STRENGTHENING THE US-PAK ECONOMIC PARTNERSHIP
USPBC POLICY RECOMMENDATIONS TO OBAMA
TARIQ AHMED SAEEDI - email@example.com
Mar 30 - Apr 05, 2009
The US-Pakistan Business Council came hard on American trade policy that it said has failed in increasing access of Pakistan's products in the US market in its recent report. The council, which is premier representative body of private sector based in Washington, believes that Trade and Investment Agreement Framework will strengthen economic ties between Pakistan and USA and increasing bilateral trade encourage private sector participation in turn.
The report came at the time when US congress is expected to broach upon new strategy for Pakistan and Afghanistan. The Obama, who has been a staunch supporter of Biden-Lugar 'Enhanced Partnership with Pakistan Act' during his tenure as Senator in previous congress, declared his plan to augment non-military financial assistance for Pakistan. The US-Pakistan business council sought earliest ratification of the legislation. Allocation of resources for public sector development sectors will be instrumental in creation of opportunities for US private sector in Pakistan, it believes.
According to the report, Pakistan exports invoke high tariffs in US market. The tariffs are four times high than an average rate on imports of other countries. A reduction in US tariff rates would make Pakistan competitive in international market and help the country to increase its exports in the midst of global economic recession. It also appeals the administration and members of the congress to bring into action US-Pakistan bilateral investment treaty, talks about which were initiated in 2005.
In the report encompassing policy recommendations to Obama Administration and members of congress, US Chamber of Commerce and US-Pakistan Business Council emphasized on comprehensive strategy to build strong economic relations between US and Pakistan, saying stable geopolitical conditions of South Asia is important for interests of US companies operating in the region. "US-Pak stronger and stable economic relations would help advance America's overarching geopolitical goals in South Asia." In their combined message in the report, Myron Brilliant, Senior Vice President, International Affairs US Chamber of Commerce and Jay Collins, Chairman US-Pakistan Business Council said: "We support the [Obama] administration's plan to seek a regional approach and incorporate economic development along with militancy and diplomatic initiatives". They said, "key objective is to strengthen dialogue between US and Pakistan decision makers to expand market access and promote business friendly environment for US companies in Pakistan. American private sector believes that a broad based relationship with Pakistan needs to include stronger collaboration in the areas of trade and investment, economic growth, and energy security."
Despite precarious political and economic conditions in the country in past, US private companies remained undeterred. The report says, "US private sector remains optimistic about its current investment in Pakistan and sees opportunities for greater engagement in future". Many American companies are working in Pakistan and investing to enhance skills of local workforce, it adds. It is believed in the report that Pakistan has large pool of workers and consumers. According to the report the foreign direct investment inflows from US in Pakistan increased to $1.3 billion in FY08 from $92.7 million in FY07. From $2.6 billion in 2001, the bilateral trade surged to $5.6 billion in 2008, it says. Out of total Pakistan's exports revenue of $19 billion, 20 percent or $3.7 billion was earned from US in FY08, it says. During 2000, the export proceeds from USA were $2.1 billion. Pakistan's import from US increased to $2 billion in FY08 from $462 million in 2000.
The report urges "the Obama administration to promote high-level economic dialogue between US-Pakistan government officials to address bilateral trade and investment concerns and invite private business community to play constructive role in the dialogue." According to the report, exploration of new markets will serve to help US to get out of economic contraction and rise in US exports will revive employment market. It demands level playing field for US investors in Pakistan. The council exhorts mobilization of international financial assistances to rescue Pakistan's economy that, it believes, "will need $10 billion foreign aid over next two years". However, it will be challenging for Pakistan to mobilize funds amidst global financial meltdown, intimates the report.
It is outlined in the report that lack of bank finances and weak financial hedging system in the country are discouraging investment from US private sector in the energy and infrastructure development sector. "Although the US private sector has shown interest in many public and private projects, the difficulty in obtaining finance and risk insurance discourages foreign investment in these sectors." It urges the administration of bolstering of Export-Import Bank and insurance coverage to private investment against political and security risks in Pakistan. Overseas private investment corporation has provided more than $1 billion in financing and insurance for projects in Pakistan, the report says.
Reconstruction Economic Zones that will allow certain products manufactured in the area to enjoy duty free access in the US market will not alone to benefit population of Pakistan and Afghanistan, it would smoothen a ground for investment for US private sector.
The council lamented over the low protection of intellectual property rights in Pakistan, saying this is a serious barrier to trade and investment and "hobbles investment". It was more concerned about dearth of mechanism or unimplemented legislation that protects patents on agriculture and pharmaceutical products. US Trade Representative's Office downgraded Pakistan to the Priority Watch List in 2008, reveals the report. The business council criticized regulations of pharmaceutical industry in Pakistan. Lack of transparency in pricing of pharmaceutical products and overregulation are spurring flight or departure intention of several American pharmaceutical companies, the report warned. In addition to this, government imposes heavy tax on foreign companies. It cited 16 percent sales tax, 50 percent input tax, and 12 percent tax on finished carbonated soft drink as an example.
Strong US-Pak economic ties will have mutual advantages for economies, political structures, and societies of both the countries.