ISLAMABAD: Pakistan’s Deputy Prime Minister and Foreign Minister Ishaq Dar on Monday stressed the importance of deepening trade and economic engagement with the European Union (EU) amid the bloc’s recent free trade agreement with India. 

India and EU last month announced they had successfully concluded negotiations for a free trade agreement with the EU, which Indian Prime Minister Narendra Modi described as the “mother of all trade deals.” The agreement grants Indian exporters sweeping tariff-free access to the EU, Pakistan’s second-largest export market. European Commission President Ursula von der Leyen said the deal created a free trade zone of two billion people.

The main concern for Pakistan is that the India-EU deal may significantly reduce Islamabad’s tariff advantage under the EU’s Generalized Scheme of Preferences Plus, which allows duty-free access for many Pakistani exports in return for commitments on labor rights, human rights and governance. Pakistan’s foreign office, however, has said it continues to view its trade relationship with the EU, particularly under the GSP Plus framework, as mutually beneficial.

Dar chaired a high-level inter-ministerial meeting to review measures aimed at strengthening Pakistan’s economic and trade cooperation with EU on Monday, the foreign ministry said. 

“DPM/FM underscored the importance of deepening and expanding trade and economic engagement with the EU, noting that the EU remains a key economic partner for Pakistan, particularly under the GSP Plus framework,” the statement said. 

He highlighted that Pakistan has successfully completed four biennial GSP Plus reviews, reaffirming Islamabad’s commitment to fully meeting its obligations under the scheme to expand mutually beneficial trade opportunities.

The meeting was attended by the federal minister of law and senior officials as well as Pakistan’s ambassador to the EU. 

The development takes place as Pakistan’s exports dwindle. After rising 5 percent to $32.1 billion last fiscal year, the Pakistan Bureau of Statistics reported that exports fell 9 percent to $15.2 billion in the first half of the current year through December. 

Pakistani industrialists and financial analysts have urged the government to reduce domestic production costs, particularly high power tariffs. EU accounts for a substantial share of Pakistan’s exports, particularly textiles and garments. 

“The EU-India FTA will have a definite impact on Pakistan’s textile exports to the EU,” said Shankar Talreja, the head of research at Karachi-based Topline Securities Ltd, told Arab News last month. 

“Pakistani companies’ competitive advantage to compete against a giant like India needs to be restored in the form of regionally aligned energy tariffs and policy certainty.”