Escaping the Cost Trap

On 20 July, the European Commission launched its Digital Product Passport Registry, making supply-chain transparency an operating system rather than a distant proposal. Textiles are a priority product group, with sector-specific work expected from 2027. That matters to Pakistan, whose GSP status allows most exports, including clothing and textiles, to enter the European Union duty- and quota-free, and to Türkiye, which sends 42.7 percent of its goods exports to the EU. Their textile debate can no longer be organized around who makes the same product a few cents cheaper.

It is not about the division of the textile production process based on the question of which country has a lower cost. Rather, it is about allocating tasks in such a way that more value can be gained from them, in terms of speed and learning. While Pakistan can add economies of scale and Türkiye speed, the cooperation will become strategic only if both offer knowledge.

Redefining the Türkiye–Pakistan Partnership

Pakistan is well-endowed with industrial capabilities. The Pakistan Economic Survey 2025–26 says that the textile and apparel industry accounted for 59.7 percent of Pakistan’s total exports and 24.2 percent of the industrial value added in July 2025-March 2026. It encompasses the full chain, including ginning, spinning, weaving and knitting, dyeing and finishing, sewing, household textiles, and technical textiles. However, its exports remained almost stagnant at US$13.58 billion for the said period, while cotton cloth exports fell dramatically. Large size makes the sector resilient but not immune to low prices and raw material shortages.

Türkiye faces the mirror image of the same trap. Its exporters’ representatives describe a loss of competitiveness in labor-intensive sectors. Defending every standard garment and fabric line against lower-cost Asian production consumes capital without solving the margin problem. Türkiye’s more useful assets are machinery and........

© Paradigm Shift