Textiles and made-ups are Pakistan's largest export sector, and the compliance that governs them mostly does not come from Pakistani law at all. It comes from the buyer.

An international retailer's code of conduct, enforced through audits and backed by the threat of delisting, is in practice a more demanding and more immediate regime than anything a domestic inspector applies. Manufacturers who treat it as paperwork lose orders.

Two layers of obligation

Domestic. Factory registration and licensing, labour registrations, minimum wage, working hours, boiler and electrical safety, fire safety, and environmental compliance for dyeing and processing units. See the registrations employers keep missing and environmental approvals and enforcement.

Contractual, imposed by buyers. Social compliance codes, safety standards, chemical restrictions, traceability, and audit rights. These are enforceable because they are terms of your supply agreement, and breach is a commercial event before it is a legal one.

The second layer is where most manufacturers are actually exposed, and it is tightening rather than relaxing — European supply chain due diligence requirements now push buyers to police their suppliers more closely than before.

What audits look at

Prepare for these as an ongoing state, not an event:

  • Age verification and records establishing every worker's age
  • Wages and hours — payment at or above minimum wage, overtime paid at the correct rate, hours within limits, and records that match reality
  • Freedom of association, and the treatment of worker representatives
  • Discrimination and harassment, including a properly constituted Inquiry Committee
  • Health and safety — fire exits and drills, electrical safety, machine guarding, chemical handling and personal protective equipment
  • Building and structural safety
  • Environmental discharge and waste handling
  • Subcontracting — whether work is being sent out, and to whom

The single most damaging audit finding is undisclosed subcontracting. Buyers treat it as a trust failure rather than a technical breach, because it means their code is not being applied where the work is actually done. Disclose your subcontractors and audit them yourself.

The second most damaging is double books — one set of wage and hour records for the auditor and another that is real. That is not a finding you recover from with the same buyer.

Chemical and product restrictions

Buyers impose restricted substances lists that reach further than Pakistani regulation, driven by the law of their own markets. Dyes, finishes, azo compounds, and testing requirements for children's products are the usual subjects.

Get testing done at accredited laboratories, keep the reports, and flow the requirement down to your own suppliers of yarn, dye and trims — because a claim will come to you regardless of where the substance entered the chain.

The contract terms that decide claims

Export sale terms are frequently the buyer's standard form, and the clauses that matter are:

Specification and approval. What the goods must be, and whose approval of samples binds. Approved counter-samples are your best defence against a later quality rejection.

Inspection. Where it happens, by whom, and whether an inspection certificate is conclusive. Pre-shipment inspection at your factory is far better for you than rejection after arrival.

Delivery and Incoterm — who bears cost and risk, and from where. See starting to import or export.

Time. Whether shipment dates are conditions, and what remedies attach to delay — chargebacks, air freight at your cost, discounts, or cancellation.

Chargebacks and deductions. The provision that quietly erodes margin. Cap them, require documentation for each, and require notice within a period.

Termination and order cancellation, including what is payable for work-in-progress and materials already committed. Manufacturers left with fabric bought for a cancelled order and no contractual remedy is a recurring story.

Governing law and forum. Arbitration seated in a New York Convention state is generally preferable to litigation in the buyer's home courts. See the arbitration clause you sign today.

Getting paid

Payment mechanics matter as much as the price:

Letters of credit are paid against documents. A discrepant presentation may not be paid even where the goods are perfect, so check that you can actually comply with the terms — required certificates, latest shipment date, presentation period — before you accept the LC.

Open account terms shift the risk to you entirely. Consider credit insurance.

Export proceeds must be realised and repatriated within the prescribed period under the State Bank framework. Unrealised proceeds because a buyer disputed the goods becomes a regulatory problem on top of a commercial one.

Rebates, refunds and duty schemes

Exporters operate within schemes for duty and tax remission on inputs, and sales tax refunds. These require precise documentation and reconciliation, and they are audited. See sales tax in Pakistan.

Claims are delayed or rejected on documentation far more often than on substance.

Practical advice

Keep one set of records, accurate. Disclose and audit subcontractors. Get counter-samples approved in writing. Read the LC before accepting the order. Cap chargebacks. Test to the buyer's restricted substances list and keep the reports. And treat the buyer's code as a contract term, because that is what it is.

How the firm can help

We advise manufacturers and exporters on domestic licensing and labour compliance, review buyer codes and supply agreements before acceptance, and negotiate the terms that actually determine exposure — chargebacks, cancellation, inspection and forum.

We act in disputes with buyers, in claims against carriers and insurers, in customs and refund matters, and in labour and environmental proceedings.

If you are being asked to sign a supply agreement or a code of conduct, contact the firm before you do.