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Business Recorder
12-05-2025
- Business
- Business Recorder
GSP plus status: EU review puts Pakistan's duty-free export to the test amid reforms push
Pakistan's crucial trade advantage under the European Union's (EU) GSP plus (+) scheme remains under review, as the European Commission evaluates the country's compliance with international human rights and governance standards. Dr Martin Henkelmann, CEO at German Emirati Joint Council for Industry and Commerce (AHK UAE) and Florian Walther, Pakistan Representative at German Emirati Joint Council for Industry and Commerce (AHK UAE) said this in response to questions by Business Recorder. The GSP+ (Generalised Scheme of Preferences Plus) has played a pivotal role in Pakistan's export-driven economy, allowing over 76% of its exports to the EU — primarily textiles and garments — to enter duty-free. Since Pakistan joined the scheme in 2014, exports to the EU have more than doubled, reaching €8 billion in 2023, including €2.4 billion to Germany. The development has made EU the single largest export destination for Pakistan. The ongoing review began in June 2022, resulting into extending GSP+ trade incentives to Pakistan till 2027. The upcoming announcement of the outcome from the ongoing assessment on the 27 conventions would guide the EU to further extend the GSP+ status for Pakistan beyond 2027, it was learned. 'Pakistan's GSP+ status remains under systematic review by the European Commission as part of the ongoing monitoring cycle. While the Commission has not yet issued a formal conclusion, recent developments—including the visit of EU Special Representative for Human Rights Ambassador Olof Skoog in late January 2025—highlight the significance of this process,' Henkelmann and Walther informed. GSP+ monitoring mission is scheduled for June 2025, it was learnt. The two German officials said there was an ongoing and open dialogue between the EU and Pakistan on improving compliance with the 27 core international conventions related to human rights, labour rights, environmental protection, and good governance. 'In our own engagements with stakeholders across Pakistan—including chambers of commerce, export associations, and the business community itself—it is consistently highlighted that GSP+ is not just a trade preference but a vital enabler of employment, growth, and economic diversification. There is widespread awareness that continued progress regarding the GSP+ requirements is necessary and in the country's long-term interest,' they added. In response to evolving global priorities, the EU has revised the GSP+ framework. The updated scheme includes additional conventions, stricter procedural obligations, and now requires beneficiary countries to submit detailed action plans. 'Pakistan has been given a two-year transition period to meet the new standards.' The extension of the monitoring cycle from two to three years allows for more comprehensive evaluations and aligns the process with international mechanisms. Pakistan must now demonstrate measurable reforms, they said. With exports under pressure and jobs linked to the EU market access, Pakistan's path forward in retaining GSP+ will depend on its ability to adapt to the tighter framework—and reassure partners like Germany of its commitment to reforms. The EU has already updated the GSP+ framework to better reflect evolving global challenges and policy priorities. The revised scheme introduces additional international conventions and sets out stricter procedural requirements, including the obligation for candidate countries to submit a detailed action plan demonstrating how they will implement these conventions. 'For existing beneficiaries like Pakistan, a transitional period of two years has been granted to ensure compliance with the enhanced obligations. The extension of the monitoring cycle from two to three years also aligns the process more closely with international treaty mechanisms, allowing for deeper, more structured evaluations. These updates aim to preserve the integrity and effectiveness of GSP+.' For Pakistan, this means that continued access to the scheme now depends even more clearly on measurable reforms. The GSP+ status has enabled robust export growth—especially in the textile sector—and serves as a cornerstone of EU-Pakistan economic relations. The continuation of GSP+ is not only a trade priority, it is crucial for maintaining export competitiveness, creating jobs, and sustaining bilateral trade momentum.
Business Recorder
23-04-2025
- Business
- Business Recorder
Dubai serves as gateway for German businesses eyeing Pakistan market
Despite growing global economic headwinds resulting from an escalation in the US-China trade war, German companies are exploring business opportunities in Pakistan, with Dubai playing an important role as a regional hub. Dr. Martin Henkelmann, CEO of the German Emirati Joint Council for Industry and Commerce (AHK UAE) and Florian Walther, Pakistan Representative at the German Emirati Joint Council for Industry and Commerce (AHK UAE) said this in an exclusive interview with Business Recorder. AHK stands for 'Auslandshandelskammer' in German, which translates to 'Chamber of Commerce Abroad'. It is part of a global network that helps German companies establish and expand business operations in foreign markets, including Pakistan, it was learnt. Dr. Henkelmann and Walther said Dubai serves as a strong regional hub for German companies looking to expand. Many firms from the European state – the third largest economy in the world after the US and China – are optimistic about exploring what a digitally booming Pakistan has to offer. They are giving serious thought to finding new opportunities in areas like agriculture and agri-tech, IT and software development and fintech as well as smart and energy efficient construction. Dr. Henkelmann said that a unique factor aiding Germany's engagement with Pakistan is the role of Dubai. There are some 1,800-2,000 German companies with regional headquarters in Dubai. AHK's presence there is instrumental in connecting German firms with opportunities in Pakistan. 'It is much easier to take a flight from Dubai to Karachi or to Islamabad and Lahore than getting someone from Germany flying six hours and then changing planes again,' he said, adding that 'we will have an event in the beginning of June where we address the regional directors of German companies based in Dubai and speak about Pakistan as an opportunity.' Pakistan remains on Germany's radar Walther said that over the past six months, at least four new German companies have either entered the Pakistani market or expanded their operations within the country, covering sectors such as financial services, energy-related machinery, and infrastructure technology. 'Two of them are in the financial services sector, one is in the energy sector and one is in the industrial/energy sector,' he said. These investments come at a time when global corporations are reevaluating supply chains, rethinking expansion strategies, and exercising caution amid tariff wars, inflationary pressures, and geopolitical uncertainties. Yet, German firms are leaning in rather than pulling back, with many seeing Pakistan as a land of untapped potential, particularly in new and evolving sectors. Walther further said that the business confidence of German firms is rising in Pakistan. 'We see positive signs,' he said. Dr. Henkelmann added that a recent survey suggested that 'more than 40% of German firms already operating in Pakistan said we will invest more in the country, which is a good sign.' 'This is in contrast to a global environment where often companies don't want to invest because in general the situation is difficult,' he said. The survey results showed that business confidence in the market is relatively high and '60% of German companies said that the next 12 months will be better'. Dr. Henkelmann said the governments of Germany and Pakistan have had a good relationship for over 70 years. 'Pakistan has always been on the radar of German companies,' he said. Walther added that the bilateral trade volume between Germany and Pakistan stands at $3.5 billion. Pakistan exports to Germany stand at around $2.5 billion, while Germany exports are worth $1 billion to Pakistan, 'which represents a positive trade balance of $1.5 billion for Pakistan.' Germany is the largest contributor to EU-Pakistan trade (total EU trade with Pakistan was $12 billion in 2023). A big chunk of Pakistan's exports to Germany (85%) come from the textile and apparel sector. As far as Germany's exports to Pakistan are concerned, 35% is machinery and roughly 25% is chemicals. 'This shows we have a solid and strong base when it comes to the trade relationship between Germany and Pakistan,' Walther said. On the flip side, they said, whenever they speak to German companies, whether they are in Germany, the UAE, or Pakistan, the main challenge hindering investment is policy inconsistency. Over 60% of those surveyed highlighted economic policy conditions as a risk and another 50% saw the prices of energy as a risk in the next 12 months. The two maintained that the Pakistan-Germany relationship is based on mutual opportunity and growth potential. They said Germany remains committed to strengthening trade and investment ties with Pakistan across both traditional and emerging sectors. Copyright Business Recorder, 2025
