EU-Pakistan Trade Relations: The Role of GSP Plus Status and Pakistan’s Enhanced Access to EU Markets

Abstract

The Generalised System of Preferences (GSP) Plus is an instrument through which the European Union (EU) intends to encourage not only free trade with the developing countries by providing them tariff free access to the EU markets, but also promote sustainable development. The GSP Plus status has also benefitted Pakistan in attaining tariff-free access to the EU markets for most of its export items. This has increased Pakistan’s exports to the EU by more than 47.25 per cent, especially textile exports which have risen by 66.6 per cent since 2013. This paper analyses to what extent the GSP Plus has helped in enhancing Pakistan’s exports to the EU and removed the constraints that affect the EU-Pakistan trade relations while putting forward recommendations for enhancing EU-Pakistan trade relations in the future. If fully utilised, this paper argues, the GSP Plus status has the ability to earn some extra foreign reserves for a country like Pakistan which is already facing a severe current account deficit, public debt and balance of payment issues.