KARACHI: Pakistan’s government is assessing the impact of a newly signed free trade agreement between India and the European Union, as industry leaders and economists warn the deal could sharply undermine Pakistan’s exports unless production costs, particularly energy tariffs, are urgently reduced.
Officials at the commerce ministry and leading trade bodies held multiple meetings in Islamabad on Wednesday to evaluate how the EU-India agreement may affect Pakistan’s access to European markets, a key destination for the country’s textile and apparel exports.
“There is a meeting scheduled today [Jan.28] to discuss the issue,” a commerce ministry official told Arab News on condition of anonymity, saying the government would be better placed to respond once consultations concluded on the impact of the EI-India FTA.
The agreement, which India’s Prime Minister Narendra Modi described as the “mother of all trade deals,” grants Indian exporters sweeping tariff-free access to the EU, Pakistan’s second-largest export market. European Commission President Ursula von der Leyen said the deal created a free trade zone of two billion people.
For Pakistan, the concern is that the deal erodes its long-standing tariff advantage under the EU’s Generalized Scheme of Preferences Plus (GSP+), which has allowed duty-free access for many Pakistani exports in return for commitments on labor rights, human rights and governance.
