October 29, 2001	Monday	Shaba'an 11, 1422

OFFICIALS of the ministries of finance and commerce have not succeeded so far in convincing the United States that Islamabad needs an immediate enhanced access for Pakistani exports, removal of quota restrictions and unfavourable tariffs.

Pakistan is said to have been informed by US Under Secretary of State for Economic, Business and Agricultural Affairs Alan P. Larson and Director of the Central Task Force at the US Agency for International Development McConnell that unless any overall economic package was finalised, Pakistan could not be obliged over the issue of enhanced market access and removal of quota restrictions.

They have told the concerned authorities that it would take “few months and not few weeks” to have any package ready for Pakistan and that Islamabad should wait for sometime. Finance Minister Shaukat Aziz had told a news conference last week that Pakistan had been promised cash grants and market access by the United States.

Later, Mr. Larson when addressed a joint news conference also declared that Pakistan was being offered enlarged access for its products along with removal of quota restrictions. What had transpired during their bilateral talks including Mr. Larson’s meeting with President General Pervez Musharraf could be anybody’s guess.

Nevertheless some responsible officials of the ministry of finance and commerce have expressed their disappointment over their seniors to “get any timely economic benefit” in return to their somewhat unconditional support to the US-led coalition against terrorism.

“Why our concerned ministers are eager to have only cash grants and new concessional loans rather than having increased market access for our textiles, rice and other products”, asked an official seeking anonymity.

He said the European Union was more forthcoming than the United States by giving access to Pakistani products, specially textiles which will help earn 400 million dollar additional this year. “This is a sizable gain as the European Union has gone for 10 per cent reduction in tariffs as well”, the official said advising the government to re-assess the whole situation and get some urgent concessions from the United States in the absence of any larger package which might take time to see the light of the day and that too who knows what would happen in case the US coalition achieves its objectives in Afghanistan sooner than later.

He also advised that the government should take some “undertaking” from the EU that its concessions announced for the current year will continue for future, and that at the same time things should be sorted out with the Americans before it was too late.

Since the whole world seems sympathetic to Pakistan, independent economic experts and analysts are also saying that enhanced market access should also be sought from Japan, Australia, New Zealand and some of the middle eastern countries specially Saudi Arabia and United Arab Emirates (UAE).

Former Prime Minister Benazir Bhutto when came to power second time her slogan was “trade and not aid” but at the end of the day her government preferred to secure only substantial foreign loans and that too for consumption and not for long-term economic development projects.

And so was the case with the second Nawaz Sharif government. According to official documents, out of total of $37 billion foreign loans, almost half of them were taken during both the governments of PML and PPP.

After September 11, the US and its allies have committed $800 million (S600m by USA) as cash grants to improve the economy. In addition to that $600 million including $320 million had been committed by the USA for Afghan internally displaced persons (IDPs) and nothing for 3 million Afghan refugees already residing in Pakistan.

It appears the government is more interested in getting cash soft loans rather than obtaining debt write-off or increased market access. Also no effort has apparently been made to seek foreign investment which is an important element for determining overall growth rate. The US government has on its own decided to give Overseas Private Investment Corporation’s (OPIC) cover, and arranged $300 million credit from the Exim Bank for the American investors.

Pakistan has been maintaining that it will lose about $1 to 2 billion due to September 11 terror attack on America. The World Bank estimates that there will be a one billion dollar loss in the shape of declining exports and over 30 per cent reduction in imports registered in about one month period.

The situation has aggravated due to the outbreak of anthrax threat as Pakistani shipments had been stalled in USA. Unless these shipments are cleared, goods will continue to be lying on various US ports bringing further harm to exports of the country. Concerned authorities are maintaining that they are in touch with US officials and that Pakistani goods are being cleared. However, some officials of the ministry of commerce do not believe that it is so easy and that it is going to take time for which a high level intervention is necessary.

The government is just making appeals to overseas Pakistanis to send their remittances through normal banking channels as inter-bank rate and kerb rate have almost become equalled due to Pak rupee appreciation.

But the fact remains that bulk of the remittances are still being sent through ‘hundi’ and ‘hawala’ and this is due to poor handling of Pakistani banks abroad. Generally, it is admitted that successive governments have failed to lure overseas Pakistanis, especially those living in North America to bring some money out of their savings.

The representatives of overseas Pakistanis when they visit Pakistan, complain that they do not get any proper treatment. On the one side, overseas Pakistanis are being asked to invest in Pakistan and on the other hand a new law is being planned by the State Bank of Pakistan and the ministry of finance that is likely to question the source of their savings.