Srinagar, Jan 31 (JKNS): The landmark free trade agreement (FTA) between India and the European Union has triggered serious concerns in Pakistan, with the deal expected to significantly alter trade dynamics in the European market, particularly impacting Pakistan’s key export sectors such as textiles and apparel.
The India–EU FTA, described as the “mother of all trade deals,” is set to provide India extensive market access to the EU in labour-intensive sectors that have traditionally formed the backbone of Pakistan’s exports to Europe. With the EU being Pakistan’s second-largest export destination, accounting for nearly $9 billion in annual shipments, Islamabad has reportedly gone into damage-control mode amid fears of losing its competitive edge.
Pakistan currently enjoys duty-free access to a large portion of its exports under the EU’s Generalised System of Preferences Plus (GSP+) scheme, which is due to expire next year. Analysts note that the India–EU agreement could neutralise Pakistan’s GSP+ advantage, as tariffs on Indian textiles and apparel are expected to fall to zero once the deal comes into force. The EU alone accounts for around 40 percent of Pakistan’s textile exports, a sector that employs millions and serves as the country’s largest source of export earnings.
On the other hand, India is poised to gain significantly from the agreement, as the EU will eliminate or reduce tariffs on 99 percent of Indian goods over a phased period, enhancing India’s competitiveness in textiles, apparel, footwear, gems and jewellery.
With changing trade equations and uncertainty over the extension of Pakistan’s GSP+ status, experts warn that Pakistan could face declining market share and job losses unless production costs are reduced and structural reforms are undertaken. (JKNS)
