ISLAMABAD: The European Union has eliminated automatic extensions under its Generalized System of Preferences Plus (GSP+) trade program, requiring beneficiary nations to formally reapply starting in January 2027, a top Pakistani commerce official told lawmakers Wednesday.
Secretary Commerce Jawad Paul testified before the National Assembly Standing Committee on Commerce that the revised scheme mandates countries to submit action plans covering all 32 U.N. conventions to qualify for continued preferential access to the 27-nation bloc.
“There will be no automatic extension in the EU’s GSP Plus scheme,” Paul said in response to committee questions. “The concerned country has to apply for the extension along with an action plan of 32 U.N. conventions.”
The new framework includes a two-year transition period during which applicant nations must present their plans for EU evaluation, Paul added. He noted that Brussels’ latest assessment of Pakistan’s compliance cited both progress and concerns, particularly regarding the human rights situation.
Committee members — including Asad Alam Khan Niazi, Khurshid Ahmed Junejo, Shaista Pervaiz, Dr. Ramesh Kumar Vankwani, Tahira Aurangzeb, Mir Amir Magsi, Dr. Mirza Ikhtriar Baig and Kiran Haider — voiced frustration over the commerce minister’s continued absence from meetings, directing the secretariat to address the issue.
The panel pressed Paul to respond to EU concerns detailed in its recent report. Paul acknowledged the document raised issues related to security and climate change but urged committee members to help clarify Pakistan’s position in future interactions with European Parliamentarians.
“The EU report has recognized that Pakistan is facing security issues, economic problems and flood-related climate issues due to which our implementation capacity is limited,” Paul said. “Our viewpoint is that since the EU understands the security conditions Pakistan is living under, there are certain actions the state needs to take to overcome that situation.”
He added: “The state has to take some fundamental actions — Pakistanis are not living in Europe.”
Trade, tariff reforms take center stage
Committee member Asad Alam Khan Niazi asked whether the government would secure guarantees from exporters to boost shipments to specific targets in exchange for state incentives. Committee Chairman Jawad Hanif clarified that exporters are not receiving direct incentives but are benefiting from reduced duties and taxes to improve competitiveness, describing overtaxation as a root cause of current challenges.
“Lowering taxes is a good step that will increase exports,” Hanif said.
Commerce Ministry officials briefed the panel on Pakistan’s new trade policy, which reduces protectionist measures in favor of broad-based duty and tax cuts. Last year, tariffs were lowered on 2,000 tariff lines to make raw materials more affordable.
Paul informed the committee that tariff reforms are part of the National Tariff Policy, with the government extending 160 billion rupees in benefits to industry and exporters last year and allocating 120 billion rupees for fiscal year 2026-27. He said the 120 billion-rupee package contributed to a $1.27 billion increase in exports during 2025-26.
“Imports could rise in the initial phase, but the imbalance would subsequently be corrected as enhanced production translates into higher exports,” Paul added.
China FTA, U.S. talks under scrutiny
The committee labeled the Free Trade Agreement with China as a key driver of Pakistan’s widening trade deficit and demanded a detailed presentation on the impact of the China-Pakistan FTA on exports. Members also sought an update on recent Pakistan-U.S. trade discussions; Paul promised an in-camera briefing.
Export fund, reinsurance, KCCI bill reviewed
Lawmakers conducted a detailed review of the Export Development Fund’s restructuring, noting the transition toward greater private-sector participation with leading exporters setting priorities. The committee applauded the shift toward initiatives with direct, measurable export linkages rather than conventional infrastructure projects. Members also examined the 40% allocation of the Export Finance Scheme portfolio for small and medium enterprises, stressing the need for equitable access to export financing.
The panel reviewed the Pakistan Reinsurance Company Limited’s performance, learning that PRCL retains about 30% of its risk while placing 70% in international markets including London, Dubai and Singapore. The chairman called for prudent resource optimization and exploration of higher returns while maintaining sound risk management.
The committee considered a private member’s bill amending the Trade Organizations Act — the Trade Organizations (Third Amendment) Bill, 2026 — concerning the Karachi Chamber of Commerce and Industry’s status and proposed exemption from certain district-based provisions. The chairman directed that amendments be formulated in legal consultation with the ministries of commerce and law and justice.
TCP liabilities, next meeting in Karachi
The committee expressed concern over the Trading Corporation of Pakistan’s outstanding markup liabilities and directed that the matter be taken up with the Finance Ministry and State Bank of Pakistan, requesting a comprehensive briefing on settlement measures.
To strengthen stakeholder engagement, members decided to hold their next meeting in Karachi, including site visits and detailed briefings at the Trade Development Authority of Pakistan and TCP offices.
