Welcome move by the EU

It has become a truism that for long-term development, countries have a greater need for trade, not aid. European Union member-states which have agreed to reduce duties on imports of Pakistani textiles for a limited time, are the first to act on this maxim and their decision needs to be welcomed. While the proposed measure is intended to help Pakistan deal with the economic fallout of the floods, it will also provide a significant boost to our textile industry. Ideally, the concessions should have been made permanent, but that would lead to stiff opposition from textile-producing countries like France and textile-exporting countries like India, Bangladesh and China. Even these limited benefits, however, should be warmly welcomed for giving a leg up to an important Pakistani industry that has suffered greatly in the last decade.

The textile industry should not become complacent while reaping the benefits of lowered duties. The flood may have destroyed the cotton crop, but that was only the final piece of bad luck to an industry that has been plagued by problems. Shrinking global demand and Pakistan’s perpetual power woes led to a 20 per cent decline in textile exports. Still, textile exports are worth nearly $10 billion to the country, more than half of total exports, and the government and the textile industry need to ensure its future by lowering cost of production to a level closer to that of our competitors by using modern technology and spending more on research and development. The government could also reintroduce a small tax on domestic sales of textile products to give cash-strapped producers greater liquidity. The US has already declined a request to cut tariffs on Pakistani exports so we should not expect more trade concessions in the days ahead. Instead, we should be grateful for the concessions offered to us and ensure that we use this as a temporary balm rather than a solution to our economic woes.

Published in The Express Tribune, September 18^th, 2010.