Congress Should Help Pakistanis Help Themselves By Lowering Or Eliminating The Tariff On Pakistani Textiles
"Congress Should Help Pakistanis Help Themselves By Lowering Or Eliminating The Tariff On Pakistani Textiles"
As Pakistan continues to be ravaged by “the worst floods in its history,” it is desperately in need of continued international assistance. Most of the international response to Pakistan has been focused on aid, with the U.S. leading the way by donating $150 million to the disaster relief effort. While increasing aid to Pakistan is important, there is another way the United States can help the people of Pakistan that wouldn’t require giving a single taxpayer dime to the country.
The United States currently imposes an average 17 percent tariff on textile products like cotton pants and shirts from Pakistan. This tariff imposes a significant strain on an industry that is crucial to Pakistan’s economy. 3.5 million Pakistanis are employed in the textile sector, and comprise 40 percent of urban factory jobs. Textiles and apparels account for 60 percent “of Pakistan’s total exports.” $3 billion worth of these textile goods went to the United States last year.
The Wall Street Journal talked to one textile company owner, Rana Hassan Sajjad, who viewed lowering the tariff as more important than receiving more foreign aid:
Umer Apparel Ltd., a Faisalabad company that exports $15 million in goods to the U.S. annually, including brands like American Eagle and Aeropostale, has laid off almost a fifth of its work force of 1,500 and is running at only three-quarters of capacity, says its chief executive, Rana Hassan Sajjad. […]
“It would help if they would lower the tariff,” said textile company owner Mr. Sajjad. “Being an owner of a company, do I benefit from aid? No. I don’t know what the government is doing with the money. They are not spending it on us.”
The paper estimates that eliminating these tariffs on Pakistani textiles would “boost the nation’s textile exports by $5 billion annually,” meaning that simply eliminating this punitive tariff would provide 33 times more money to Pakistanis than all flood aid given by the United States so far — and it would all be done without spending a single taxpayer dollar.
Last year, the House of Representatives passed a bill that would allow for “Reconstruction Opportunity Zones” (ROZs) that would create special trade zones for Pakistanis manufacture and develop textile goods that were not subject to tariffs. Unfortunately, as the New York Times editorialized, it “was so hemmed in with protectionist limits that it was almost worthless.” And the Senate has failed to pass even this watered-down bill “because Republicans have objected to sound language in the House bill endorsing basic international labor standards for Pakistani export workers.” That is an extreme position to hold, given that Pakistan’s weak labor enforcement has made many labor rights advocates skeptical of the use of ROZs in the country because the labor standards would not be tough enough.
A better idea would be for Congress to lower or simply eliminate, country-wide, the tariffs the United States has imposed on Pakistani textile products. Doing so would add billions of dollars to the Pakistani economy and help Pakistanis help themselves with their own hard work and ingenuity.