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Trade and Economic Security

Pakistan

EU trade relations with Pakistan. Facts, figures and latest developments.

Country or region
  • Pakistan
Trade topics
  • Negotiations and agreements
  • Trade policy

EU-Pakistan bilateral trade relations are governed by the Cooperation Agreement from 2004. Enhancing bilateral trade and investment is also part of the EU-Pakistan 5-year Engagement Plan from 2012.

Pakistan is a major beneficiary of the trading opportunities offered by the EU Generalised Scheme of Preferences (GSP). From 1 January 2014, Pakistan benefits from generous tariff preferences (mostly zero duties on two thirds of all product categories) under the so-called GSP+ arrangement aiming to support sustainable development and good governance. In order to maintain GSP+, Pakistan has to keep ratification and effectively implement 27 core international conventions on human and labour rights, environmental protection, and good governance.

Trade picture

  • The EU is Pakistan’s second most important trading partner, accounting for 12.4% of Pakistan’s total trade in 2024, while Pakistan was the EU’s 48th largest trading partner in goods, accounting for 0.2% of EU trade.
  • Bilateral trade in goods between the EU and Pakistan represented €12 billion in 2024 (with a deficit for the EU of €4.6 billion).
  • Total trade in services added another €2.2 billion in 2023 (with a surplus for the EU of €0.7 billion).
  • EU imports from Pakistan are dominated by textiles and clothing, accounting for 75.8% of the EU’s total imports from Pakistan in 2024. The EU’s exports to Pakistan mainly comprise chemicals, machinery and appliances, and base metals.
  • Pakistan is the largest beneficiary of the EU's GSP+ arrangement.

The EU and Pakistan

The EU and Pakistan have set up a Sub-Group on Trade to promote the development of two-way trade. The Sub-Group on Trade, set up under the auspices of the EU-Pakistan Joint Commission, is the forum for discussions on trade policy developments more broadly. It also aims to tackle individual market access issues which hamper trade between the two parties.

While Pakistan's economy holds considerable potential, high costs of doing business, complex regulation and infrastructure bottlenecks all have a detrimental effect on trade and growth. Pakistan's trade regime and regulatory environment still remain comparatively restrictive.

While the textiles and clothing industry are the backbone of Pakistani exports, relying so heavily on one product category carries risks for Pakistan. Trade diversification would play an essential role in this respect. The granting of GSP+ preferences since 2014 has stimulated Pakistan's efforts towards some degree of diversification.

  • As a result of GSP+, more than 88% of Pakistani exports eligible for tariff reductions entered the EU at preferential rates in 2024.
  • Around 89% of the textiles and clothing articles imported to the EU from Pakistan enter the EU at a preferential tariff rate. Around a quarter of these imports are bed linen, table linen and toilet and kitchen linen.

Pakistan's trade preferences

  • The EU supports Pakistan's integration into the world economy and its sustainable economic development by granting it GSP+ trade preferences.
  • Thanks to GSP+, more than 85% of Pakistan's exports, including textiles and clothing, enter the EU duty and quota free. This represents almost 20% of Pakistan's exports globally. The GSP+ preferences should also help Pakistan diversify its export basket.
  • To maintain GSP+, Pakistan has to keep ratification and effectively implement 27 core international conventions on human and labour rights, environmental protection and good governance. This is closely monitored by the European Commission and the European External Action Service, and is also subject to permanent scrutiny by EU Member States and the European Parliament, as well as civil society.

Trading with Pakistan

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