EDITORIAL: It’s a bit rich of the Americans to raise questions about Pakistan’s tax laws during discussions meant to relaunch the Trade and Investment Framework Agreement (TIFA) and reinforce bilateral trade. It’s America’s tax laws that are a problem for everybody, after all, especially its novelty of enforcing personal income tax based on citizenship instead of residence.
This special provision goes back to the American Civil War, administered by the Lincoln administration to deal with southern estate owners fleeing to England to escape taxes. The only other country to have such a law is Eritrea, but it does it to fund the powerful one-party government that has controlled the country since its independence in 1993. The Philippines had a citizenship-based tax regime as well, but it was abolished in 1996.
Of the other main points raised in the TIFA meeting, transparency and good governance are too broad to debate right now, but it is true that Pakistan continues to struggle with issues like intellectual property rights, particularly piracy of copyright and trademark material.
It was pointed out that even government offices in the country use pirated software. Since such things are illegal, unethical and also very unsafe, the government was very rightly urged to discontinue this practice. That way, it would at least be in a much better position to amend and enforce necessary laws.
Interestingly, the American side made it very clear, during a virtual question-and-answer session with a select group of media, that this effort to increase Pak-American trade was in no way influenced by the political relationship between the two countries.
That’s very welcome because the current volume of just $8 billion per year clearly does no justice at all to the bilateral trade potential. And it’s a shame that it’s held hostage to politics all the time. Mostly such initiatives fall off the track, not just with Pakistan, because of Washington’s bullying attitude when it comes to setting terms. It’s habit of throwing its weight around because it is the sole superpower often results in unfavourable conditions for its trading partners.
Yet as the so-called ‘rise of the rest’ slowly pushes the world towards multi-polarity, some of America’s client states have started ignoring its lead in important international matters.
The fact that countries like the UAE and even India, which is central to Washington’s Pivot to Asia policy, abstained from voting against Russia at the UN General Assembly despite US pressure could well have a little to do with just such things because engagements with the US are also often contingent upon distance from some other potential trading countries and even blocs.
Surely, Islamabad would’ve expected either the carrot or the stick just about now because it, too, abstained at the UN and the US is making all-out efforts to isolate Russia. But since this is a time when Washington has even sent a delegation to Caracas to cajole the Venezuelans - very unlikely even days ago - just to try and make some space between them and the Russians, it seems the superpower is going to try persuasion first.
Therefore, Islamabad must make sure that TIFA is all trade and no politics, just like the Americans are saying. It’s already made it adequately clear that it is not going to take sides any longer; in this or any other conflict. But it’s also open, and indeed desperate, for more trade, from wherever it can come. For, that’s the only way to ensure a win-win outcome for both parties concerned regardless of the circumstances.
Last but not least, a very good thing that America is engaging constructively with Pakistan once again. Countries that have been allies this long should not let politics interfere with trade and commerce. If TIFA can help nudge this relationship in that direction, then it will be something to write home about.
Copyright Business Recorder, 2022
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