Issue Brief on “How can Pakistan Fully Exploit its GSP Plus Status?”

In 2014, Pakistan was awarded the GSP Plus status which gave tariff free access to certain Pakistani goods to the EU markets. This has significantly improved EU-Pakistan trade relations with an increase of 38% in Pakistan’s exports to EU since 2014.[1] European Union is Pakistan’s one of the largest trading partners and is the destination for more than 25% of Pakistan’s exports.[2] Of these, 76% are covered by GSP plus, hence making Pakistan one of the largest GSP plus beneficiary.[3] However, Pakistan has failed to fully exploit the GSP plus status and achieve the trade potential that the European markets can offer.

Pakistan’s declining exports are a big cause of concern for the country’s leading economists. Pakistan’s total exports saw a sharp decline of almost US$ 5 billion between fiscal years of 2013-14 and 2015-16.[4] Numerous reasons have been identified for the falling exports which include overdependence on a few items and markets, market imperfections, energy crisis, institutional rigidities, lack of skilled labor[5] and modern technology.

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