Pakistan floods renew focus on stalled US trade bill

A coalition of Pakistani American organisations urged Obama to press Congress to approve the ROZ bill.

Reuters August 20, 2010

WASHINGTON: Devastating floods in Pakistan have renewed attention to an unfulfilled US promise to create a trade program to help that country recover from an earthquake in 2005 that took close to 80,000 lives.

A coalition of Pakistani American organisations on Thursday urged President Barack Obama to press Congress to approve the "Reconstruction Opportunity Zones" bill first promised by former President George W Bush.

"By passing this bill, it will not only help Pakistan to get on its feet by creating over a million jobs in the country but would also improve America's shattered image in Pakistan," said the groups, which included the Council of Pakistan American Affairs and the Pakistani American Leadership Center.

Heavy flooding in Pakistan has left 4 million people homeless and 8 million people in urgent need of humanitarian assistance. The dire situation has prompted the United States to earmark for flood relief $200 million of a 5-year, $7.5 billion aid package already planned for Pakistan.

Domestic politics have blocked approval of the ROZ bill ever since Bush promised it in the aftermath of the 2005 earthquake centered in Kashmir. It aims at creating jobs in Pakistan and Afghanistan by providing duty-free access to the United States for certain goods made in approved zones within the two countries.

Pakistan's biggest exports to the United States are cotton clothing and household goods. Those items accounted for $2.4 billion of its total exports of $3.2 billion to the United States last year. The United States collects some $300 to $400 million each year in duties on imports of clothing, bedsheets and towels from Pakistan, said Edward Gresser, president of the Democratic Leadership Council and a trade policy analyst.

Hard to reconcile

That US tax on Pakistani business is hard to reconcile with Congress's commitment to provide $1.5 billion per year in aid to Pakistan with one major goal of helping create a strong private sector, he said.

"It's hard to figure out why that is a logical approach ... I think it's worth thinking that through and deciding whether the policies we have that treat Pakistan more harshly than China, Japan, Britain or really any other big trading partner are sensible," Gresser said.

The Democratic-controlled House of Representatives passed a ROZ bill in 2009. But US retailers and clothing importers that favour a broader programme for Pakistan complained the legislation was too narrow in scope in deference to US textile makers' concerns.

Republicans also objected it imposed overly restrictive labor requirements on Pakistani companies. The controversy blocked Senate action on the legislation, with no resolution in sight. US lawmakers are currently on recess and will not return until mid-September. US trade officials pledged after a meeting with their Pakistani counterparts in April to push for approval of the ROZ bill, but so far without any noticeable impact.

The US Trade Representative's office also is working with Pakistan "to address the impediments to the country's existing exports, including countering negative perceptions about security and other factors that may prompt US and other buyers to shop elsewhere," a spokeswoman for the trade agency said.

"We also are looking at ways we can assist Pakistan in diversifying exports and moving up the value chain, including boosting the technological and human resources capabilities of Pakistan's export industries. The current natural disaster in Pakistan adds urgency to these efforts," she added.


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