The European Union imports from Pakistan amounted to 5.5 billion Euros in 2014, making it one of the largest countries to reap benefits from the GSP-Plus status granted to the country on January 1, 2014, according to a report released by the EU.
Pakistan was granted the GSP-plus status for the first time. Prior to that, the South Asia’s second-biggest economy was placed under standard GSP. Pakistan’s economy is still quite dependent on agriculture, which accounts for around 21 % of GDP and 43 % of employment (services and industry account for 59 % and 20 % of GDP respectively).
Pakistan’s economy has recently shown signs of recovery after experiencing subdued growth rates of 3-4 % over the past years due to an energy crisis, a volatile security environment, recurring natural disasters and challenges in economic governance.
The grant of GSP-Plus status at the start of 2014 significantly boosted Pakistan’s exports to the EU. The country’s exports to EU in 2014 were 22 percent higher when compared with 2013, the report said. Pakistan’s products have duty free access in 28 members of European Union.
Over 70 % of EU imports from Pakistan are textiles and clothing. The EU is Pakistan’s first export destination taking around 25 % of Pakistan’s total exports to the world, followed by the USA (12 %), China (9 %) and the UAE (8 %).
Pakistan takes part in the economic integration efforts within, inter alia, the South Asian Association for Regional Cooperation (SAARC) and has trade agreements with China, Indonesia, Malaysia and Sri Lanka.
Around 87 % of Pakistan’s exports to the EU are eligible for GSP+ and over 95 % actually use the preferences. The enhanced trade preferences under GSP+ are of particular importance to Pakistan’s textiles and clothing industry, which accounts for 8 % of GDP, contributes to 50-60 % of total export earnings and provides employment to 38 % of the manufacturing labor force.
Pakistan’s top export products such as bed and toiled linen, denim trousers and leather apparel enter the EU duty free, which would otherwise be subject to the normal GSP rate of 9.6 % or the MFN rate of 12 %.
EU preferential imports of textiles and clothing from Pakistan increased substantially in 2014, 82 % compared to 2013 (from EUR 2 billion in 2013 to EUR 3.7 billion in 2014) and preferential imports of footwear increased by 121 %.