Pakistan Urged to Strike Trade Deal with Europe, Fears Loom Over ‘Mother of All Deals’ Between India and EU

Islamabad: India’s landmark free trade agreement (FTA) with the European Union has sent shockwaves across Pakistan, creating a climate of concern in Islamabad. Pakistani experts are warning that the country is falling behind India in global trade and urging immediate action to avoid economic setbacks.

Since Donald Trump assumed the U.S. presidency, global tariff wars have escalated, affecting countries from India to Europe. India, hit by 50% U.S. tariffs, has responded strategically by forging a massive trade deal with the EU, widely described as the ‘Mother of All Free Trade Deals.’ This move has alarmed not only the United States but also India’s regional rivals, Pakistan and Bangladesh. While Bangladesh is actively negotiating trade agreements with Europe, Pakistan faces the risk of one million jobs being lost if it fails to keep pace.

Shamsul Islam Khan, an international trade expert, wrote in the Pakistan Express Tribune that the India-EU FTA reflects a shift in global trade patterns rather than a decline in commerce. Nations are now seeking stable, rule-based markets and reliable partners. The India-EU agreement, two decades in the making, demonstrates a search for stability amid an uncertain global economy.

Impact on Pakistan

According to Khan, the India-EU FTA will reshape global trade dynamics. India’s textile and garment sectors have already suffered under U.S. tariffs, prompting buyers to explore alternative suppliers. India and the EU currently trade goods worth approximately $136 billion, with the EU being India’s largest trading partner, accounting for 17% of India’s exports.

For Pakistan, the implications are significant. The EU is Pakistan’s largest export destination, absorbing 27% of its exports, valued at around $8.8 billion, primarily in garments, shirts, jeans, towels, and bedsheets. Khan warned that if the EU extends similar FTA concessions to India, Pakistani exporters could face severely reduced profit margins. Even basmati rice exports may be affected. He highlighted that Pakistan has lagged behind in concluding FTAs, unlike India, which has secured deals with the UK and advanced negotiations with the UAE and Israel.

Pakistan’s Response to U.S.-India Tariff Tensions

Earlier, Pakistan had welcomed U.S. tariffs on India, hoping to gain market advantage. Prime Minister Shehbaz Sharif even publicly praised Donald Trump and lobbied for his Nobel Peace Prize nomination. However, India’s strategic deal with Europe now threatens one million Pakistani jobs, creating alarm in the country.

Former Pakistani diplomat Maleeha Lodhi wrote in Dawn that India’s trade agreements with the EU, Canada, and China illustrate the changing global trade landscape. She noted that trade among Global South countries is rising and now accounts for a quarter of total global trade. India, as part of the Global South, is positioning itself to benefit significantly from this shift.

The message from Pakistani experts is clear: to mitigate economic risks and remain competitive, Islamabad must urgently pursue comprehensive trade agreements with Europe.