EU’s GSP+ trade scheme under fire as critics allege Pakistan misuses billions for terror funding

The European Union’s Generalised Scheme of Preferences Plus (GSP+) deal, pouring ₹₹8 billion ($9.36 b) yearly into Pakistan since 2014, has done little to champion values that the EU wants to promote in a developing country, according to Pakistan watchers. Profits earned by Pakistan as a result of the deal have been used to encourage terrorism instead of improving the education and health sectors, they alleged.

GSP+ fuels Pakistan’s textile barons, who consistently violate labour rights, yet the EU has turned a blind eye to this human rights violation, said one of the persons, who did not wish to be identified.

Pakistan is counting on getting $5 b (₹4.3 billion) in IMF loans in 2025, but taxes cotton at 18% and chokes its industry while cashing EU cheques, according to the people.

Pakistan’s Special Investment Facilitation Council, a hotbed of alleged corruption, bagged $1.9 b (₹1.63 billion) in 2024 as a result of GSP+, claimed a second person.

Significantly, the EU’s GSP+ demands compliance with 27 rights conventions. But Pakistan has not complied with several of these conventions, alleged a Pakistan watcher. While the EU provides funding for human rights promotion through initiatives like Huqooq-e-Pakistan, it has faced calls to revoke Pakistan’s GSP + status due to Pakistan’s non-compliance with international agreements. But even as calls continue for greater accountability and concrete action from Pakistan, the EU has extended Pakistan’s trade preferences until 2027.