Ashraf Hayat, Minister Trade, Embassy of Pakistan in Washington DC on Friday reminded that removal of quotas from January 2005 was realisation of a 10-year-old commitment by developed countries. Therefore, it was not a matter of surprise for any of the countries. He stated this at a discussion on the topic: "End of MFA and Implications for South Asia", held under the aegis of the Saarc Ambassadors' Forum in collaboration with the School for Advanced International Studies, John Hopkins University.
Speakers on the occasion were Assistant United States Trade Representative (USTR) Ambassador Ashley Wills, Ambassadors of Bangladesh, Nepal and Sri Lanka and Ministers Trade of the Pakistan and Indian Embassy. A renowned international trade expert, Peter Minor of the Nathan Group also gave a presentation.
Ashraf Hayat said the quota regime not only created distortions in international trade flows, but also affected and influenced flow of investment, adding certain economies had attracted domestic and foreign investments, particularly in downstream textile industry, merely because they were holders of quota.
He said their competitiveness was not based on natural competitive advantage, and this point is significant because the same phenomenon is replicated even as we speak, because of the large number of preferential trade arrangements the US has with certain other countries.
The development of the apparel industries in the Caribbean, Andean and Sub-Saharan Africa started immediately after they received preferential trade status from USA, he said, adding: "You can trace the development of their apparel industry from the date they entered into preferential trade agreement with the United States."
Ashraf Hayat said: "It is very difficult for countries of South Asia to compete globally, when they are faced with such distortions. Any forecast about the impact of the new trade regime on exports from the region's not without risks. However, we could be certain of some developments."
"There will be a shift in trade, as importers consolidate their sources of supplies. There will also be price pressures on exporters from open competition. There is no doubt the countries that enjoy preferential access to the US market will benefit from the price differential that they will manage because of the zero-rated entry into USA", said Hayat.
He also agreed with other speakers who said that in addition to preferential tariff, these countries enjoy ever-evolving and changing rules of origin that further discriminate against South Asian economies.