Unlocking Pakistan's trade potential with Europe.

KARACHI -- The European Union (EU), a conglomerate of 27 different countries, is the largest destination market for Pakistani exports. According to the trade statistics provided by the International Trade Centre's Trademap.org, the EU imported more than $12 billion worth of goods from Pakistan in 2022. The EU provides Pakistani exporters with GSP (Generalised Scheme of Preferences) Plus concessions on the exports of goods as an incentive to pursue good governance and sustainable development. Although there are several conditions attached by the EU to become a recipient of this scheme, it provides Pakistani exporters, particularly of textile products, with duty-free access to the European market. The imports into the EU from Pakistan increased from $5.4 billion in 2013 to $12 billion in 2022, an increase of over 120% in 9 years. Comparatively, exports from India, the largest exporter in the South Asian region, and exports from the Philippines, the largest exporter to the EU among GSP Plus beneficiaries, have increased by less than 100% in the last 9 years. Pakistan would have lost at least $3 billion in exports to the EU if the status was revoked, signifying the importance of this unilateral liberalisation programme for the Pakistani economy. However, several challenges remain for Pakistani exporters that must be addressed to improve their export capabilities.

I recently authored a report on the export pattern of Pakistan to the EU, published by the Friedrich Naumann Foundation for Freedom in collaboration with the PRIME Institute. The report, titled 'Pakistan and EU Trade Potential: The Bottlenecks and Roadmap for Reforms', maps out the trade patterns between Pakistan and the EU, identifies some obstacles, and charts out the reform path. The report analyses the trading patterns between Pakistan and the EU and compares them with those of regional counterparts, Bangladesh, India, and Vietnam. Exports from Pakistan and Bangladesh to the EU are heavily dominated by textile products, while those from India are petroleum products, pharmaceuticals, and smartphones. Exports from Vietnam are dominated by electrical and electronic goods such as smartphones. Both India and Vietnam export a relatively more diversified range of products to the EU than Pakistan. The top 15 products from Pakistan and Bangladesh are similar. Even within the textile industry, Pakistan mainly exports cotton-based products. While the share of cotton-based products in the...