Flood-hit Pakistan says it needs West’s trade, not just aid, to recover and to stop militants

By Nahal Toosi, AP
Sunday, October 3, 2010

Pakistanis push trade, not just aid, after floods

FAISALABAD, Pakistan — This eastern Pakistani city is known for the roar of its power looms and the buzz of its sewing machines. Now, following massive floods that devastated the cotton crop, another noise is threatening to drown those out: the pleas of a struggling textile industry begging the U.S. and Europe to open their markets further.

It’s a tough sell in the West, where the economic slowdown has left governments skittish about concessions that could cost jobs or votes. The European Union has agreed to tariff cuts, but only temporary ones. The United States, where control of Congress is at stake in elections next month, is avoiding them altogether, touting instead its billions in taxpayer-funded humanitarian aid.

But Pakistan argues that trade, not aid, will deliver long-term economic stability and also help combat terrorism by giving poor youths an alternative to joining militant movements: money and jobs.

The country’s textile industry, which employs more than 10 million people and produces more than half of its $19 billion in annual exports, has been hit hard by electricity and natural gas shortages, inflation and deteriorating security conditions in the past three years. Then, this summer’s floods wiped out 2 million bales of cotton.

“Obviously, we’re very worried, because we could lose our jobs at any time,” said M. Shahid Malik, a 30-year-old father of three who stood soaked in sweat from running power looms. “We have to work so we can meet our living expenses.”

Workers in Faisalabad weave, dye, sew, fold and package colorful bed sheets, clothes and other goods destined for stores from Wal-Mart in the United States to Carrefour in Europe.

Some companies expect to reduce production by as much as 30 percent because of the cotton shortage. They may have to raise prices to stay afloat, though that would hurt them in international markets.

“We will try to survive, but it will be very difficult for us, ” said Sohail Pasha, chief executive of Riaz Enterprises, who expects his company will export about $21 million worth of curtains, bedding and other goods this year, down from its usual $25 million.

U.S. and European lawmakers say they support the concept of giving Pakistan more market access.

In mid-September, the European Union pledged to waive tariffs temporarily on key Pakistani imports, a move that could be worth $290 million to $380 million a year. But businessmen here are skeptical the final deal will help much.

America, Pakistan’s largest trading partner, has been the more frustrating ally, industry leaders say.

The U.S. has proposed creating “reconstruction opportunity zones” in Pakistan’s militant-ridden northwest. Goods made in those zones would be given lower tariffs and other trade preferences. But it would do little to help the textile industry in Pakistan’s heartland.

Even that legislation is stuck in the Senate, with little prospect of emerging while the U.S. unemployment rate hovers near 10 percent.

Pakistan has allies, including the U.S. Chamber of Commerce, that want to expand the reconstruction zone legislation to cover the entire country, or at least the area hit by the floods.

Such proposals face stiff opposition from the American textile and apparel industry, which has lost more than 250,000 jobs — more than one-third of its work force — since 2004, according to the National Council of Textile Organizations.

“At a time when America is struggling to recover from the worst economic downturn in 80 years, and with national unemployment at historic levels, the last thing that the Obama administration should consider is a proposal that destroys critical manufacturing jobs,” U.S. textile industry groups said in a Sept. 1 letter opposing the U.S. chamber’s call for expanding the legislation in light of the floods.

One trade expert said that expanding Pakistan’s access to the U.S. market would have little impact on American workers, who mostly make firefighting suits, auto seat covers and other higher-end textile products that Pakistan doesn’t produce.

But she agreed there’s little chance of any legislation passing. “I had one (congressional) staffer tell me if it’s even one U.S. job right now, we’re not going to do it,” said Kimberly Ann Elliott, a senior fellow at the Center for Global Development in Washington, D.C. “It was a Democrat.”

Pakistani business leaders say the lack of action is particularly galling because of their country’s cooperation with U.S. requests to root out militants who are launching attacks into Afghanistan from Pakistan’s northwest. The army-led effort has sparked retaliatory attacks by the militants on targets across Pakistan.

The relentless violence is bad for business. Pakistani businessmen sometimes miss trade conferences because Western countries are slow to grant them visas as they run security checks. Many would-be foreign investors are too nervous to visit Pakistan.

“Pakistan deserves more,” said Waheed Raamay, chairman of Faisalabad’s Council of Loom Owners. “We are the ally of America in the war against terror, and we have lost billions of rupees and thousands of lives in this war. And this is the time when they should support our economy.”

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