Economics, International economy

Trade Bill Misses Development Opportunities in Pakistan

The New York Times today reports on anti-Americanism in Pakistan and how U.S. special envoy Richard Holbrooke and other high-ranking Obama administration officials in Pakistan are facing these sentiments. Noted at the end of the article is how Amb. Holbrooke is advocating the importance of a “soft power” agenda in his day-to-day work. As an example of possible use of U.S. “soft power” in Pakistan, the article references a trade bill, passed by the House but pending in the Senate, that allows duty-free access to the U.S. market for certain textiles from Pakistan.

The pending bill, HR 1318, would create “Reconstruction Opportunity Zones” in the conflict-ridden Northwest Frontier Province in Pakistan. (The bill also sets out to create such zones in Afghanistan, but it is unclear whether Afghanistan has a viable textile industry that could take advantage of the ROZs.) The Obama administration supports these ROZs as providing a way to raise the plight of poverty-stricken people in Pakistan and help reduce the terrorist threats to U.S. and coalition forces fighting Taliban and Al Qaeda insurgents in bordering Afghanistan.

Pakistan exports $3.1 billion worth of textiles to the United States annually and faces 15 percent to 25 percent import tariffs at the U.S. border on its textiles. So, the projected $100 million benefits of HR 1318 sound positive. However, the bill excludes from duty-free access a large swath of popular textiles that are imported from Pakistan—cotton trousers and shirts—and also disallows the duty-free access if manufacturing facilities fail to adhere to core labor standards, i.e. provisions of the 1998 International Labor Organization Declaration. These conditions appear to be at the behest of U.S. manufacturers and labor groups. U.S. retailers have argued that restrictions in the bill that make the plan a hollow gesture.

So, let’s get this straight—we are willing to dole out billions of dollars in aid to Pakistan every year with few conditions and tangible results. Yet, when there is an opportunity to pursue policies to potentially develop Pakistan’s manufacturing base for it to take advantage of its low-skilled labor we inundate the bill with conditions that essentially gut its benefits? The point of the bill is to promote development and alleviate poverty and, in turn, curb violence in Pakistan. It may not make Pakistanis hate us less, but may, in the long run, provide jobs and remedy dire economic conditions which breed so much discontent. Trade and security policy are integrally tied. I hope, if this bill does become law, its provisions will reflect this.

Comments are closed.