Pakistan Bulletin
An up-to-date and informed analyses of key issues of Pakistan.
GSP+ Scheme and Pakistan
December 2023
Pakistan being one of the largest beneficiaries of the European Union’s Generalised Scheme of Preferences Plus, has struggled to translate its benefits into achievements in democratic consolidation, socioeconomic development and protection of the rights of vulnerable communities.
The European Union (EU) introduced a reformed GSP scheme in 2014 aimed to incentivize developing countries to adhere to sustainable development by ensuring compliance with international standards relevant to labour and human rights, governance and environment. The EU awarded GSP+ status to Pakistan, along with a select few developing countries, ensuring their eligibility for the status and enabling them to enjoy trade benefits from 2014 onwards.
According to the European Commission’s 2018 midterm review report, the scheme continued to be effective in fostering sustainable development, improved compliance with human and labour rights standards, and job creation in beneficiary countries. However, some labour and human rights activists argue that while it has contributed to strengthening trade relations between the EU and beneficiary countries, the socioeconomic benefits of the scheme have not sufficiently reached the labour force and vulnerable groups.
With regard to GSP+ compliance obligations, the broader consensus is that the status of labour and human rights compliance has remained compromised in beneficiary countries, including Pakistan.
Pakistan had achieved substantial relative economic stability, which has partly contributed to an increase in exports to EU since 2013. However, the country now faces severe fiscal deterioration due to domestic and global economic challenges. According to EU’s 2023 GSP+ report, the European Union has become Pakistan’s second most important trading partner, absorbing 29.8% of the country’s total exports. Despite this, a recent Pakistan Business Council’s report indicates a fluctuating trajectory of exports to the EU with increase from US$7.67 billion in 2013 to US$13.6 billion in 2021, followed by a decline to US$9.3 billion in 2022. Moreover, the EU’s third biennial report (2019) on GSP+ anticipated Sri Lanka to be classified as a middle-income economy in 2018-19, leading to an exit from GSP+ status and entry into a Free Trade Agreement (FTA) with the EU. However, both Sri Lanka and Pakistan experienced economic downturns afterwards.
The examples of both Sri Lanka and Pakistan highlight a concerning trend. Despite increased global connectivity, assistance from International Financial Institutions (IFIs) and the EU’s incentivized trade facilities, the economies of these developing countries experienced significant decline. This raises questions about how international development cooperation could be reformed to effectively achieve sustainable development in the developing world.
With regard to GSP+ compliance obligations, the broader consensus is that the status of labour and human rights compliance has remained compromised in beneficiary countries, including Pakistan. Human Rights Watch – in its comment piece on November 21, 2023 – notes that GSP+ rights conditions lack credibility due to a lack of clarity in compliance benchmarks. HRW further observes that, despite serious labour and human rights violations, the EU remains reluctant to put pressure on the beneficiary countries to abide by the GSP+ obligations. The absence of action on Pakistan’s part to introduce legal protection against enforced disappearances, prevent torture and illegal detentions, and ensure media freedom, has been flagged repeatedly. Pakistan was similarly required to extend labour laws to the Export Processing Zones (EPZs) and Special Economic Zones (SEZs), and strengthened its labour inspection system. The country’s claims of extending the same has been dubbed as “ambiguous” by labour rights groups. Moreover, continuous crackdown on civic spaces, particularly NGOs, has remained a burning question. GSP+ monitoring has had limited impact on Pakistan government’s policies towards civil society.
While critically analyzing Pakistan’s compliance to GSP+ conditionalities, it would be equally important to review the support infrastructure extended to Pakistan to ensure compliance. According to the EU’s recently released GSP+ assessment report for Pakistan, an EU project was implemented between 2019 and 2022 to support human rights compliance in the country. This multimillion-euro project was implemented together by the Federal Ministry of Human Rights and an international audit firm Earnest and Young. Surprisingly, the report remains silent about the outcomes of this project. The report also outlines the 2021-27 EU-Pakistan Multi-Annual Indicative Programme (MIP) which is relatively more focused on green growth, human capital, post-flood recovery and governance. Given the GSP+ context, the effectiveness of the MIP in achieving its objectives should be assessed in the backdrop of EU’s commitment towards human rights in Pakistan.
The examples of both Sri Lanka and Pakistan highlight a concerning trend. Despite increased global connectivity, assistance from International Financial Institutions and the EU’s incentivized trade facilities, the economies of these developing countries experienced a significant decline.
Pakistan’s history of compliance with international human rights standards is evidently linked to seeking international leverage, rather than solely focusing on domesticating human rights reforms. For instance, Pakistan ratified the International Covenant on Economic, Social and Cultural Rights (ESCR) in 2008, followed by the Covenant on Civil and Political Rights (CCPR) and the Convention Against Torture (CAT) in 2010, primarily to qualify for GSP+ status. Subsequently, the country struggled to submit overdue reports to the UN Treaty bodies to ensure compliance with obligations associated with the EU’s trade incentive package. Moreover, Pakistan introduced its first National Action Plan on Human Rights and has established the National Human Rights Institutions (NHRIs) including the National Commission for Human Rights (NCHR) and the National Commission for the Rights of the Child (NCRC). However, successive leaderships of these institutions have struggled to achieve independence following international standards.
On the eve of the expiry of the current GSP regime by December 2023, the EU extended the existing scheme for another four years as an interim arrangement. This grace period is an opportunity for Pakistan to maximise the benefits of the GSP scheme for sustainable development by encompassing an improved economy, democratic consolidation and respect for people’s rights.
Join Our Mailing List
Get the latest news and updates from our team