KARACHI: Pakistan’s textile exporters should diversify their products and tap into new sectors to take full advantage of a preferential trade scheme with the European Union, the bloc’s ambassador to the country said on Tuesday.
Riina Kionka, the EU’s envoy to Pakistan, was speaking at a meeting with the Karachi Chamber of Commerce and Industry (KCCI). The GSP Plus grants Pakistan duty-free access to the EU market for 66 percent of its products, mainly textiles and garments, which account for more than half of the country’s exports.
The EU has recently extended the preferential trade scheme for another four years.
“Rather than staying confined to exporting textiles only, the business community of Karachi should broaden and diversify their exports to EU so as to take maximum advantage of EU’s GSP Plus for Pakistan, which has recently been rolled over for four more years up to 2027,” Kionka said.
The envoy said the GSP Plus had been “tremendously important” for Pakistan’s economy, boosting its exports to the EU by 108 percent and its imports by 40 percent since the start of the programme in 2014.
“GSP Plus is tremendously important for Pakistan’s economy whose overwhelming beneficiaries are not just textile producers but by trickledown effect, all those people as well who work in textile factories.”
Kionka said the EU had extended the GSP Plus for Pakistan without any changes to the rules framework, so everything was going to stay the same up to 2027. But new regulations could be negotiated after the EU elections in June 2024, she said. “We also have elections in June 2024, which means there will be political changeover in the parliament and the EU’s Commission. Once everything settles, we expect that the new parliament and the council of EU member states will once again take up negotiations on a new directive for GSP Plus with Pakistan which couldn’t happen last year,” the envoy said. “Although it’s a four-year rollover for GSP Plus but if they come up with a new regulation, it will become effective before 2027.”
Kionka also identified gems and jewelery, tourism, handicraft and auto parts as potential sectors for Pakistan to expand its exports to the EU, which is the country’s largest trading partner.
“Around 28 percent of Pakistan’s exports come to European single market which is a good number but it could be lot bigger which is one of the main things EU delegation in Islamabad has been working on, so that Pakistan’s exports could be enhanced through better utilisation of GSP Plus, diversifying exports, investing in value-addition, using new technologies & IT solutions for better access to EU market, besides bringing in the SMEs who are the backbone of any economy.” She said the EU delegation in Islamabad was working to set up a platform to promote business-to-business relations between Pakistan and the EU, especially for small and medium enterprises (SMEs).
“Gems and jewellery sector of Pakistan has huge potential so they must add value here and export them to the European Union rather than exporting the raw material around the region and have somebody else doing all the cuttings, polishing and making jewelery,” the envoy said.
According to the Pakistan Bureau of Statistics, the EU was the largest export destination for Pakistan, which stood at $8.4 billion, followed by the United States at $5.93 billion and China at $2.02 billion in the fiscal year 2022-23.
Pakistan’s exports to the EU are dominated by the textile sector, which is the backbone of the country’s exports. Last year, Pakistan’s total textile exports remained at $16.50 billion, which is almost 60 percent of the total exports.