USTR EXPECTS PAKISTAN DEAL

Byline: Kristi Ellis

WASHINGTON — U.S. Trade Representative Robert Zoellick said Tuesday he thinks Pakistan will offer “reciprocal” textile and apparel market access to U.S. exporters if the U.S. temporarily suspends tariffs on a broad range of textile and apparel products for its cooperation in the campaign against terrorism.
“If you look at the textile tariffs in Pakistan, they are much, much higher than in the United States,” Zoellick told an audience at a meeting held by the Council of Foreign Relations. “When the EU [European Union] put together a package, the Pakistanis also made some reductions.”
The EU has proposed a package that would remove all tariffs on apparel, but not textiles and increase quotas for Pakistani textiles and clothing by 15 percent. As part of the proposal, which must be approved by EU nations and the European Parliament, the Pakistanis agreed to a 5 percent reduction across the board on EU textile and apparel exports.
Meanwhile, the Pakistan government and U.S. importers are waiting on a U.S. deal to be struck. U.S. officials have been considering legislation to eliminate duties, though the Bush administration has made no formal proposal. Zoellick said Tuesday a trade component will be part of a larger economic aid package for Pakistan.
“Frankly, if we are going to move forward on this, I would hope it would, to a degree, be reciprocal,” he said.
Pakistan’s huge textile industry, which exports $1.9 billion to the U.S., has become a negotiating chip in the war against terrorism. The Pakistan government is seeking a temporary suspension of tariffs and quotas on textile and apparel exports to the U.S. through 2004, and U.S. importers are also calling for incentives to continue doing business in a war zone.
The domestic textile industry, which has lost 90,000 jobs in the last 18 months, opposes duty-free or quota-free treatment for a broad range of Pakistani apparel exports.
The American Textile Manufacturers Institute has said it would support duty-free treatment for hand-knotted and hand-hooked floor coverings from Pakistan, which it contends could be worth over $100 million annually.
“Most of what we can do is either make adjustments and add products to the [General System of Preferences for duty breaks] or tariff reductions, which has to be done through Congress,” said Zoellick. “We’ve been trying to have consultations with Congress about the possibility of having temporary tariff [reductions], to support [Pakistan’s] overall economic growth program.”
But it is a delicate balancing act, according to Zoellick. He said the domestic textile industry has lost 60,000 jobs in the past year, adding that its concerns have to be taken into account.
“The question is: How can we help integrate [Pakistan]?” said Zoellick, noting that 85 percent of the country’s exports are in textiles and apparel. “The larger case is that these developing countries — if we are going to help them survive — have to produce and be part of the international economy, and we have to structure our trading relationships so they have an opportunity.”
In related news, the World Trade Organization over the weekend issued a revised draft agenda in anticipation of a new round of global trade talks set for Nov. 9-13 in Qatar. In textiles, the draft calls for changes in how growth rates are calculated for quotas on textile and apparel imports.
“We are disappointed that the textile and apparel implementation issues don’t go far enough,” said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel. “We think it needs to go further than merely trying to revive calculations of growth and encouraging countries to be more liberal.”
Hughes, echoing what many developing countries are seeking, called for an acceleration of the elimination of textile and apparel quotas, not a recalculation of existing quotas. The 10-year phaseout of quotas, which expires on Dec. 31, 2004, was established during the Uruguay Round in the Agreement on Clothing & Textiles.
Trade officials have stated that tariff reductions on textiles and apparel will also be on the table if a new round of global talks is launched. A consensus on an agenda must be reached among all 142 WTO members before a new round can begin, and that is still undecided.
In his speech, titled, “The WTO and New Global Trade Negotiations: What’s at Stake,” Zoellick said the U.S. will continue to pursue trade liberalization through regional and bilateral negotiations “if the WTO falters.”

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