EU extends GSP+ status up to 2027, Pakistani exporters urged to explore beyond textile bonanza

January 09, 2024 (MLN): Rather than staying confined to exporting textiles only, the business community of Karachi should broaden and diversify their exports to the European Union to take maximum advantage of the EU’s GSP Plus for Pakistan which has recently been rolled over for four more years up to 2027, Ambassador of European Union (EU) Raina Kionka said on Tuesday during her visit to Karachi Chamber of Commerce & Industry (KCCI).

GSP Plus is tremendously important for Pakistan’s economy whose overwhelming beneficiaries are not just textile producers but by trickledown effect, all those people as well who work in textile factories, she added.

The status has been extremely positive and useful in economic terms during the last ten years as it helped in increasing Pakistan’s exports to the EU by 108% while EU imports also ascended by 40% since the start of this program, she further highlighted.

Raina Kionka further stated that EU’s GSP Plus for Pakistan has been rolled over without any changes to the rules framework so everything was going to stay the same up to 2027.

“We also have elections in June 2024, which means there will be a political changeover in the Parliament and the EU’s Commission. Once everything settles, we expect that the new Parliament and the Council of EU member states will once again take up negotiations on a new directive for GSP Plus with Pakistan which couldn’t happen last year, " she stated. 

Although it’s a four-year rollover for GSP Plus if they come up with a new regulation, it will become effective before 2027, she noted. 

While identifying Gems and Jewelry, Tourism, Handcrafts and Auto Parts etc. as potential sectors under GSP Plus, the EU Envoy noted that 28% of Pakistan’s exports come to the European single market which was a good number but it could be a lot bigger.

EU Delegation in Islamabad has been working so that Pakistan’s exports could be enhanced through better utilization of GSP Plus, diversifying exports, investing in value-addition, and using new technologies & IT solutions for better access to the EU Market, besides bringing in the SMEs who are the backbone of any economy.

She informed that EU’s delegation in Islamabad would also like to set up a platform to promote EU-Pakistan business-to-business relations which could also help the SMEs in making good connections with businesses in EU and ultimately help the SMEs in Pakistan to benefit from GSP Plus.

“Gems and Jewelry sector of Pakistan has huge potential so they must add value here and export them to the European Union rather than exporting the raw material around the region and have somebody else doing all the cuttings, polishing and making jewellery”, she added. 

Earlier, President KCCI Iftikhar Ahmed Sheikh, while welcoming EU’s Ambassador, pointed out that in addition to being a major trading partner of Pakistan, it was encouraging to see that the EU has been supporting Pakistan’s integration into the global economy. 

Pakistan is committed to fortifying enduring, future-oriented and comprehensive partnerships for peace, development, and prosperity with the European Union, he said.

He noted that the EU has been the largest export destination for Pakistan, which stood at $8.4 billion, followed by the USA at $5.93bn and China at $2.02bn in FY23.

Pakistan’s exports to the EU are dominated by the textiles sector which is the backbone of Pakistan’s exports. Last year, Pakistan’s total textile exports remained at $16.50bn which is almost 60% of the total exports.”

He stressed that sustainable policies are needed in Pakistan during its journey to economic recovery which would also pave the way to exploit the full potential of EU’s GSP plus and attract much-needed Foreign Direct Investment.

Pakistan and EU need to discuss ways to improve access to Pakistani products in the EU market, address trade barriers, foster collaboration, focus on export diversification, and ensure smoother trade practices and compliance with international standards.

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