Pakistan sees no immediate export risk from EU–India Free Trade Agreement 

Pakistan’s Ministry of Commerce has told the National Assembly Standing Committee on Commerce that the proposed European Union–India Free Trade Agreement (FTA) does not pose an immediate risk to Pakistan’s exports.

In a written brief, the ministry stated that Pakistan will continue to benefit from zero-duty access for key exports under the EU’s GSP+ scheme, even after the EU–India FTA becomes operational and tariffs on Indian goods are phased out.

The EU accounts for 28% of Pakistan’s total exports and remains its largest export destination. During FY2024-25, Pakistan exported goods worth $9.01 billion to the EU, with more than 90% of shipments entering at zero tariff under GSP+.

Major sectors covered under GSP+ include ready-made garments, home textiles, hosiery, leather products, footwear, ceramics, glassware, chemicals and surgical instruments. Textiles and apparel alone accounted for nearly 80% of Pakistan’s exports to the EU in the last fiscal year.

The ministry noted that Pakistan and India currently export similar volumes of textiles to the EU, estimated at around $7 billion each. While Pakistan enjoys zero-duty access under GSP+, Indian textile exports face average Most Favoured Nation (MFN) duties of about 11%, which are expected to be removed once the FTA is implemented.

Under the proposed EU–India agreement, India is expected to receive preferential access on 97% of tariff lines. However, the EU will retain protection for selected agricultural products, including sugar, ethanol, rice, wheat, beef, poultry and milk powder.

The ministry maintained that the EU does not offer tariff concessions beyond GSP+ on sensitive items such as rice and ethanol, and therefore Pakistan’s current preferential position, particularly in textiles and apparel, would remain unchanged.

It stressed the need to ensure continued compliance with GSP+ conventions, noting that the fifth review of the scheme is under way. The government is also working to reduce input costs for exporters and is engaged in discussions with the EU on a Comprehensive Economic Partnership Agreement (CEPA).

Separately, Pakistan’s textile industry has warned the government that India’s trade agreements with the EU and the United States could affect Pakistan’s export share. Industry representatives have cited high energy costs, taxation and financing constraints as existing challenges and said improved market access for competitors may increase pressure on Pakistani exporters.