- Country or region
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- Negotiations and agreementsTrade policy
Pakistan is a major beneficiary of the trading opportunities offered by the EU Generalised Scheme of Preferences (GSP). From 1 January 2014, Pakistan benefits from generous tariff preferences (mostly zero duties on two thirds of all product categories) under the so-called GSP+ arrangement aiming to support sustainable development and good governance. In order to maintain GSP+, Pakistan has to keep ratification and effectively implement 27 core international conventions on human and labour rights, environmental protection, and good governance.
- 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.
- In 2020, Pakistan was the 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 are mainly comprised of machinery and transport equipment (33.5% in 2020) as well as chemicals (22.2% in 2020).
- From 2010 to 2020, EU-27 imports from Pakistan have almost doubled from €3,072 to €5,537 million. The growth of imports from Pakistan has been particularly fast since the award of GSP+ (€5,515 million in 2014).
The EU and Pakistan
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. It also aims to tackle individual market access issues which hamper trade between the two parties.
While Pakistan's economy holds considerable potential, high costs of doing business, complex regulation and infrastructure bottlenecks all have a detrimental effect on trade and growth. Pakistan's trade regime and regulatory environment still remain comparatively restrictive.
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 stimulate Pakistan's efforts towards diversification.
- As a result of GSP+, more than 78% of Pakistan's exports enter the EU at preferential rates.
- Around 80% of the textiles and clothing articles imported to the EU from Pakistan enter the EU at a preferential tariff rate. Around a quarter of these imports are bed linen, table linen and toilet and kitchen linen.
Pakistan's trade preferences
- The EU supports Pakistan's integration into the world economy and its sustainable economic development by granting it GSP+ trade preferences.
- Thanks to GSP+ more than 76% of Pakistan's exports, including textiles and clothing, enter the EU duty and quota free. This represents almost 20% of Pakistan's exports globally. The GSP+ preferences should also help Pakistan diversify its export basket.
- In order to maintain GSP+ Pakistan has to keep ratification and effectively implement 27 core international conventions on human and labour rights, environmental protection and good governance. This is closely monitored by the European Commission and also under a permanent scrutiny by the EU Member States and European Parliament, as well as civil society.
Trading with Pakistan
- Importing into the EU from Pakistan
- EU trade defence measures on imports from Pakistan
- Exporting from the EU to Pakistan
- Trade relations are part of the EU's overall political and economic relations with Pakistan
- Pakistan is a member of the World Trade Organization