US
drops plan for Pakistan border
jobs By Syed Fazl-e-Haider
KARACHI - The United States' plan for
establishing war-zone factories in Pakistan's
tribal areas along the border with Afghanistan now
looks most unlikely to be pursued during the
present Barack Obama administration.
United States trade officials in
Washington told a visiting Pakistani delegation
headed by Commerce Secretary Zafar Mahmood last
month that the US had no intention to move any
legislation that would help to establish
Reconstruction Opportunity Zones (ROZs), which
were meant to guarantee the duty-free import of
local produce into the US market.
The ROZs
concept was developed to give duty-free access to
products from designated parts of the border
region between Afghanistan and Pakistan in a bid
to create new industries and
jobs in the longtime
Taliban stronghold as they rebuild from fighting.
Then-president George W Bush promised six
years ago to help set up ROZs in the border areas,
but the measure has been bottled up in the US
Congress.
The ROZ legislation raised the
concern of US textile makers and unions that it
could lead to job cuts in the US. Critics say the
ROZs could be used as a place to warehouse, label
or package textile goods made in the
industrialized Pakistani cities of Faisalabad and
Karachi. They also contend that the ROZs could
lead to transshipment from China, particularly
since customs officials would be effectively
unable to monitor the trade from that region.
Scrapping the ROZs deal has disappointed
the Pakistani business community, which was hoping
for increased market access to the US and a boost
to overall exports.
Local analysts believe
the US offered ROZs as an economic "carrot" to
Pakistan and has used it as a politically more
feasible tool for benefiting trade compared with
any reduction in duty as an immediate market
access initiative.
"The United States
Trade Representative [USTR] officials told us in a
meeting that Washington will not move any
legislation for the establishment of ROZs this
year," Dawn reported the commerce secretary as
saying. "One thing is clear. The present US
administration will not consider approving the ROZ
legislation. They prefer to leave that job to the
administration that will come into office after
the next presidential election [in November]."
ROZs were planned to be set up in the
whole of Khyber Pakhtunkhwa province (formerly
Northwest Frontier Province) and in Azad Jammu and
Kashmir (Pakistan-administered Kashmir) which
borders India.
A bill to establish the
ROZs was proposed 2009 by Democratic lawmakers
Senator Maria Cantwell of Washington and
Representative Chris Van Hollen of Maryland, but
it has languished ever since amid feuding over
labor standards and duty-free provisions.
The Pakistani business community had high
hopes on progress after what appeared a commitment
by the Obama administration to early realization
of the ROZ trade program.
"I have been
telling everyone from day one that this project
would not materialize," Dawn quoted Haji Ghulam
Ali former president of the Federation of Pakistan
Chambers of Commerce and Industries as saying. "US
officials kept asking the Pakistan bureaucracy to
conduct meetings on procedures, etc, but no
progress has been made since. If America had any
interest in this project, it could have been
implemented much earlier."
United States
retailers and clothing importers favor the ROZs
program for Pakistan, while American manufacturers
and unions say US retailers would take advantage
of the duty savings and the 35 US cents an hour
labor costs in Pakistan, putting at stake workers'
jobs in the US.
Goods produced in ROZs
would be exported to the US at zero tariffs. As a
result of a free-trade agreement signed in 2006,
the Pakistan-China Investment Co (PCIC) is working
as a window of the China Development Bank for
evaluation of joint ventures between the two
countries. The Chinese would not miss an
opportunity to invest directly in the ROZs or
through PCIC.
Pakistan's exports textile
products worth US$3 billion a year to the US,
where the total textile market is worth as much as
$110 billion. The country's share in the American
market could grow to $10 billion in a short time
if Washington allows it duty-free market access.
Pakistani officials argue that a reduction
in import duty on textiles would not cost US jobs,
but would increase Pakistan's share of US textile
imports to 0.5% from 0.2% by giving it a
competitive edge over competitors like India,
Bangladesh and Vietnam.
The idea of
setting up ROZs came when a US consulting firm
issued an assessment report during the George W
Bush administration. The study emphasized the need
to combat unemployment of young educated males and
reduce poverty in the tribal areas. A lack of
economic development in the areas resulted in
turning them into a base for extremists.
Syed Fazl-e-Haider
(http://www.syedfazlehaider.com) is a
development analyst in Pakistan. He is the author
of many books, including The Economic
Development of Balochistan (2004). He can be
contacted at sfazlehaider05@yahoo.com.
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