Brexit threatens Pakistan’s trade perks with the EU
Britain’s departure from the EU robs Pakistan of a key ally in its fight to preserve preferential trading terms with the EU.
Since 2014, Pakistan has been the leading beneficiary of the EU’s preferential trading program for “vulnerable” developing countries, known as the Generalized System of Preferences Plus (GSP+). The scheme grants manufacturers, particularly Pakistani textilemakers, tariff-free access to Europe in exchange for Islamabad implementing reforms on human rights, working conditions, climate change and good governance.
Britain prides itself on having won this sweetheart deal for its former colony, a country of 210 million people, where many families have relatives living in the U.K. “It was us, Britain, who ensured Pakistan got tariff-free access to the European Union,” former Prime Minister David Cameron said at a campaign event during the 2014 European election.
British members of the European Parliament, who played a key role in lobbying for Pakistan’s GSP+ status, reckon that Pakistan would be increasingly isolated after Brexit. They said that they had to overcome resistance from EU heavyweights back in 2014, and warned that antipathy could well return when GSP+ comes up for renewal in January 2020.
Several EU countries have deep concerns about Pakistan’s record on human rights, and were cool on the idea of bringing it into the free-trade fold in January 2014.
“They’re not really going to have anybody here really looking out for them,” said British Conservative MEP Sajjad Karim, who is of Pakistani origin and founded the Friends of Pakistan group in the European Parliament. “The politics that we were able to deal with … nobody’s going to do that.”
The loss of GSP+ would be a big blow to Islamabad. Almost three-quarters of all European imports from the GSP+ program (which also covers countries such as the Philippines and Sri Lanka) come from Pakistan. Some 82 percent of these purchases are textiles and clothing. Pakistan’s exports to the EU increased by 38 percent over the three years since it signed on in 2014, rising to €6.2 billion in 2016 (EU exports were valued at €5.3 billion). The bump in exports turned the EU into Pakistan’s largest trade partner.
Human rights concerns
Several EU countries have deep concerns about Pakistan’s record on human rights, and were cool on the idea of bringing it into the free-trade fold in January 2014. Since then, Islamabad has upped the stakes by reintroducing the death penalty in December 2014, a massive taboo for the EU.
Karim said France and Germany both signaled opposition back in 2014. Portugal, a textile producing country, said it opposed Pakistan’s designation because it maintained “a more stringent interpretation” of the GSP+ criteria.
“Bringing [German Chancellor] Angela Merkel and [former French President] François Hollande to the table … that was David Cameron,” Karim said. He said Paris was opposed, while Germany was on the fence. The French and German missions in Brussels declined to comment when asked about their stance on the continuation of GSP+ after 2020.
Pakistan confirmed the U.K.’s role by awarding Karim the Star of the Great Leader, a civilian honor. His commendation specifically stated his contribution in getting Pakistan into the GSP+ club.
Tory MEP Sajjad Karim is of Pakistani origin and founded the Friends of Pakistan group in the European Parliament | Flickr via Creative Commons 2.0
Wajid Khan, another British MEP of Pakistani origin, said that Pakistani diplomatic missions across Europe need to be “more proactive” after Brexit. Asked whether he was optimistic about the continuation of GSP+, Khan said: “It’s a challenge.”
The EU reviews the GSP+ program’s progress every two years. If it finds that any country failed to make enough progress on its commitments, it can suspend the scheme.
But despite Pakistan’s patchy record, Islambad won a clean bill of health from the Commission in an interim assessment last month. The latest report broadly concluded the GSP+ was working across the countries involved, but also cautioned that Pakistan’s progress has been “mixed.” The Commission said it had “serious concerns” about human rights issues and urged Pakistan to “step up its efforts” to keep to its promises.
A separate report published in October last year by the Pakistan Workers Confederation, one of the local monitors of the GSP+ program, noted Pakistan’s lack of progress on labor rights. “Unfortunately, labor law reform has never been any [Pakistani] government’s priority,” the report said. According to a report by Human Rights Watch, other conditions — progress on women’s rights, religious freedom, protecting activists and journalists — has either remained poor or deteriorated.
Asked about the Commission’s report during a press briefing, Commission spokesperson Daniel Rosario said: “This is a dynamic process … This is also a way for engaging directly with these countries to address these problems.”
Madi Sharma, who leads the Women’s Economic and Social Think Tank, opposed Pakistan’s continuing membership, saying: “the Commission’s just turning a blind eye” to Pakistan’s violations of the agreement.
For their part, the Pakistanis seemed unperturbed. “We have good relations with many countries and many MEPs and that will continue after Brexit,” a senior Pakistani diplomat said, speaking on the condition of anonymity. The embassy did not provide an official statement.
Pakistan can draw some heart from the fact that it is very difficult to lose GSP+. So far, only Sri Lanka has ever lost the designation mid-term — from 2010 to 2017 — but that was in the extreme circumstances of a war.
“Next time round, when we’re not here, Pakistan’s in trouble. They’re in big trouble” — British Conservative MEP Sajjad Karim
Pakistan also profits from a growing belief that trade interaction is the best way to maintain stability in a nuclear-armed country plagued by tribal and Islamist unrest.
Even France is stressing the importance of commercial interaction. According to Pakistan’s Nation newspaper, Marc Baréty, French ambassador to Pakistan, last month visited the Lahore Chamber of Commerce and Industry (LCCI) to stress that President Emmanuel Macron was prioritizing trade as a way to guarantee economic stability.
France’s embassy in Islamabad declined to give more information on the visit.
Rashid Yaqoob, a spokesperson for the LCCI, who attended the meeting with Baréty, noted that the criticism of Pakistan in January’s GSP+ report were “not encouraging” but predicted the “program will keep going.”
Asked how that would be possible, Yaqoob said simply: “backdoor diplomacy.”
But back in Brussels, MEP Karim was far less sanguine.
“Next time round, when we’re not here, Pakistan’s in trouble. They’re in big trouble,” he said.