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Pakistan Deal Over Apparel In Question

<CS:BOLD>WASHINGTON -- Pakistani President Pervez Musharraf is scheduled to arrive here today amidst uncertainty whether the White House will extend further textile and apparel trade benefits as a thank-you for helping in the war on...

WASHINGTON — Pakistani President Pervez Musharraf is scheduled to arrive here today amidst uncertainty whether the White House will extend further textile and apparel trade benefits as a thank-you for helping in the war on terrorism.

The Pakistani’s request for trade breaks has been mired in election-year politics, resulting in the Bush administration being caught between rewarding a valuable Mideast ally and honoring promises to Capitol Hill textile-state lawmakers to minimize the impact of Pakistani trade breaks on domestic mills.

Pakistan’s Commerce Minister Abdul Razaq Dawood arrived in Washington on Monday in advance of Musharraf’s arrival and meeting Wednesday at the White House with President Bush. Some kind of U.S. announcement regarding Pakistan is scheduled that day at a Rose Garden news conference.

A spokesman for the National Security Council said Monday that there “may” be an announcement of “further assistance” for Pakistan during a Bush-Musharraf meeting at the White House. However, the spokesman said it was “too early to talk about” whether textile and apparel concessions will be included.

Grant Aldonas, Undersecretary of Trade at the Commerce Department’s International Trade Administration, told reporters Monday that the administration is still mulling its decision on possible Pakistani textile-apparel trade breaks, “as well as what we’re trying to do in terms of establishing a longer-term relationship with the Pakistanis.”

Acknowledging opposition from the domestic textile industry to expanding Pakistani market access, Aldonas said: “There are plenty of issues that our industry has with Pakistan that we’d like to have a forum where we could continue to have conversation and work on that.”

Last week, Aldonas tested one trade-break proposal with House and Senate textile-state lawmakers, which would allow Pakistan to shift 25 percent of its unused quota to categories where quota has been used up or is about to be closed, like cotton yarn, apparel and home furnishings. Administration officials pitched their Pakistan quota plan — amounting to $100 million to $150 million in increased imports — as being far less onerous to U.S. mills than granting Pakistan the menu of trade breaks the country is seeking, sources said.

The White House doesn’t need congressional approval for changes in quota, but Bush officials wanted to assure GOP allies from textile states, particularly in the House, that they were honoring lawmakers’ concerns about minimizing the impact on domestic mills of any breaks for Pakistan, sources said.

However, a group of 11 GOP textile-state lawmakers rejected the administration’s sentiment in a letter sent to Commerce Secretary Donald Evans last week.

The lawmakers, including Reps. Robin Hayes (R., N.C.) and Jim DeMint (R., S.C.), wrote: “We have repeatedly alerted the administration to the perilous state of the textile and apparel industry. On the other hand, Pakistan’s textile and apparel economy continues to grow, increasing by 8.5 percent during 2001.”

The letter also noted that 146,000 U.S. textile and apparel workers last year “lost their jobs as bankruptcies and plant closings have become commonplace.”

Hayes and DeMint were among several House GOP lawmakers that the President courted in December in order to shore up House support to pass renewal of presidential trade promotion authority, which is key to Bush’s trade agenda. In securing votes, the administration made various pledges to help the domestic textile industry. TPA squeaked by on one vote.

Meanwhile, Pakistani officials expressed concern Monday that there was still no word from the White House as to whether textile and apparel trade breaks were forthcoming.

“Typically, when a foreign head of state makes a visit, a deal is announced” in advance, said a source involved in the parley. “There is no indication that tariff relief is even going to be mentioned and we are disappointed and dismayed.”

Pakistan would like textile and apparel relief to be the centerpiece of any aid, which could also include debt relief. Such trade concessions are needed to offset the increased cost to importers from war insurance and shipping delays due to the terrorism conflict, Pakistani officials said.

Without help, these officials forecast their textile and apparel industry in the second quarter could lose up to half of its 5 million employees involved in production and related services on lost spring and summer orders from U.S. buyers.

Pakistani officials said U.S. demand for their imports in January fell 32 percent against year-ago figures and 177 apparel and textile plants closed in December. The twin industries account for about two-thirds of Pakistan’s total exports, according to the government. It is also the top supplier to the U.S. of cotton yarn imports, cotton fabric and cotton home furnishings, according to Commerce data.

Further complicating matters is a conflict within the Pakistani trade delegation over how hard to push the Bush administration, the source said. One faction wants to ratchet up the pressure on administration officials for a reduction in duties, while another faction favors a softer approach, according to the source.

“Although they are disappointed and they know [modest concessions] will hurt their textile and apparel industry a lot, they are not willing to scream bloody murder because it might jeopardize the potential long-term strategic relationship with the U.S.,” the source said.

To date, the Bush administration has offered modest apparel and textile concessions, which Pakistani officials and the U.S. import community claim fall short of the original Pakistani request for a temporary suspension of tariffs and quotas through 2004.

Last fall, the administration dropped a unilateral quota on cotton combed yarn from Pakistan after the U.S. repeatedly lost challenges in the World Trade Organization to the limits. The White House also revised three years of data discrepancies in 13 quota categories in Pakistan’s favor, including cotton trousers and shorts and man-made fiber nightgowns, which essentially increased quotas in 2001.