GSP+ is not a gift. Pakistan can lose it

Pakistan’s most valuable trade arrangement is being renewed on terms the country has never had to meet. For twelve years, GSP+ has asked Pakistan to ratify international conventions. From 2027, it will ask whether those conventions are actually working. That is a different test, and on current evidence Pakistan is not ready for it.

The stakes are hard to overstate. The European Union buys more than a quarter of Pakistan’s exports. In 2024, about €7.5 billion of GSP+ eligible goods went to Europe, mostly textiles and clothing, and duty-free access saved exporters roughly €732 million. Without it, Pakistani garments would face tariffs of around 12%. In a trade where orders move over a few cents, that margin decides who gets the business.

In June, the EU published a new Generalised Scheme of Preferences that runs from January 2027 to 2036. Every current GSP+ country must apply again. Pakistan keeps its preferences until the end of 2028, and Brussels has said plainly that approval will not be automatic. The list of conventions grows from 27 to 32, adding two International Labour Organisation (ILO) conventions, on labour inspection and on tripartite consultation between government, employers, and workers. The Paris Agreement replaces the Kyoto Protocol. Any union, NGO or worker can now lodge a complaint directly, and the urgent withdrawal procedure has been cut from six months to two.

The EU’s July monitoring report has already marked Pakistan’s homework. It welcomed new laws, but concluded that “much of the progress remained legislative or administrative” and called child labour “a major challenge despite new action plans.” Read plainly, Pakistan legislates and does not enforce.

Nowhere is that gap wider than on the factory floor. Labour inspection, now a named GSP+ obligation, has been hollowed out for years; Punjab once restricted routine inspections altogether to attract investment. Provincial departments have too few inspectors and publish almost nothing. Auditors hired by foreign brands routinely find workers missing from social security and pension rolls. Effluent standards exist, but most dyeing units are rarely tested by the state. Each of these is evidence that the law lives on paper, and the EU now reads that evidence closely.

The irony is that Pakistan’s export industry already generates more proof of compliance than any regulator. A large mill hosts twenty or more social audits a year for its buyers, under BSCI, SMETA, WRAP and SLCP, and reports energy, water and chemical data through the Higg index and ZDHC. Almost none of this reaches the state, and none of it reaches the EU’s assessment. Industry treats compliance as the price of the next order. Government treats GSP+ as a diplomatic file to be defended every two years. Neither has accepted that factory-level compliance is now national trade policy.

Our competitors are not waiting. India concluded a free trade agreement with the EU in January, and once it takes effect Indian textiles will enter Europe duty-free. Bangladesh keeps duty-free access until late 2029 despite graduating from least developed country status. A Pakistan without GSP+ would pay 12% where its two closest rivals pay nothing.

The reapplication window is a chance to change the evidence, not just the paperwork, and Pakistan should move on three fronts at once.

First, turn existing factory data into national evidence: industry associations and provincial labour departments should pool verified audit results, with workers’ identities protected, into a single compliance record that shows Brussels how many factories meet wage, hours and safety standards and how that number rises each year.

Second, rebuild enforcement where the new conventions bite: fund labour inspection with digital, published results, make social security registration a simple online step linked to exporters’ payrolls, and let tripartite councils meet with genuine worker representation.

Third, bring buyers in as partners rather than auditors. European brands gain directly from Pakistan’s duty-free access; they should share audit findings with the national effort and co-finance remediation in the factories they source from. This is the logic of shared responsibility that Alternate Development Services is advancing through its Shared Transition Responsibility Movement (STRM).

The government has formed a committee to steer the reapplication. If its task is to produce a better dossier, it will miss the point. The EU is no longer asking what Pakistan has promised. It is asking what has changed for the worker on the factory floor.

GSP+ was a bet that Pakistan would reform. In 2027, Europe starts checking the result.

The article does not necessarily reflect the opinion of Business Recorder or its owners.