The European Commission has moved to suspend Pakistan’s preferential trade access to the EU market for ethanol, in a significant setback for Islamabad that could herald wider consequences both commercially and diplomatically.
From 20th June, all industrial-grade ethanol exported from Pakistan has lost its duty-free status under the EU’s Generalised Scheme of Preferences Plus (GSP+), a blow that industry insiders and policymakers on both sides of the continent have seen coming for months.
The Commission’s decision follows a formal request lodged in May 2024 by six EU member states—France, Germany, Spain, Italy, Hungary and Poland—under Article 30 of the GSP Regulation, which permits suspension of preferences in response to “serious disturbance” in the European market. According to the complainants, a surge in Pakistani ethanol exports since 2022 has placed unsustainable pressure on European producers.
The decision may appear limited in scope—fuel-grade ethanol, which Pakistan does not export to the EU due to sustainability certification requirements, remains unaffected—but the political message is difficult to ignore.
For years, human rights groups have accused the EU of being overly lenient with countries such as Pakistan, which continue to benefit from generous trade terms while flouting the very principles GSP+ is meant to promote. The arrangement, introduced in 2014, grants tariff-free access to the EU market for vulnerable developing countries that commit to implementing 27 international conventions covering human rights, labour standards, environmental protection, and good governance.
Pakistan’s status under the scheme was extended in 2023 until 2027, despite growing evidence of regression on nearly all these fronts. Among the most vocal critics is Human Rights Without Frontiers, an NGO that, along with media outlet EU Today and several other organisations, has spearheaded a campaign calling for greater accountability. Their argument is simple: it is absurd to reward Islamabad with preferential trade status while it permits forced conversions, persecutes religious minorities, and allows the blasphemy laws to be wielded with impunity.
Speaking to The Telegraph, one senior EU official said: “This isn’t just about economics. If Pakistan expects to benefit from access to our markets, it has to hold up its end of the deal. We cannot continue turning a blind eye to human rights abuses.”
European traders have already begun reducing orders from Pakistani suppliers in recent months, citing the growing likelihood of a suspension. Some have already pivoted to alternative markets. Pakistani exporters, meanwhile, have been scrambling to redirect shipments to Africa and the Gulf to cushion the blow.
“This is going to hurt,” admitted one trader based in Lahore. “The EU was our biggest customer for industrial ethanol. Now we have to build new supply chains from scratch.”
For Islamabad, the setback could hardly come at a worse time. The country is battling economic instability, with foreign reserves strained and inflation biting. Losing tariff-free access to the EU’s ethanol market, though not a total collapse of GSP+, risks denting confidence among exporters and discouraging foreign investment. But beyond the economic pain lies a deeper diplomatic concern: Europe’s patience with Pakistan may be wearing thin.
In London, where concern about Pakistan’s human rights record has been steadily building, a chorus of voices has gone further still with calls for Pakistan to be suspended from the Commonwealth of Nations unless it can demonstrate rapid and verifiable improvements in its treatment of minorities, its blasphemy legislation, and its rule-of-law credentials.
Such calls are no longer being dismissed as fringe. In fact, they dovetail neatly with the shifting mood in Brussels, where officials are under pressure to enforce conditionality with greater rigour across the GSP+ system. The ethanol suspension may be just the first visible crack.
Industry bodies, too, have sounded warnings. The European renewable ethanol association, ePure, while welcoming the move, criticised the decision not to include fuel-grade ethanol—citing the potential for unintended loopholes. “We cannot stabilise the EU ethanol market unless all avenues of distortion are closed,” a spokesperson said.
Pakistan’s failure to secure international sustainability certification, such as the ISCC required under the EU’s Renewable Energy Directive, has so far kept fuel ethanol off the table. But that hasn’t assuaged concern. European regulators are wary of any future shift that could allow Pakistani exporters to re-enter the market under a different guise, bypassing restrictions and undermining the Commission’s objectives.
What’s more, Pakistan’s overall eligibility for GSP+ remains under review. A midterm assessment due later this year will likely factor in both trade and human rights considerations, and few in Brussels now expect a smooth continuation. As one MEP put it bluntly last week: “This is not a charity programme. If countries like Pakistan want access to the European market, they must respect the values we stand for.”
In the end, the suspension of ethanol preferences may be just the opening salvo. As calls grow louder across the UK and Europe for meaningful action on human rights, Pakistan may find that diplomatic indulgence is no longer something it can rely on.
