US ties are not dispensable

The US is Pakistan’s largest trading partner. Exports to the US were 128 per cent higher than those to China in 2011.

Kazim Alam July 22, 2012
Supporters of the Difa-e-Pakistan Council are bent on blocking Nato supplies. Rubbishing the possibility of any backlash from Western governments in the form of hostile trade policies and international isolation for Pakistan, they say the US is already a sunset superpower and that Pakistan should foster stronger trade ties with China and other emerging powers.

According to critics, two fully-fledged wars in the last decade have shaken the economic foundations of the US. However, when the US-led wars in Afghanistan and Iraq were at their peak, its war-related expenses amounted to $125 billion a year, which is not even one per cent of the total size of the US GDP.

Also, while referring to its heavy defence spending, many people feel that America will soon crumble under its own military weight. What they fail to notice, however, is that US defence spending forms only 4.9 per cent of its GDP, which is hardly 0.6 per cent higher than that of China, according to CIA’s The World Factbook.

The reason for US’ unrivalled military power is that it rests on a solid economic base, which is reflected in the enormous size of its economy. It has been the world’s largest economy for the past 130 years and has been producing around one-quarter of the global GDP for the last six decades.

But what should we make of the claim that the United States is on the wane?

Businesses and technologies of the future, like nanotechnology and biotechnology, are all being developed in the US. While many Pakistanis never tire of pointing out the outsourcing of manufacturing operations from the US to Asia, they should take a closer look at profit margins. According to iSuppli Corporation — a market research firm — the bill of materials of an iPhone 4 (manufactured in China) in 2010 was $187.51 as opposed to its unsubsidised price of $600 in the US market. The stark difference between the manufacturing cost and the retail price makes clear that real money lies in branding and retail, which can prosper only in countries with higher per capita income.

America is Pakistan’s largest trading partner.

Our exports to the US were 128 per cent higher than those to China in 2011. The US is indeed indispensable for us. We should try to achieve economic growth within the international economic and political system instead of trying to overturn it by taking on a superpower unnecessarily.

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Kazim Alam
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