of Pakistan’s total exports to the EU in 2020.

Pakistan’s imports from the EU mainly comprise of machinery and transport equipment (33.5% in 2020) as well as chemicals (22.2% in 2020).

From 2010 to 2020, EU27 imports from Pakistan have almost doubled from €3 072 to €5 537 million - growth that was particularly fast since the award of GSP+ (€5 515 million in 2014).

The EU and Pakistan have set up a Sub-Group on Trade to promote the development of two-way trade. The Sub-Group on Trade set up under the auspices of the EU-Pakistan Joint Commission is the forum for discussions on trade policy developments more broadly and also aims to tackle individual market access issues which hamper trade between the two parties.

Textiles and clothing account for over 80% of Pakistan’s exports to the EU. While the textiles and clothing industry are the backbone of Pakistani exports, relying so heavily on one product category carries risks for Pakistan. Trade diversification would play an essential role in this respect. The granting of GSP+ preferences in 2014 should have stimulated Pakistan’s efforts towards diversification.

Copyright Business Recorder, 2021