EU hints at new legislation to clinch GSP plus deal beyond 2027

ISLAMABAD: Amid failure of Pakistani exporters to diversify products, the European Union (EU) is giving indications about increased legislation from parliament for the re-admission of immigrants, increased transparency, enhanced standards, ending of forced disappearances and protection of human rights for clinching new GSP Plus beyond 2027.

The Generalised System of Preferences (GSP) Plus has been extended until 2027. Earlier, it was reaching its expiry last December 2023.

Now the EU’s new parliament has been elected and it might start working on new legislation for GSP Plus by the second half of 2025. Currently, it’s premature to judge anything about the upcoming legislation but keeping in view discussions held on the time of transitionary arrangement from 2024 to 2027, some new legislation might be on the cards about the re-admission of immigrants, increased transparency requirements and abolishment of forced disappearances for clinching the new GSP Plus arrangement. The EU arranged a media team visit of Pakistani journalists from different media outlets last one week and held background discussions to throw light on various aspects of EU-Pakistan relations in different spheres including trade, economic, defence and diplomatic relations between the two sides.

There are two incentive- based arrangements including Everything But Not Arms (EBM) for least developed countries including Bangladesh whereby they were given incentives on all tariff lines except arms. For Pakistan, there is GSP Plus whereby almost 66 percent tariff lines are being incentivized through zero rating on exports.

According to official data available with The News, Pakistan’s exports to EU were mainly restricted to textiles and stood at 6.64 billion Euro in 2021 which went up to 9.4 billion Euro in 2022, witnessing an upsurge by 43 percent. However, the exports to EU declined by 16 percent in year 2023-24 and stood at 7.9 billion euros.

Pakistan was awarded GSP plus status on January 1, 2014 after the country had ratified 27 international conventions and committed to implement all of them.

The EU serves as a special incentive arrangement to promote good governance and sustainable development by facilitating trade. The incentive grants Pakistan zero-rated or preferential tariffs on nearly 66% of tariff lines, enhancing the country’s ability to export to the EU market. Pakistan’s imports from EU stood at 5.5 billion euros in 2021 and declined by 3 percent in 2022 and stood at 5.38 billion euros in 2022.

However, the imports restriction witnessed a decrease of 27 percent in 2023 whereas Pakistan’s imports from EU stood at 3.93 billion euros in 2023. Pakistan’s top ten exports items included boy’s trousers, bedlinen of cotton, toilet linen, printed bedlinen, women or girl’s trousers, jersey, pullovers, husked or brown rice and semi milled or wholly milled rice.

The top ten imports from EU included waste and scrap of iron steel, lights oils and preparations of petroleum or bituminous minerals, vaccine of human medicines, wheat and meslin (excluding seed for sowing and durum wheat), waste and a scrap of aluminum, machinery for working rubber or plastics, medicaments consisting of mixed or unmixed products for the therapeutic or prophylactic purpose, high erucic rape or colza seeds, waste and scrap of alloy steel.

The GSP plus played an important role for EU-Pakistan bilateral trade ties. From 2014 to 2022, Pakistan’s exports to the EU increased by 108% whereas imports from the EU increased by 65% and the total trade volume increased from EUR 8.3 billion in 2013 to EUR 14.85 billion.

Pakistan’s garments, bedlinen, terry towels, hosiery, leather, sports and surgical goods and similar products enter the EU market availing the GSP+ concessions.