German envoy cites trade hurdles

Berlin commits €114m for climate, energy and social protection in Pakistan

LAHORE:

Pakistan and Germany share longstanding friendly and economic relations, but significant untapped potential remains in trade diversification and investment expansion due to regulatory unpredictability, taxation complexity, lack of transparency and red tape, German Ambassador Ina Lepel said on Tuesday.

Speaking at the Lahore Chamber of Commerce and Industry (LCCI), she noted that bilateral trade has remained relatively stagnant despite stability. German industry is actively seeking supply chain diversification, creating fresh opportunities for countries like Pakistan, she added according to a statement.

LCCI President Faheemur Rehman Saigol said Germany is Pakistan's largest trading partner in the European Union, with bilateral trade exceeding $2.5 billion. Pakistan's exports to Germany stand at $1.7 billion, while imports are $880 million, reflecting a stable trade balance in Pakistan's favour.

Saigol highlighted potential for cooperation in automobile manufacturing, renewable energy, engineering, pharmaceuticals, tourism and SME development. He appreciated Germany's continued support for the GSP+ framework, which has played a significant role in supporting Pakistan's export growth.

He also emphasised strengthening collaboration with German development and technical agencies, particularly GIZ, which has been actively supporting technical and vocational training and skills development in Pakistan.

The ambassador acknowledged improvements in Pakistan's infrastructure and economic indicators but said structural challenges in taxation, governance and regulatory consistency continue to limit investor confidence and export competitiveness. She noted that sustained implementation of International Monetary Fund (IMF)-supported reforms is essential for long-term macroeconomic stability. She noted that Germany, within the framework of the European Union, closely monitors trade arrangements such as GSP+, which are linked to compliance with international conventions on labour rights, human rights, and environmental standards.

Germany has committed approximately €114 million in development cooperation focused on climate, energy, private sector development, health and social protection.

Lepel appreciated Pakistan's diplomatic efforts in regional peace-building and acknowledged its role in facilitating dialogue and de-escalation in sensitive geopolitical situations.

She emphasised the importance of stronger institutional linkages between chambers and business organisations to improve matchmaking and promote joint ventures between Pakistani and German companies, particularly small and medium enterprises.