Islamabad: The EU's ambassador to Pakistan has said that the country should not take its preferential status under the EU Generalised Scheme of Preferences (GSP+) framework that is set to expire later this year. Paksitan is required to seek inclusion in the successor regime, which has stricter requirements for entry

“The situation is not certain. And, of course, GSP+ preferences cannot be taken for granted," said ambassador Raimundas Karoblis

Though the new trading framework will take effect with the turn of the year, Pakistan will continue to receive preferences during a two year transition period ending on December 31, 2028.

However transition does not guarantee the facility will continue for the next two years or automatically enter Pakisan into the new framework. A European Commission report covering the years 2023-25, released in July this year, concluded that Pakistan faced financial compliance issues and regressed in a number of key areas while making only limited positive changes. It noted that much of the progress had yet to translate into improvements on the ground. “There are areas of regression, and of course, this means that the government needs to address them,” Mr Karoblis said, adding that this applied to the implementation of the current GSP+ convention reapplication for the new scheme.

At last week's foreign office press briefing outgoing spokesperson Tahir Andrabi said that while Pakistan appreciated the commission’s recognition of its continued compliance, the report’s overall narrative did not present “a sufficiently balanced picture of Pakistan’s performance”.

“GSP+ remains central to Pakistan’s economic relationship with the European Union, and we will remain constructively engaged with the EU and remain committed to the effective implementation of the international conventions underpinning the GSP framework,” he continued.

Dependence on the framework is particularly high in the textile and clothing sector, which accounts for 70 to 76 percent of Pakistan’s exports to the European market. Leather products, prepared foods and beverages are other major sectors.

Loss of preferential access would, therefore, have consequences beyond the immediate value of tariff exemptions and products such as textiles and clothing could lose competitiveness in one of the country’s most important export markets.

The framework provides for partial or full withdrawal of preferences in cases of serious failure to comply with the underlying conventions. There are precedents at both ends of the spectrum, with Bolivia facing partial withdrawal and Sri Lanka previously losing its preferences altogether.

Mr Karoblis, said no determination had so far been made in Pakistan’s case. “So far, it requires further investigation as to whether the regression in these specific areas has already reached the threshold concerning the implementation of the regulation, and whether it has reached the level that could trigger a partial or full temporary suspension,” he said.