Pakistan’s Economic Relations with the European Union (2013-2023): Challenges, Opportunities and Policy Lessons

Abstract

The EU and Pakistan relations are shaped by interrelated political, economic and strategic factors. Currently, Pakistan’s economic relations with the EU are shaped by its GSP+ status. In 2014, the EU included Pakistan in GSP+ status when it ratified all international conventions required for admission in the scheme. The primary aim of GSP+ scheme is to assist developing nations in alleviating poverty, establishing good governance, and promoting sustainable development. The scheme offers opportunities for these states to engage in trade with the EU with low or no tariffs to generate additional revenues. While Pakistan is currently the largest beneficiary of GSP+ scheme, several challenges, mainly related to the exports’ diversification and competitiveness, reduce the scope of its economic ties with the EU. However, the country is potentially capable of addressing these challenges and upgrading economic relations with the EU. Drawn on David Ricardo’s theory of comparative advantage and using qualitative research approach, this study analyses Pakistan’s trade relations with the EU with an aim to underline challenges and opportunities in this regard, and then offer policy lessons for Pakistan regarding the upgradation of economic relations with the EU.