Close ties between Pakistan and the EU

Genetically Pakistan is a peace-loving nation and promotes friendly relations with all other nations, countries, and communities. It established diplomatic relations with almost all countries around the world.

However, its special ties with the EU are admirable, which are based on mutual respect, equality, and according to the UN charter of friendly relations among nations.

In commemoration of the 60th anniversary of the establishment of diplomatic relations between Pakistan and the European Union, a photographic exhibition was launched last evening in Brussels at an event organized by the Pakistan Mission to the European Union in collaboration with European External Action Service (EEAS).

The photo exhibition that showcases Pakistan’s rich history, heritage, architecture, tourism, sports, as well as religious, cultural, and culinary diversity was inaugurated by the Acting Foreign Secretary Jauhar Saleem, who is visiting Brussels to lead the 8th Round of Pak EU Political Dialogue. The inauguration ceremony was attended by officials of European institutions, diplomats, intelligentsia, and media persons.

In his remarks on the occasion, the Acting Foreign Secretary Jauhar Saleem noted the positive trajectory in bilateral relations between Pakistan and the EU and the growing partnership in political, economic, and trade domains. He emphasized that the Pakistan-EU relationship was a befitting representation of the value of working together on global challenges — such as climate change, food security, and sustainability, which required a multilateral and interdisciplinary approach.

The Acting Foreign Secretary underlined the enormous potential for further expanding Pakistan-EU ties under the Strategic Engagement Plan. He expressed Pakistan’s readiness to advance this productive and constructive partnership, especially in areas of science and technology as these are the most relevant sectors for the attainment of socio-economic development.

EU-Pakistan bilateral trade relations are governed by the Cooperation Agreement from 2004. Enhancing bilateral trade and investment is also part of the EU-Pakistan 5-year Engagement Plan from 2012.

Pakistan is a major beneficiary of the trading opportunities offered by the EU Generalised Scheme of Preferences (GSP). From 1 January 2014, Pakistan benefits from generous tariff preferences (mostly zero duties on two-thirds of all product categories) under the so-called GSP+ arrangement aiming to support sustainable development and good governance. In order to maintain GSP+, Pakistan has to keep ratification and effectively implement 27 core international conventions on human and labor rights, environmental protection, and good governance.

Trade picture

•             The EU is Pakistan’s second most important trading partner, accounting for 14.3% of Pakistan’s total trade in 2020 and absorbing 28% of Pakistan’s total exports.

•             In 2020, Pakistan was the EU’s 42nd largest trading partner in goods accounting for 0.3% of EU trade.

•             Pakistani exports to the EU are dominated by textiles and clothing, accounting for 75.2% of Pakistan’s total exports to the EU in 2020.

•             Pakistan’s imports from the EU are mainly comprised of machinery and transport equipment (33.5% in 2020) as well as chemicals (22.2% in 2020).

•             From 2010 to 2020, EU-27 imports from Pakistan have almost doubled from €3,072 to €5,537 million. The growth of imports from Pakistan has been particularly fast since the award of GSP+ (€5,515 million in 2014).

The EU and Pakistan have set up a Sub-Group on Trade to promote the development of two-way trade. The Sub-Group on Trade, set up under the auspices of the EU-Pakistan Joint Commission, is the forum for discussions on trade policy developments more broadly. It also aims to tackle individual market access issues that hamper trade between the two parties.

While Pakistan’s economy holds considerable potential, high costs of doing business, complex regulation, and infrastructure bottlenecks all have a detrimental effect on trade and growth. Pakistan’s trade regime and regulatory environment still remain comparatively restrictive.

Textiles and clothing account for over 80% of Pakistan’s exports to the EU. While the textiles and clothing industry is the backbone of Pakistani exports, relying so heavily on one product category carries risks for Pakistan. Trade diversification would play an essential role in this respect. The granting of GSP+ preferences in 2014 should stimulate Pakistan’s efforts toward diversification.

As a result of GSP+, more than 78% of Pakistan’s exports enter the EU at preferential rates.

Around 80% of the textiles and clothing articles imported to the EU from Pakistan enter the EU at a preferential tariff rate. Around a quarter of these imports are bed linen, table linen and toilet, and kitchen linen.

Trade preferences

•             The EU supports Pakistan’s integration into the world economy and its sustainable economic development by granting it GSP+ trade preferences.

•             Thanks to GSP+ more than 76% of Pakistan’s exports, including textiles and clothing, enter the EU duty and quota-free. This represents almost 20% of Pakistan’s exports globally. The GSP+ preferences should also help Pakistan diversify its export basket.

•             In order to maintain GSP+ Pakistan has to keep ratification and effectively implement 27 core international conventions on human and labor rights, environmental protection, and good governance. This is closely monitored by the European Commission and also under permanent scrutiny by the EU Member States and European Parliament, as well as civil society.

It is desired to further strengthen the existing ties. Certainly, there is a potential to grow further

and a strong will on both sides, it is expected, that with the passage of time, we may touch the

peaks soon.

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