Pakistan Bulletin

An up-to-date and informed analyses of key issues of Pakistan.

Pakistan’s Compliance Complications: GSP+ and Beyond

May 2024

The intersection of international trade dynamics, human rights obligations, and economic sustainability presents a complex challenge for Pakistan as it navigates the requirements of the GSP+ scheme.

After a decade of the GSP+ scheme, which was introduced in 2014, the European Parliament approved Corporate Sustainability Due Diligence Directive (CSDDD) in April 2024. The directive requires firms and their upstream and downstream partners, including those involved in supply, production and distribution to prevent, end or mitigate their adverse impact on human rights and the environment. These impacts include slavery, child labour, labour exploitation, biodiversity loss, pollution and destruction of natural heritage. Germany, a significant trade partner of Pakistan has already initiated a mandatory human rights due diligence law which requires companies to safeguard the human rights of workers within their supply chains.

The GSP+ scheme, awarded by the EU to Pakistan in 2014, is now extended till December 2027, and offers preferential access to Pakistan’s exports to the European Markets. However, this tariff preference comes with the conditions to ratify, maintain ratification and ensure compliance with 27 international conventions on human rights, labour rights, climate change and good governance.

Given Pakistan is one of the major trading partners of the EU: from 2014 to 2022, Pakistan’s exports to the EU increased by 108%, according to EU’s Fourth GSP Report. Twenty eight percent of Pakistan’s exports are directed to the EU markets. Pakistan’s garments, bed linen, terry towels, hosiery, leather, sports, surgical goods and other similar products enter into the EU markets availing the GSP+ preferences.

Given that in the regime of increasing compliance obligations, the government and business community of Pakistan must reconsider their approach towards ensuring international compliance to maintain trade on track and to achieve competitiveness. For instance, compliance failure can lead to withdrawal of GSP+ status. Furthermore, continuation of the status is conditional to the strength of measures by Pakistan to comply with the obligations or not.

According to the Sindh Human Rights Commission's report on GSP+, non-compliance with international labour and human rights obligations in Pakistan is largely due to institutional malpractices, weaknesses in the justice system and legislative gaps.

A recent study estimates that if GSP+ is revoked, Pakistan will lose more than one-third of its exports to the EU. Commenting on this study, an article by the All Pakistan Textile Mills Association on their website, describes a potential loss of GSP+ status as posing an existential threat to Pakistan’s textile sector, the country’s largest export industry. “Other resulting threats, such as loss of employment opportunities and decent livelihoods, gender discrimination, and non-compliance to human and labour rights will significantly hinder Pakistan’s advancement to accomplish sustainable socio-economic development,” APTMA fears.

The EU has planned to extend the GSP+ scheme beyond 2027 and is expected to introduce a framework for current GSP+ beneficiary countries to adapt to the new requirements. This includes offering an adequate transition period and requiring the submission of implementation plans against obligations. Moreover, the EU has increased the burden of compliance obligations for GSP beneficiary countries by incorporating six additional international conventions into the existing list of 27 treaties. These conventions are relevant to improving the protection of labour rights, child rights, rights of persons with disabilities, and environment, as well as to control transnational organised crimes.

Nevertheless, even when Pakistan has ratified all the international treaties associated with GSP+ compliance obligations, it continues to face challenges related to compliance with these conventions. The EU has repeatedly expressed serious concerns over issues such as shrinking civic spaces, the death penalty, freedom of religion and belief, freedom of opinion and expression, as well as discrimination against women and minorities.

Furthermore, the EU continues to highlight ongoing violations of labour rights in Pakistan, including the inadequacy of the labour inspection system, occupational safety and health issues, ineffectiveness of labour courts, denial of workers’ rights to strike, trade unionisation, and collective bargaining, as well as persistent harassment and intimidation of trade union workers and the absence of tripartite mechanisms. The Joint Staff Working Document “The EU Special Incentive Arrangement for Sustainable Development and Good Governance (‘GSP+’) assessment of Pakistan covering the period 2016 – 2017” further points out the persistent prevalence of child labour, forced labour, and discrimination against women and minorities in the labour market.

In response to the EU’s compliance concerns, the Pakistan government showcases policies, action plans, laws and institutional mechanisms introduced to protect labour and human rights. However, in reality, Pakistan’s status on rights protection is dismal. For example, Human Rights Watch (HRW), in its commentary on the EU’s GSP+ report, notes the absence of important safeguard measures against enforced disappearances, prevention of torture and illegal detentions, and protection of media freedom. The HRW further states that Pakistan was also required to extend labour laws to the Export Processing Zones (EPZs) and Special Economic Zones (SEZs) and strengthen its labour inspection system. However, labour rights groups have dubbed the country’s claims of such extensions “ambiguous”.

Adhering to compliance requirements is imperative as it bolsters the nation's objectives of fostering democratic consolidation, ensuring effective governance, advancing environmental protection, and upholding human rights standards.

According to a report by the Sindh Human Rights Commission on GSP+, non-compliance with international labour and human rights obligations in Pakistan is largely due to institutional malpractices, weaknesses in the justice system and legislative gaps. Institutions struggle with financial constraints, lack of strategic planning, and insufficient coordination and oversight. Consequently, fragmented efforts by government bodies, commissions, and civil society hinder collective efforts to achieve respect for people’s rights.

In addition to these institutional and governance challenges, legislative loopholes and persistent delays in enacting secondary legislation further impede compliance with Pakistan’s international labour and human rights obligations.

Another report by the UN Office on Drugs and Crimes (UNORC) titled “Enhancing Access to Justice through Legal Aid in Sindh, Pakistan” links people’s inaccessibility to justice in Pakistan with the pendency of cases, overburdening of judges, corruption, inefficiency of law enforcement agencies and inadequate coordination between criminal justice institutions.

Given the future challenges of increasing international compliance obligations, particularly the economic value of GSP+ status and the EU’s forthcoming compliance requirements, the Pakistan government should prioritise meeting these conditions. Compliance will support the country’s goals of democratic consolidation, good governance, improved climate action, and respect for human rights. To enhance the effectiveness of GSP+ compliance monitoring, the European Union should extensively involve civil society actors such as NGOs, trade unions, media, and bar associations as well as National Human Rights Institutions (NHRIs) in implementation and monitoring of its assistance programs. This collaborative approach will foster transparency, accountability, and a stronger commitment to upholding international labour and human rights standards in Pakistan.

Muhammad Rafique

Author

Muhammad Rafique is human and labour rights expert. He holds a Master’s in Political Science.

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