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EU to end automatic GSP+ extension from 2027, Pakistan told to submit fresh action plan

ByJustpaste.in

ISLAMABAD: The European Union (EU) is set to introduce a revised mechanism for extending its Generalised Scheme of Preferences Plus (GSP+) trade facility from January 2027, under which beneficiary countries will no longer receive an automatic extension.

The Commerce Ministry informed the National Assembly Standing Committee on Commerce on Wednesday that Pakistan would have to formally seek continuation of the GSP+ facility and submit an action plan covering its commitments under 32 United Nations conventions.

Commerce Secretary Jawad Paul briefed the committee that the new GSP+ framework would come into force in January 2027, followed by a two-year transition period. During this period, countries benefiting from the scheme will be required to prepare and submit their respective plans, which will subsequently be assessed by the European Union.

According to the secretary, the EU’s assessment of Pakistan contains both positive observations and areas of concern. Among the issues highlighted by the European bloc is the human rights situation in Pakistan, along with security and climate-related challenges.

The briefing was given during a meeting of the National Assembly Standing Committee on Commerce chaired by Jawad Hanif. Members including Asad Alam Khan Niazi, Khurshid Ahmed Junejo, Shaista Pervaiz, Dr Ramesh Kumar Vankwani, Tahira Aurangzeb, Mir Amir Magsi, Dr Mirza Ikhtiar Baig and Kiran Haider attended the meeting.

EU concerns discussed

The committee asked the Commerce Ministry to explain the concerns raised by the European Union in its latest assessment of Pakistan and their possible implications for the country’s trade interests.

Jawad Paul said the EU report had acknowledged the difficult circumstances Pakistan was facing, particularly in terms of security challenges, economic pressures and climate-related disasters, including floods. These factors, he said, had affected the country’s capacity to fully implement various commitments.

He urged members of parliament to present Pakistan’s perspective during their engagements with European Parliamentarians and other EU representatives.

The secretary maintained that Pakistan’s circumstances should be taken into account while evaluating the country’s performance under the GSP+ framework. He said the government needed to undertake fundamental measures to address the challenges identified by the EU while also ensuring that Pakistan’s position was effectively communicated to European stakeholders.

The committee also expressed concern over the repeated absence of the Commerce Minister from its meetings and conveyed its displeasure over the matter.

Tariff reforms aimed at boosting exports

The meeting also reviewed the government’s tariff reforms and their impact on industrial competitiveness and exports.

Committee members questioned whether exporters would be required to commit to specific export targets in return for government support. The committee chairman clarified that the measures being introduced should not be viewed simply as incentives for exporters, arguing that reductions in duties and taxes were intended to lower production costs and improve Pakistan’s competitiveness in international markets.

Officials from the Commerce Ministry said the government had been pursuing a policy of reducing tariff protection and lowering the cost of imported raw materials. The objective, they said, was to enable domestic industries to become more competitive and increase their presence in international markets.

As part of the reforms, tariffs on around 2,000 tariff lines were reduced last year to make raw materials and other industrial inputs available at lower prices.

The secretary said tariff reforms were being implemented under the National Tariff Policy and that the government had provided an estimated Rs160 billion benefit to industry and exporters during the previous year.

For fiscal year 2026-27, another Rs120 billion has been earmarked under the relevant support measures. According to the Commerce Ministry, the previous Rs120 billion package was associated with a $1.27 billion increase in exports during 2025-26.

Jawad Paul acknowledged that the tariff changes could initially result in higher imports as industries gained access to cheaper inputs and machinery. However, he argued that the trade imbalance could gradually improve as increased industrial production translated into stronger exports.

Committee seeks review of Pakistan-China trade agreement

The standing committee also raised concerns over Pakistan’s trade deficit with China and identified the China-Pakistan Free Trade Agreement (CPFTA) as an issue requiring closer examination.

Members asked the Commerce Ministry to provide a detailed presentation on the agreement’s impact on Pakistan’s exports, imports and overall trade balance.

The committee also sought an update on the latest trade discussions between Pakistan and the United States. The Commerce Secretary assured members that a detailed briefing on the matter would be provided in an in-camera session.

Export Development Fund restructuring reviewed

The committee separately examined the restructuring of the Export Development Fund (EDF).

Officials told the meeting that the management and decision-making structure of the fund had been moved towards greater private-sector participation, with leading exporters being given a more significant role in determining spending priorities.

The committee welcomed the shift towards projects that have a direct and measurable connection with export growth rather than conventional infrastructure-focused initiatives.

Members also reviewed the allocation of 40% of the Export Finance Scheme (EFS) portfolio for small and medium-sized enterprises (SMEs). They stressed that smaller businesses should have fair and sufficient access to export financing so that they can participate more effectively in international trade.

Pakistan Reinsurance Company performance discussed

The committee also reviewed the performance and investment strategy of Pakistan Reinsurance Company Limited (PRCL).

Members were informed that the company retained nearly 30% of its risk domestically, while approximately 70% was placed in international reinsurance markets, including London, Dubai and Singapore.

The committee chairman called for careful management of the company’s financial resources and urged officials to explore opportunities to improve returns without compromising risk-management standards.

Proposed amendments for Karachi Chamber examined

The committee considered the Trade Organizations (Third Amendment) Bill, 2026, a Private Member’s Bill seeking amendments to the Trade Organizations Act in relation to the Karachi Chamber of Commerce and Industry (KCCI).

During the discussion, members examined the special status of KCCI and proposed exemptions from certain district-related provisions.

The chairman directed that the proposed amendments be drafted in appropriate legal language in consultation with the Ministry of Commerce and the Ministry of Law and Justice before being brought back to the committee for further deliberation.

TCP liabilities raise concern

The financial position of the Trading Corporation of Pakistan (TCP) also came under discussion.

The committee expressed concern over the corporation’s outstanding markup liabilities and directed that the issue be taken up with the Ministry of Finance and the State Bank of Pakistan.

Members sought a comprehensive briefing outlining the total outstanding liabilities, the reasons behind the accumulation of the markup burden and the proposed mechanism for clearing the dues.

Committee to visit Karachi

To strengthen its engagement with trade-related institutions and assess their operations on the ground, the committee decided to hold its next meeting in Karachi.

The planned visit will include meetings and site visits to the offices of the Trade Development Authority of Pakistan (TDAP) and the Trading Corporation of Pakistan.

The committee is expected to receive detailed briefings from both institutions as part of its broader review of Pakistan’s export promotion strategy and trade-related organizations.

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