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 engineering, knitting, dyeing and finishing experience, technical textiles, and proximity to European buyers.
An official investment report identified Pakistan among Türkiye’s leading textile-machinery export destinations in 2022. Those strengths do not justify a permanent hierarchy in which Pakistan performs cheap work, and Türkiye keeps every sophisticated function.
The existing trading relationship serves as a foundation. Türkiye currently exports to Pakistan cotton, yarn, fabrics, textile machinery, industrial machinery, and chemicals and imports cotton fabrics, apparel, and dyes from Pakistan. Transactions continue to be mostly isolated: a piece of machinery travels one way and fabric the other, and the relationship ends there. The shared structure would tie all of these transactions into a single customer order and single product development process.
A Two-Speed Manufacturing Model
Think about an order for home textiles or workwear coming from Europe. Pakistan mills can manufacture massive quantities of yarn, greige fabric, or plain base cloth, where economy of scale plays a bigger role. Coloring, coating, printing, finishing, cutting, or packaging can be deferred until more detailed demand data arrives and executed in Türkiye, where proximity would warrant it.
Such a two-speed manufacturing chain will allow avoiding inventory risk of producing finished goods that do not match demand specifications without losing Pakistan’s competitive advantage in high-volume manufacturing. Reliable bulk orders can still be completed in Pakistan alone. The split should be product-specific, not nationalistic.
Nor should Türkiye be sold as a tariff shortcut. Pakistan already enjoys extensive EU access under GSP+, while Türkiye participates in the EU customs union. Moving Pakistani fabric through a Turkish factory does not automatically make it Turkish-origin material. Preferential origin depends on product-specific processing rules, and textiles often require specified transformations. Late differentiation must therefore earn its place through faster replenishment, lower inventory risk, and better customer service—not creative border paperwork.
Navigating Standards, Digital Passports, and Joint Capabilities
The bigger reward is the move towards technical textiles together. There is a need for testing, certification, and process controls for filtration, protective, medical, geotextiles, and automotive uses. Joint labs would be able to certify the flame-resistant, chemical, colorfast, and recycled nature of materials for companies in both nations. The winning product should allow the Pakistani textile company to do better work next time around and allow the Turkish partner to improve their machine, software, or material design.
Joint ventures between machinery manufacturers in Turkey and Pakistan should also follow the same path. A Turkish company should not just sell the machinery and walk away. They can sign contracts for productivity, energy consumption, reductions in defects, and operator training, keeping technicians and spare parts in Pakistan. This will make the Turkish machinery company responsible for productive performance and give Pakistani mills an opportunity to learn how to operate.
It is clear from the start that the Digital Product Passport makes for an instant joint project. Requirements for specific textiles data will be determined by a delegated act in the future, so no government needs to claim full knowledge about all fields at this point. However, textile mills, finishers, and brands may start working out a common registry for the origin of fibers, chemicals, batches of production, lab results, and energy consumption now.
The DEİK Türkiye–Pakistan Business Council, the textile association, machinery providers, and selected European-facing manufacturers would choose three product lines for an 18-month trial. Each must have a named buyer, a step-by-step analysis of cost and lead time, an origin study, joint testing procedures, and a strategy for identifying capabilities gained by each country. The project should pay for testing, digitization, and supplier qualification—but not regular cloth transactions.
Türkiye’s companies might not be eager to shift volumes to Pakistan. The producers in Pakistan could be suspicious of the intent of Türkiye, which is trying to keep the buyer relationship and profit margins. Proximity can undo labor savings, and both partners might be reluctant to open their production records. The contract will need to define brand ownership, buyer information, intellectual property rights, risks of returned goods, and savings from reduced inventory. The declarations about brotherhood will not answer all these issues.
The first scorecard will need to reflect something other than the amount of bilateral textiles trade. The scorecard should reveal lead time, inventory of unsold products, defect rate, energy costs, jointly certified products, and processes that can be done locally without foreign help. Otherwise, this partnership will merely reorganize the old cost trap instead of escaping from it.
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The views and opinions expressed in this article/paper are the author’s own and do not necessarily reflect the editorial position of Paradigm Shift.
Mehmet Enes Beşer is a researcher focusing on ASEAN and a graduate of Sociology at Boğaziçi University. His work examines Türkiye’s relations with Southeast Asian countries, particularly in the fields of economic development, industrial cooperation, and foreign policy. He's also a member of the Editorial Board of Teori magazine.
