While Indians are celebrating the EU-India Free Trade Agreement (FTA) by popping bottles of champagne and distributing sweetmeats at temples, Pakistani policymakers and exporters are anguished and struggling with a sense of loneliness.
Pakistan is a beneficiary of EU GSP+, which grants duty-free access for two-thirds of Pakistani exports. This has been a lifeline for Pakistan’s textile and apparel industries, leather goods manufacturers, and agricultural exporters, earning up to $9 billion during FY25, with textiles contributing about $7bn.
For an economy persistently short of foreign exchange, coupled with escalating foreign and domestic debts, exports to the EU are considered imperative. Unfortunately, exporters, barring a few large ones, continue to have tunnel vision and remain mini-retail exporters. In real time, Pakistan has not taken maximum advantage of GSP+.
Since 2014, Pakistan has enjoyed its EU GSP+ status, but the state has also grown complacent that its exports to the EU will be given preferential access forever. The government went an extra mile to project implementation of the 27 Conventions and pledged to implement any new EU-mandated conditionalities for the next GSP+. Meanwhile, the annual EU monitoring missions to Pakistan continue to urge the nation to do more before the current status ends on December 31, 2027.
The cautionary signal is that GSP+ is only a short- or medium-term booster, not a complete panacea for Pakistan’s alarming economic situation
The EU-India FTA, especially, brought the sky down on Pakistan’s textile exporters. The industry already bears a heavy load of expensive electricity and gas rates, enduring power and gas loadshedding, an uncomfortable bank markup rate, excessive taxation, perennially low productivity of workers, minimal economies of scale, and a threatening law and order situation; the chips are stacked up against them, and now this FTA is a loaded dice.
Decision-makers in Islamabad have yet to come out of their cocoon, while the industry has sounded the death knell (although a dirge is frequently sung by industry leaders). The usual ‘appeal’ advertisements in living colour are placed in leading newspapers but are now structured to portray more pictures of policymakers with every new appeal; as always, the industry leaders are assured of full assistance and support.
Fantastic announcements emerge from Islamabad to soothe the exporters: “export-led growth”, “export emergency”, and “exporters are ambassadors” routinely emanate from the capital, but then there are no visible signs of implementation.
About 130 years ago, American Editor Charles Dudley Warner, in his editorial, wrote, “Everybody talks about the weather, but nobody does anything about it”. This is the stark truth when it comes to Pakistan’s export potential. Therefore, actual exporters and the government must maintain optimism and ensure that the EU GSP+ boat does not leave the shores without them being on board.
The cautionary signal is that GSP+ is only a short- or medium-term booster, not a complete panacea for Pakistan’s alarming economic situation. The real remedy is a mix of factors, including diversifying products, tapping new markets, a sense of urgency, and having government and stakeholders on the same page.
Uncertainty in the global marketplace persists, as evidenced by mounting tensions, strategic realignments, and legal challenges. There will be heightened volatility and aggressive developments in global trade, as exporters cope with the challenges of tariff recalibration and realignment of economic pacts. No wonder the EU-India FTA is being touted as the “mother of all deals”.
Our options are limited; factors that should be discussed in Islamabad — as well as the many chambers and trade associations — include addressing utility rates, focusing on economic diplomacy, the ramifications of climate change, green skills development, green vocational training, and improved efficiency and productivity.
Whether Pakistan is at an advantageous position to undertake progressive transformation or whether the apathetic, nonchalant, parochial, bureaucratic mindset and easy-going attitude would again put a spanner in achieving export-led growth must be the top priority; Pakistani exporters would lose out on prospects to make their mark in the global marketplace.
The overarching point is whether exporters would continue at the same snail speed to enhance exports, despite assiduously complying with the GSP+ Conventions and conditionalities or whether they want to scale to new heights. Will they be able to compete with India or other regional nations in increasing their market share and even protecting from nations encroaching on whatever share they hold is the focal concern.
If they are unable to do so, then Pakistan may just forget about renewing its GSP+ status after 2027, take it easy on compliance, divert attention to China or the African market, or just endeavour to survive by quoting low prices for their products. The clouds are dark, and the signs on the horizon are ominous.
The writer is the President of the Employers Federation of Pakistan.
Published in Dawn, The Business and Finance Weekly, February 9th, 2026
