The imposition of conditionalities, like duty-free treatment to export of low-valued textile products from the proposed reconstruction opportunity zones (ROZs) to US, is not a good omen for the problem-riddled textile industry of Pakistan, sources told Business Recorder.
They said that the proposed duty-free treatment would be for approximately 51percent of total textile and clothing exports to the United States. "Export of all textile and clothing articles from Pakistan to USA during 2008 earned $3.07 billion. Out of this, $1.60 billion was earned from the export of articles included in ROZs Act, " sources said.
This would mean that the textile industry of Pakistan would lose more than $1 billion earned from exports of all T&C articles if it exported the articles that are only included in the ROZ Act. The reconstruction opportunity zones were proposed by the Bush administration, but was never implemented as it mainly depended upon peace in Pak-Afghan border area.
ROZs envisage tariff concessions on certain exports from these particular areas to US. The ROZ Bill was introduced in the United States Congress on March 13, 2008. The Bill proposed to authorise the US president to designate areas in Afghanistan and Pakistan, as ROZs from which certain products may be exported duty-free to the United States up to September 2023.
ROZs coverage will encompass NWFP, the earthquake affected areas in Kashmir, and Balochistan which are within 100 miles from Afghanistan. Pakistan's textile industry has been expressing doubts about US conditions limiting the proposed duty-free access to textile products from the ROZs.
Sources said that the high-value textile products, like cotton knit shirts and cotton trousers, would not be duty-free, while it is a fact that almost half of Pakistan's textile exports to the US comprise such items. Sources acknowledged that there are some conditions in 'Afghanistan-Pakistan Reconstruction Opportunity Zone Act of 2009' that do not favour Pakistan. These conditions are as follows:
1) The president of United States may waive the application of duty-free treatment under this Act if he determines that providing such treatment is inconsistent with the national interest of the United States.
2) To protect against unlawful trans-shipments, detailed information about the exporting units in the ROZ would have to be provided to the US authorities on regular basis.
3) Pakistan would be required to make provisions in law to enable the US customs to visit and inspect any exporting unit in ROZ.
4) Pakistan should enact legislation that would permit US customs and border protection verification teams to have access necessary to investigate thoroughly allegations of unlawful transshipment through such country.
5) Pakistan will not engage in activities that undermine United States national security or foreign policy interests.
6) Pakistan will not provide support for acts of international terrorism.
7) Pakistan will ensure physical security to infrastructure of the ROZs.
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