Karoblis says next GSP+ to be linked with ‘compliance’

ISLAMABAD: European Union Ambassador to Pakistan Raimundas Karoblis said that Pakistan has entered a ‘very critical’ juncture in its trade relationship with the European Union, with continued preferential access to its largest export market far from guaranteed unless Islamabad demonstrates credible and measurable progress on human rights, labour rights, environmental commitments and good governance. While talking to Business Recorder, Karoblis said the next phase of the EU’s Generalised Scheme of Preferences Plus (GSP+) would place significantly greater emphasis on implementation rather than merely ratifying international conventions or putting legislation on the statute books. “GSP+ preferences are not for granted, ” the ambassador said, stressing that there were “far from guarantees” over Pakistan’s position under the new system and that necessary political decisions now rested with the government. He later described the country as being at a “very critical juncture”. READ ALSO: Pakistan committed to closer EU ties, trade expansion under GSP+: PM The warning comes at a consequential moment for Pakistan’s export economy. According to the European Commission’s latest figures, bilateral trade in goods between Pakistan and the EU reached €12. 2 billion in 2025, with the EU running a €5. 2 billion goods-trade deficit with Pakistan. The bloc accounted for 14. 1 per cent of Pakistan’s total trade and remains Pakistan’s largest export destination, while Pakistan is the biggest beneficiary of the EU’s GSP+ arrangement. More than 85 percent of Pakistan’s exports currently enter the EU duty- and quota-free under GSP+, while more than 88pc of Pakistani exports eligible for tariff concessions actually entered the bloc at preferential rates in 2024. Around 89pc of Pakistan’s textile and clothing articles imported by the EU benefited from preferential tariffs. That makes the approaching transition to the EU’s new GSP regime considerably more than a diplomatic or human-rights issue: it is a direct competitiveness question for Pakistan’s textile industry and its broader external account. The EU’s new GSP Regulation was signed in June and published in the Official Journal on June 22, 2026. It will apply from January 1, 2027, for the next 10 years and expands the number of international conventions relevant to GSP+ from 27 to 32. It also strengthens monitoring, introduces tougher sustainability conditionality and gives the EU additional mechanisms for withdrawing preferences in serious cases. The revised arrangement includes new obligations covering, among other areas, disability rights, children in armed conflict, labour inspection, tripartite labour consultation and transnational organised crime, while the Paris Agreement replaces the Kyoto Protocol among the climate-related commitments. Importantly, Pakistan does not face an automatic tariff cliff on January 1, 2027. Under the transition provisions, countries already benefiting from GSP+ at the end of 2026 can submit a fresh application under the new regime, with their existing tariff preferences maintained while that application is assessed. Current beneficiaries are given up to two years after the new regulation begins to submit their applications. But Karoblis made clear that continuity during the transition should not be confused with guaranteed approval under the new framework. “The question is more about implementation, ” he said, explaining that applicants would be expected to present a credible action plan setting out concrete measures, timelines and performance indicators covering implementation of the conventions. The application will initially be assessed by the European Commission before being considered individually in the EU Council, representing member states, and the European Parliament. The ambassador pointed to the European Commission’s latest GSP assessment, released on July 16, which acknowledged progress by Pakistan in several areas but also identified serious concerns. The Commission’s 2023-2025 GSP review is the final monitoring report under the outgoing framework and comes immediately ahead of the tougher 2027-2036 regime. The wider report says beneficiary countries have made progress in a number of areas but continues to flag shortcomings in human rights, access to remedy, accountability and implementation of labour rights. Karoblis said Pakistan had received recognition for improvements involving women’s rights, measures addressing child marriage and violence, anti-torture legislation, a reduction in the scope of offences carrying the death penalty and the continuation of the defacto moratorium on executions. But, he said, the assessment also identified “regression” in some areas. Among the issues he specifically identified were enforced disappearances, extrajudicial killings, freedom of expression and the situation of journalists, as well as, concerns relating to minorities. “These issues are crucial, ” he said, adding that they would also be important during the reapplication process. Karoblis stressed that these assessments were not simply European political standards being imposed on Pakistan. According to him, they are principally based on the findings of UN treaty-monitoring bodies, committees, working groups and special rapporteurs assessing compliance with conventions to which beneficiary countries themselves are parties. “We are not asking (for) or imposing new standards, ” he said, arguing that the GSP+ requirements concern implementation of commitments already made under international conventions. The distinction is significant because the new scheme explicitly shifts attention toward implementation in practice. For Pakistan’s exporters, the consequences of eventually losing GSP+ could be substantial. Karoblis warned that in a scenario where preferences were revoked or not continued, Pakistani textile producers could face tariffs of roughly 9pc to 12pc on products currently benefiting from zero-duty access. Such an increase, he argued, would be difficult for parts of Pakistan’s industry to absorb and could prompt European importers to shift sourcing toward countries retaining preferential access. It would be quite difficult for industries to adjust to tariffs at those levels, he said. He pointed particularly to Bangladesh and Mediterranean producers such as Egypt and Tunisia as competing textile suppliers. An additional competitive challenge is emerging from India. The EU and India concluded negotiations on a landmark free trade agreement on January 27, 2026. The deal is not yet in force — its legal text must still be finalised, signed and go through the required procedures before becoming binding — but textiles are among the Indian sectors identified by the European Commission as beneficiaries of the agreement. Karoblis said the eventual implementation of the EU-India trade agreement would further change the competitive landscape for Pakistani exporters, particularly if Pakistan simultaneously faced reduced preferential access. The ambassador nonetheless described GSP+ as an exceptional trade opportunity that has already delivered major gains to Pakistan. Pakistan’s exports to the EU, he said, rose from around €4. 5 billion in 2013, before GSP+ took effect, to a peak of €9. 4 billion in 2022 — an increase of about 108. 5pc. Pakistan has also emerged as the number-one beneficiary among current GSP+ countries. But Karoblis argued that Pakistan had failed to exploit the arrangement’s full potential because its export structure remained excessively dependent on textiles and clothing. “The potential is not utilised, ” he said. Leather, agriculture and IT services were among areas he believed could be developed further. He was particularly critical of Pakistan’s overall export capacity, comparing the country’s exports with substantially smaller economies and pointing to high energy costs, bureaucracy, taxation and other structural impediments to competitiveness. An economy of roughly 250 million people, he argued, should be capable of generating a considerably larger export base, while maintaining a stronger manufacturing sector alongside the expansion of services. Karoblis also linked GSP+ compliance with Pakistan’s ambitions to attract European investment. Rule of law, predictable regulation and functioning commercial dispute-settlement mechanisms were not abstract governance questions, he argued, but factors directly influencing whether international companies were prepared to commit capital. The ambassador recalled restrictions on profit repatriation and other difficulties faced by foreign investors during Pakistan’s recent economic crisis, while noting that the government’s IMF-backed reform programme and efforts to improve the business environment were moving in a positive direction. Around 500 European companies are currently present in Pakistan, according to the ambassador. He said the EU wanted to build on this presence through the EU-Pakistan Business Network and the high-level business forum, which brought together more than 1, 000 participants and identified potential cooperation in green textiles, agriculture, mining, logistics, IT and fintech. European financing is also beginning to return. In April, the European Investment Bank announced €160 million in financing for Pakistan — €100 million for flood-resilient housing reconstruction in Sindh and €60 million for water infrastructure in Karachi. The financing marked EIB Global’s return to Pakistan after a decade and forms part of the EU’s Global Gateway strategy. Karoblis said energy, transport and connectivity could emerge as major areas of future cooperation under Global Gateway, alongside vocational training and private investment. He also highlighted the EU’s development assistance, saying its bilateral grant portfolio for Pakistan during the 2021-2027 financial framework stood at around €400 million, with roughly another €100 million coming through regional and global programmes — approximately half a billion euros in grants over the seven-year period. While Pakistan enjoys a sizeable merchandise trade surplus with Europe, the ambassador acknowledged concerns in EU member states about the imbalance. He said one reason was straightforward: the EU grants zero-duty treatment to a wide range of Pakistani exports under GSP+, whereas Pakistan maintains comparatively high tariffs on numerous European products. Customs procedures and other trade-facilitation issues also constrain European exports, while preferential arrangements enjoyed by competitors such as China create additional pressure. European exports to Pakistan, he said, include machinery used by Pakistan’s textile and agriculture sectors and could increase substantially if market-access conditions improved. Despite those concerns, Karoblis portrayed the broader relationship as being on an upward trajectory. He cited expanding political engagement, the EU-Pakistan Strategic Dialogue and cooperation extending beyond trade into development, climate, education, science, research, digitalisation and investment. EU foreign policy chief Kaja Kallas visited Islamabad on June 1 for the eighth EU-Pakistan Strategic Dialogue, where GSP+, international trade, climate resilience, digital infrastructure, clean energy, migration and mobility were among the issues discussed. But the ambassador’s message on GSP+ was unmistakable: the economic relationship now intersects directly with Pakistan’s governance and rights commitments. The EU, he said, remained willing to cooperate with Islamabad on the action plan covering all 32 conventions and had received signals that the government was prepared to engage. Yet market access under the new system would ultimately depend on what Pakistan does in practice. For an export economy still heavily reliant on textiles, the difference between continuing to enter Europe largely tariff-free and competing after a 9–12pc duty would be significant — particularly as other Asian exporters negotiate deeper access to the same market. The next GSP+ assessment, therefore, is no longer simply about preserving a decade-old trade concession. It is increasingly about whether Pakistan can preserve one of its most important competitive advantages in the global export market. Copyright Business Recorder, 2026

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