Pakistan Risks EU Trade Status Amid Political Crisis

The Government of Pakistan faces a significant risk of losing preferential market access to the European Union under the Generalised Scheme of Preferences Plus (GSP+) framework. This threat follows a domestic political crisis intensified by the state's takeover of the Khyber Pakhtunkhwa provincial government, alongside reports of military abuses, arbitrary detentions, and restrictions on fundamental freedoms.

A European Union assessment indicates that while Pakistan has made some administrative and legislative progress, these changes have not resulted in measurable improvements on the ground. The EU flagged regressions in judicial independence, labor rights, and civil-society space, specifically citing concerns over election rigging, forced labor, and the growing influence of the military. Reports also highlight an increase in extrajudicial killings and enforced disappearances in the Kashmir and Balochistan regions.

The economic stakes are substantial, as the EU market accounts for 28% of Pakistan's total exports. In 2024, Pakistan exported 7.5 billion euros of GSP+-eligible goods and received 732 million euros in tariff exemptions. A suspension of these benefits would force manufacturers to face tariffs up to 12% on certain garments. Furthermore, EU GSP reforms beginning early next year will require Pakistan to reapply for preferential access beyond 2028.