FOR a decade, a special trade deal with the European Union has been a bedrock of Pakistan’s economy. The Generalized Scheme of Preferences Plus (GSP ), granting duty-free access to the EU’s vast market for key exports like textiles and leather, has supported billions in revenue and countless jobs. This lifeline, however, is being rewoven with a stronger, more demanding thread. A newly agreed overhaul of the EU’s GSP framework, effective January 2027, introduces stricter conditions that will test Pakistan’s commitment to reform like never before. Navigating this change is not just a trade policy issue; it is a national economic imperative.

On December 1, 2025, the EU’s Council and Parliament made a short-term deal. This deal transforms the GSP structure while keeping the rest the same. The plan is transforming from a means of promoting growth into a contract closely monitored and subject to substantial penalties for noncompliance. The core conditionality is expanding and hardening. Pakistan has already ratified 27 international conventions on human rights, labour and governance.

The new rules will add more conventions and, critically, create what the agreement terms an “urgency procedure” for the rapid withdrawal of preferences in case of violations. A significant incident could now trigger immediate market disruption, moving beyond the previous system of lengthy reviews. Furthermore, environmental protection is formally elevated. As per the revised framework, “serious and systematic violations” of climate change and environmental........

© Pakistan Observer