Pakistani textile industry is, reportedly, deeply concerned about the conditions attached by the US to the proposed duty-free access of textiles to be limited to Reconstruction Opportunity Zones (ROZs) located at the border between Pakistan and Afghanistan.
During last week of March 2009 President Barrack Obama supported duty-free access for certain textile and apparel imports from Pakistan manufactured in ROZs. Two bills were recently reintroduced in the House of Representatives and Senate offering duty free access.
"How can such a plan be successful if neither any garment factory has been established on the border areas of Pakistan and Afghanistan nor do people of these areas have any know-how about manufacturing textile and apparel," said one of the textile stakeholders in an exclusive chat with Business Recorder. Most of the textile and apparel factories in the country are established in Karachi, Faisalabad or other parts of Punjab.
Trade preference for the ROZs was initially proposed by the former US President George Bush a few years ago and his administration had introduced two bills unsuccessfully in the Congress. The objective of the bills was to promote economic opportunities in the region thereby tackling the root cause of militancy and terrorism. Under the new trade preference, rules of origin would impose a minimum 35 percent value addition in these ROZs.
In addition, a series of products would be excluded from the duty-free benefits including cotton knit and cotton trousers. Industry stakeholders are of the view that 90 percent of Pakistans textile exports to the US are cotton knit shirts and cotton trousers.
If these products are to be excluded from the proposed duty-free benefit, and then the utility of the policy would be compromised, said Bilal Mulla, Chairman FPCCIs standing committee on textile. "If there is any such policy in the offing, it will not benefit existing industry," he added. Textile sector has also expressed annoyance over the US textile sectors allegations that massive fraud is to be expected by Pakistani exporters with most duty free imports actually coming from outside the ROZs. "It is totally nonsense, why are we being accused before the policy comes into effect," Mulla maintained. The sources said, the House version of the bill also includes a complex system for verifying that textile and apparel plants in ROZs actually comply with core labour standards. A labour official would be named by Pakistani authorities for developing and maintaining a registry of textile or apparel exporting enterprises and co-ordinating a monitoring program which would actually be conducted by the International Labour Organisation (ILO).
The program would include visits to plants and an annual report with a list of non-complying companies. "If a legislative text could possibly be approved by the Congress this year, US importers already warned it could be rather ineffective," he continued.
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