For all the talk of expanding the relationship between Pakistan and the United States beyond its current military-dominated dimension, Washington seems uninterested in moving forward on trade and investment agreements with Islamabad.
A meeting of the United States-Pakistan Trade and Investment Council is set to begin on Tuesday (today), the fifth since the US-Pakistan Trade and Investment Agreement (TIFA) was signed in 2003. Most observers, however, feel that the talks, the stated goal of which is to enhance trade and investment between the two countries, are unlikely to achieve anything.
Commerce ministry officials say they plan on pushing the United States to pass the Reconstruction Opportunities Zones Bill (ROZ), a piece of legislation that would grant tariff-free access to goods produced in areas of Pakistan most affected by the Taliban militancy, especially the tribal areas. Pakistan is also likely to ask for easier access to US markets for exporters located in other parts of the country, through the Generalied System of Preferences (GSP).
Yet despite being in line with the 9/11 Commission Report’s recommendations of encouraging economic development in areas that suffer from an preponderance of radicalism, the ROZ bill lapsed in the US Senate after controversial language about labour issues was included by the US House of Representatives, which passed the bill in 2009.
Commerce ministry officials say they are pushing the US government to reintroduce the bill in the Senate, though one trade expert, who wished to remain anonymous due to the sensitive nature of his job, said that the strained ties between the two countries are unlikely to create any sense of urgency amongst US legislators.
Trade experts have, however, criticised the Pakistan government’s approach as well. They argue that pursuing a GSP is a flawed strategy since it would only lower tariffs on a select number goods and services.
GSP would be rendered moot if the Non Agriculture Market Access negotiations going on under the Doha Round of World Trade Organization talks are successful. NAMA would reduce tariffs on most items that Pakistan exports to the United States and Europe by half.
Experts recommend pursuing a free trade agreement with the United States, which would require Pakistan to lower many of its own tariffs for US goods but would have a net positive effect for the Pakistani economy.
The US has, in the past, been somewhat more willing to move forward with the bilateral investment treaty, though commerce ministry officials say that the two countries are unlikely to make progress on that front owing to Islamabad’s refusal to accept Washington’s proposal on a dispute resolution mechanism for US investors in Pakistan.
The US wants disputes to be handled under American law, a stance that Pakistan objects to. US investors are shy of making investments in Pakistan because they do not trust Pakistani courts.
During talks the US would also raise the issue of intellectual property rights protection in Pakistan. Washington wants Islamabad to improve the intellectual property rights situation in the country.
Published in The Express Tribune, September 20th, 2011.
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