Bush Proposes Production Plan for Afghan Border Region
Apparel and textile producers are used to venturing deep into the Third World looking for lower prices, but it remains to be seen if the industry is ready to take to the border regions of Afghanistan and Pakistan, even for looser trade restrictions.
WASHINGTON — Apparel and textile producers are used to venturing deep into the Third World looking for lower prices, but it remains to be seen if the industry is ready to take to the border regions of Afghanistan and Pakistan, even for looser trade restrictions.
Reconstruction opportunity zones, however, fit with President Bush's larger vision for the region, and the administration is putting the finishing touches on its proposal to Congress that would lower duties for goods made there.
"We're cooperating to strengthen our economies," said Bush at a March 2006 press conference with Pakistan President Pervez Musharraf.
Bush said the idea of special trade zones was backed by "the theory that economic vitality and economic prosperity for people in the remote regions of Pakistan will help defeat the terrorists and their hateful ideology."
The exact details are not known, but the understanding in the industry is that to qualify for special treatment, apparel made in the region would have to conform to a single transformation rule of origin. That means, for instance, that foreign-made materials could be assembled into apparel in the zone and still qualify.
Goods covered under the quota agreement with China, such as cotton trousers and cotton knit shirts, are also expected to be excluded in the proposal.
"It certainly seems to be far too narrowly defined," said Julia Hughes, senior vice president of international trade at the U.S. Association of Importers of Textiles and Apparel. "While it may represent an opportunity for some manufacturers who are already doing business in Pakistan, the security issues in the Pakistan and Afghanistan border regions mean it's not likely to attract a huge business."
Despite myriad security concerns and a general reluctance among Western sourcing executives to go to the country, Pakistan is the second-largest apparel and textile importer to the U.S., with shipments of 3.3 billion square meter equivalents, or 6.2 percent of the total market, at a value of $3.2 billion.
While careful to acknowledge the plight of the region, Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said he pushed for the scope of the benefits to be narrowed and questioned whether the zones were practical."In the short term, legitimate production and trade from the areas they'll designate a ROZ is probably going to be small," said Tantillo. "The problem comes in under the enforcement issue. Are we going to be sending customs agents to Tora Bora to figure out how they actually made the garments and the towels and the sheets? We see enormous potential for transshipment and illegal activity."
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