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

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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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