US: Clothing imports to benefit from Pakistan-Afghan scheme?
A new initiative by President Barack Obama proposes to set up reconstruction opportunity zones on the Pakistan-Afghanistan border to produce items such as clothing that would enter the United States duty-free.
The zones are among a number of ideas announced by the US on Friday (27 March) to try to strengthen Pakistan's economy over the next five years and reduce terrorism in the region.
However, a major apparel association has warned that unless the program includes the apparel products Pakistan actually makes, the necessary investment will not occur.
"The idea is exactly right, and clothing manufacturing, which is highly labour intensive, would offer employment and hope to people otherwise susceptible to joining terrorist groups," said Laura E Jones, executive director of the US Association of Importers of Textiles and Apparel (USA-ITA).
"But for the program to induce US apparel importers to place business in the tribal areas, where security is a major concern, it has to include the key products US companies source from Pakistan - cotton knit tops and cotton trousers and shorts."
According to data from the US Census Bureau, US imports of cotton knit tops and cotton trousers and shorts made in Pakistan accounted for two-thirds - $975m of $1.49bn - of the apparel the US imported from Pakistan in 2008.
"If properly structured, with meaningful product coverage and straight-forward rules that do not cause the costs of compliance to outweigh the duty-free benefits, the ROZs could create true economic opportunities in that troubled region of the world," Jones said.
Lower prices on tops and pants made in Pakistan could also help US retailers, who have shed more than 630,000 jobs since November 2007 as a result of the downturn in the economy and steep decline in consumer spending.
Legislation to create the ROZs already has been introduced in both houses of Congress, but both limit the types of clothing items that would qualify for the duty-free access to the US market.
"Pakistan is where you go for cotton tops and bottoms. Offering benefits for a long list of synthetic clothing is not going create opportunities," Jones asserted.
"Unless the product scope is amended to bring it into sync with the business reality, the ROZs will only be a 'feel good' symbolic gesture. That won't help Pakistan, Afghanistan, or us."
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