Perpetual
Dependence on Preferential Treatment
Pakistan’s textile industry is once again seeking government intervention to safeguard its preferential access to the European Union under the GSP+ regime. In a letter dated October 22, 2026, the Pakistan Textile Council (PTC) urged Prime Minister Shehbaz Sharif to mobilize federal ministries and provincial governments to meet the EU’s requirements. While protecting export markets is a legitimate concern, the industry’s persistent dependence on government support raises a fundamental question, when will it learn to compete on merit rather than concessions?
For decades,
Pakistan’s textile and clothing industry has benefited from cheap cotton,
textile quotas and preferential market access under the GSP and GSP+ regimes.
Yet, barring a few islands of excellence, much of the industry has failed to
undertake adequate balancing, modernization and replacement (BMR), upgrade
technology, improve quality standards and develop internationally competitive
products. Its preference for exporting raw cotton, yarn and intermediate goods
rather than moving decisively towards higher-value finished products reflects a
persistent failure to capture greater value from the country’s resources.
Preferential
access can provide breathing space, but it cannot substitute for productivity,
innovation, compliance and efficient resource utilization. An industry that
repeatedly seeks official intervention while neglecting structural weaknesses
should not be surprised when competitors gain ground. Cheap inputs and tariff
concessions may improve margins temporarily, but they cannot indefinitely
compensate for inadequate investment, inconsistent quality and weak
competitiveness.
The stakes
are considerable. In FY2025-26, the EU-27 absorbed US$7.103 billion, or 39.5%
of Pakistan’s textile and apparel exports. Yet sector exports to the bloc
declined by 2%. Meanwhile, India is pursuing deeper trade integration with the
EU, while Bangladesh is exploring closer trade ties. These developments expose
Pakistan’s vulnerability to changing trade preferences.
The EU’s
emphasis on human rights, labour standards, the rule of law and environmental
protection must also be treated as more than bureaucratic hurdles. Compliance
is integral to sustainable participation in modern global supply chains.
The
government should pursue GSP+ retention through credible reforms, but the
industry must reciprocate by investing in technology, skills, product
development and value addition. Preferential access should be a bridge towards
competitiveness, not a permanent crutch.
Pakistan
cannot build a resilient export economy by repeatedly negotiating concessions
while postponing the reforms needed to compete without them.
