I'm not at all implying that we wouldn't be affected, it would defintely have a significant economic impact if the worst was to happen, I just think the way out from that damage would be to find new markets.Bhai it's being beyond optimistic to think our economy will somehow grow resilient if EU sanctions and trade barriers or an outright trade ban is imposed on Pakistan.
The EU is our largest export destination accounting for almost 20% of our total exports(1). Conversely Pakistan is a marginal trading partner at best for the EU with only 0.2% of the EUs exports headed to Pakistan(2). Everything that Pakistan exports to the EU is easily replaceable by another country. Textile, sporting goods and surgical equipment is mass produced by dozens of other developing nations who provide these items at affordable prices, so we have no economic leverage over the EU.
Meanwhile 20% of our trade disappearing due to an EU ban will send our economy into complete shock mode. The small to medium sized businesses in Sialkot and Faisalabads would collapse and unemployment and poverty would skyrocket bringing with it a whole host of other problems like criminality, drug abuse, prostitution etc.
A strong argument can also be made that where the EU boycotts one body/nation, its allies or similarly politically aligned nations will follow suit. Countries such as the US, Canada, Japan, Australia which are the main consumers of value added products will also likely take a distance from Pakistan. They might not outright impose a trade ban on Pakistan but are far more unlikely to provide preferential treatment to Pakistan in future trade deals, and understandably so. If the writ of the Pakistani state is so weak that it gives in to the demands of every movement, why should they take an unnecessary risk and increase their economic dependence on such an unpredictable and weak partner.
Reality is reality. We have no economic leverage over the EU or the nations that consume value added products. They have made the rules of the worlds economic game and we have to play it or leave and cry in a corner by ourselves about how unjust it is. Fighters adapt to reality, strengthen themselves and make themselves so strong that other players value them and their opinion. Losers quit playing and drown themselves in self-pity about how unjust the world.
When the British took over political and military control of the subcontinent the Muslim community had two choices. Drown themselves in self-pity which a large section of our community did do, or react to the reality and make a place for ourselves and and our future generations as dignified members of society like Sir Syed did when he established the Aligarh University much to the discontent of a large part of the ulema hazrat of that time. The University gave us alumni Mohammad Ali Johar, Liaqut Ali Khan, Maulana Shaukat Ali, Abdur Rab Nishtar and other leaders and political workers who were instrumental to the Pakistan movement. There is a reason why the Quaid called Aligarh the "Arsenal of Muslim India" (3).
Pakistan in 2021 is also at a crossroads. We can give in to the desire of self-pity which is always the easiest way to deal with a problem or accept reality that the world economic system is driven by a set of countries who currently do not value us or our opinions due to our lack of financial power. Ultimately the goal is for us is to grow economically, make other countries reliant on trade with us and then everyone will listen to our religious sensitivities.
The vast majority of our exports go to the USA, EU, China and Saudi/UAE. We need to look beyond these destinations. There are huge growing markets in the developing world which our businessmen overlook. We just seem to export to wherever we have an expat community or existing relationships.
To do that we'd have to start making things that consumers want to buy, rather than focusing on raw materials, agriculture, cotton - all the stuff we currently focus on.
IF they did that, it would be a silver lining to a dark cloud, but certainly not a fix. At the end of the day most of the money is in the western countries, they're the ones buying things.