On June 1, EU representative Kaja Kallas made two statements in Islamabad during the EU–Pakistan Strategic Dialogue’s Joint Press Communiqué. First, she acknowledged Pakistan as the primary mediator in the current US–Iran conflict. Second, she reminded the room that Pakistan’s continued access to European markets depends on its progress on human rights indices. Kallas’s remarks reflect Pakistan’s current geopolitical standing. While it is applauded for its role in international mediation, it is also warned about the negative impacts of breaching human rights conditions under the Generalised Scheme of Preferences (GSP+), which would cut off tariff-free exports to the EU.

Together, the two statements capture a tension at the center of the EU’s relationship with Pakistan: The EU wants Pakistan’s diplomatic weight in the region, but also wants leverage over its human rights record, and those two aims do not sit easily together. If Europe strictly enforces these conditions, it risks destabilizing Pakistan’s economy, thereby limiting its influence in the region. This double-edged sword underscores the complexity of balancing geopolitical interests with ethical and economic imperatives.

EU and Pakistan trade relations

Pakistan is a major beneficiary of the trading opportunities under the GSP+. It is a non-reciprocal scheme in which developed European nations grant duty-free or reduced-tariff access to beneficiary developing countries. The 2004 Cooperation Agreement governs the bilateral trade relations between the EU and Pakistan. It gave Pakistan a subsidized opening in the European markets. Further, Pakistan has benefited from the GSP+ arrangement since 2014. The “+” refers to an upgraded tier of GSP reserved for lower-income countries that ratify and implement 27 international conventions on human rights, labor rights, environmental protection and good governance. While standard GSP offers only partial tariff reductions, GSP+ grants full duty-free access, conditional on that compliance record. This is a special incentive arrangement for Sustainable Development and Good Governance based on conditionality. Pakistan must adhere to 27 international human rights conventions to be eligible for duty suspensions on all EU tariff lines.

Such a cooperative agreement has proven beneficial. The economic metrics speak for themselves. Pakistan’s exports to the EU reached $9.82 billion in 2025, making it Pakistan’s single largest export destination. It now bypasses the US and China. The GSP+ scheme grants Pakistan zero-duty access to 66% of EU tariff lines and saves Pakistani exporters between $450 million and $550 million in annual tariffs. The scheme, thus, directly sustains millions of jobs, the majority of which are held by women. This showcases a structural reality of Pakistan’s export economy.

Pakistan’s role in resolving human rights issues

Human rights are non-negotiable. Gender abuse, militant violence, misuse of blasphemy laws, and a lack of freedom of speech are some of the major issues that Pakistan needs to work on. Conditionality, therefore, is not wrong in principle.

Pakistan has not remained passive in this arrangement. It has ratified all 27 international conventions requiring adequate human rights standards, labor standards, environmental protection and good governance under GSP+. In December, 2025, the EU acknowledged that Pakistan is working on streamlining its death penalty application with international standards and will establish a commission on minority rights. 

Moreover, Pakistan’s National Commission for Human Rights regained “A” status accreditation in 2024, indicating significant progress on human rights issues. It was also elected to the UN Human Rights Council for 2026–2028. This is a testament that Pakistan is moving in the right direction, despite being a lower-income economy. 

Concerns remain

Despite its efforts, Pakistan has not yet matched international standards, as serious gaps persist. Freedom of expression, gender equality, the rule of law and civic space remain areas of active EU concern. This is where conditionality faces problems, as it can lead to grave macroeconomic consequences. The EU needs to consider that if GSP+ access is suspended, it would not affect the political leadership. Rather, the working class will face the consequences in the shape of economic collapse. Textile workers in Faisalabad and Karachi who sew European retail garments, the women workforce, and families whose livelihoods depend on duty-free export orders will suffer.

This is not a hypothetical scenario. Analysts argue that Pakistan’s textile sector, based on GSP+ exports, is already caught in a low-value export trap, relying on price competitiveness. Withdrawing duty-free access in that context does not incentivize political reform; instead, it accelerates economic collapse. The EU has legitimate interests in pushing for human rights in South Asian countries, but a framework that says “we will only support you till you move according to our pace” is not rooted in fairness. 

Is conditionality worth it for Pakistan?

The EU-Pakistan strategic dialogue on June 1 produced a joint agreement committing both sides to a rule-based international order and to global and regional stability. However, imposing punitive trade conditionality on a country would soon close the mediation channels it has opened. A country whose working class has been pushed deeper into poverty by the withdrawal of market access is not more democratic for the experience. Kallas also noted that instability has global consequences for energy prices and fertilizer costs. The same logic applies domestically. Economic instability in Pakistan has consequences that extend well beyond the country itself.

What the EU should do moving forward is not to put strict conditions, but to monitor Pakistan’s slow but steady steps in the right direction. It should demand measurable progress on human rights. An economically stable Pakistan will benefit from its current role as a mediator. Trade can be an engine of peace, and schemes like GSP+ can be utilized for the development of everyone.

[Ankita Dutta edited this piece]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.