Gsp+ extension for Pakistan: Futile prospects

INTERNATIONAL DESK: The Generalized Scheme of Preferences Plus (GSP+) offers trade incentives for developing countries, but Pakistan’s eligibility for this program is contentious. Despite benefiting since 2014, Pakistan’s compliance is dismal, marked by human rights violations, labour abuses, poor governance, and environmental negligence. Blasphemy cases and labour rights breaches persist, undermining GSP+ criteria. Governance crises, fostering extremism over development, led to conflicts and economic distress. A deepening economic crisis, driven by mismanagement and substantial debt, further questions Pakistan’s suitability for GSP+ extension. As the scheme’s expiration looms, Pakistan’s inability to meet standards makes its renewal unjustifiable. The EU must uphold compliance standards and refrain from endorsing Pakistan’s failures, aligning with its commitment to global justice and shared values.

The Generalised Scheme of Preferences Plus (GSP+) is a trade incentive programme initiated by the European Union (EU). It is designed to accommodate the demands and developmental needs of developing countries. The GSP+ offers zero tariffs on exports of items to the EU countries by the recognised developing and least developed countries under the GSP+ programme by the EU and covers more than two-thirds of all tariff lines.

The GSP+ facilitates a country to significantly improve its economy by boosting the country’s exports and making it more competitive in the marketplace due to the lowering of tariffs by the EU. Significantly, by promoting the principles of good governance and sustainable development, the GSP+ encourages beneficiary countries to improve their governance and practices in the domains of human rights, environmental and climate protection.

By removing the import duties, the EU’s GSP+ helps developing countries in their poverty alleviation and employment generation efforts. The United Nations Conference on Trade and Development (UNCTAD), nearly 50 years ago, asked developed economies to enable the integration of developing countries into the global economy. The GSP was born out of this effort. Currently, nearly a dozen countries have the GSP mechanism in place.

One of the requirements to avail the benefits of the GSP+ is that countries make a commitment to implement 27 international conventions pertaining to human rights, environmental protection, good governance, and labour laws. However, some countries benefitting from this GSP mechanism, such as Pakistan, raise an important question of whether this preferential treatment be continued for them given the gross violation of the compliance requirements, especially in the fields of human rights and good governance measures.

The EU-Pakistan relations date back to 1962. Agreements such as the Cooperation Agreement on Partnership and Development of 2004 as well as the EU-Pakistan Strategic Engagement Plan of 2019 have been guiding the relations between Pakistan and the EU. Pakistan has benefitted immensely from the GSP+ mechanism since 2014. The GSP+ has helped Pakistan in its endeavours towards sustainable development, poverty reduction, and integration with the global economy while emphasising good governance at the same time.

Despite such benefits, the compliance on the part of Pakistan has been extremely poor. Ranging from human rights violations, poor governance records, and undermining of labour rights, to aggravating economic crisis, among others, Pakistan has been violating the foundational requirements of the GSP+ system.

One of the primary conditions for GSP+ status is compliance with international human rights conventions. Pakistan has a very abysmal record in this area. It has consistently undermined values such as freedom of expression, religious freedom, and the rights of minorities. The rising blasphemy cases in Pakistan are another cause for alarm.[7]

In the realm of labour rights and working conditions for labourers and workers, there are frequent reports of violations. Many Pakistani labour laws are not aligned with international standards. These reports highlight violations such as forced labour, child labour, unhygienic workplaces, and hazardous working conditions, all of which constitute a clear breach of the GSP+ norms and standards related to labour rights requirements.

In the area of climate action and environmental protection as well, the efforts and commitment of the Pakistani government remain subdued and hollow. Despite itself facing several challenges including air and water pollution, inefficient waste management, and deforestation, among others. Pakistan’s failure to effectively address these issues has a complete bearing on the continuation of its GSP+ status.

Good governance serves as a crucial benchmark for determining a developing country’s eligibility for continued GSP+ status. Unfortunately, the Pakistani state is currently grappling with a governance crisis—a predicament largely of its own making, resulting from decades of flawed policies. Pakistan finds itself in a state of internal conflict, having prioritized supporting extremism and militancy under the guise of jihad over long-term economic growth. Instead of focusing on sustainable development, it has often engaged in short-sighted conflicts, be they direct or proxy, with India. The consequences of this approach are evident in the rise of terrorist groups like Tehreek-e-Taliban Pakistan (TLP), initially supported by Pakistan’s army and intelligence agency ISI, which now pose a threat to the Pakistani state itself, leading to the tragic loss of innocent civilian lives and law enforcement personnel.

Economically, Pakistan is currently under considerable duress, facing a deep crisis. Its deflating economy grapples with spiralling inflation, a depreciating Pakistani Rupee, dwindling foreign exchange reserves, and a general downturn in various macroeconomic indicators. The situation has become so dire that the Pakistani state is teetering on the brink of bankruptcy. This crisis is pushing millions of people into poverty and even starvation, exacerbated by the government’s inability to import basic and essential items. Frequent power outages have become the new normal for Pakistan.

The current economic crisis is attributed to its myopic policy decision resulting in excessive spending on non-developmental and economically unviable projects. Economic mismanagement and financing of futile infrastructure projects like the Gwadar-Kashgar Railway line project through long-term debt instruments, and relying massively on external borrowing rather than from domestic institutions added to its troubles. The China-Pakistan Economic Corridor (CPEC) under China’s Belt and Road Initiative (BRI) which Pakistan readily joined has now put Pakistan under a Chinese debt of $64 billion.

In conclusion, as the expiration of the GSP+ scheme looms, it is evident that Pakistan stands far from meeting the criteria for its renewal. The country’s deep-seated crisis of governance, economic turmoil, deficient labor laws, blatant human rights violations, abuse of power against minorities, and a conspicuous disregard for climate action and environmental protection paint a dismal picture. Pakistan’s current state positions it as a pariah in the international community, sharply contrasting with nations striving for progress, peace, and stability.

The European Union, as a proponent of justice and adherence to standards, would be remiss in encouraging the continuation of Pakistan’s gross abuse of power and poor governance. The GSP+ mechanism is designed with clear compliance standards, and Pakistan’s failure to meet these benchmarks renders it ineligible for any preferential treatment. It is imperative for the EU to make a resolute stand against enabling a nation that falls significantly short of the international community’s expectations, fostering a commitment to shared values and the pursuit of a just global order. (W)