Pakistan wanted $1.6 billion in textile and apparel quota and duty relief, as part of a broader aid package.

The Acting Deputy Assistant Secretary, in the US Commerce Department said, “obviously our industry preferred not to give Pakistan anything in view of the condition of the industry and we were very sympathetic to that.”

Dollar devaluation and imports have hurt the American textile industry which lost 67,000 jobs in 2001. For the five- year period ending last December, the industry has lost 176,000 jobs or 28 per cent of it’s work force.

In a report to the Congressional Textile Caucus, the US administration said, “We continue to resist attempts by exporting nations to obtain unilateral concessions.” With the exception of Pakistan, because of its unique role in the war on terrorism, the US has denied all requests from additional quota from numerous countries including Bangladesh, Indonesia, Malaysia and Sri Lanka.

The United States also successfully opposed proposals at the WTO Council on Trade in Goods (CTG) at Doha last year to “expedite phasing out textile quota”, report added.

 Any further concessions to Pakistan on access to American market would, as it would appear, depend on common interest and on reciprocal basis.

 It is no surprise that the US Commerce Department has denied any understanding has been reached with Pakistan over textile duty and quota breaks during this month’s visit of US Under Secretary of State for Economic and Agriculture affairs, Alan Larson.

The US department said even no negotiations were held between Larson and Pakistani officials over apparel and textile duty and quota.  A leading textile exporter to the US said that Pakistan had blundered into negotiations with textile importers instead of reaching an understanding with the manufacturers who were opposing the increased access to Pakistani textiles. Importers like to buy from the cheapest source and prefer foreign goods. There was nothing to negotiate with them. It is because of the poor strategy that the outcome is dismal.

The projected increase in foreign exchange earning was claimed at $142 million per year. Instead of any increase the foreign exchange, reserves have dropped by over $13 million by end October 2002 when compared with the previous year.

To survive, Pakistani exporters believe, the US manufacturers, might be forced to relocate their plants in countries, where textiles have competitive edge because of domestic advantage. For example, Pakistan offers abundance of raw cotton, skills and cheap labour.

A news report in the Observer says, “In 1980s, apparel manufacturers began making shifts offshore, and that is one option most domestic textile manufacturers have only begun to explore”. Some US industry officials visualise that offshore textile production, particularly in Asia, will continue to grow in importance.

 To ensure reciprocal market access on a priority basis, the US department of commerce is working with industry to” identify foreign barriers and trade practices in textile and apparel sector that should be kept negotiating priorities” in future trade agreements. A task force set up for the purpose is working with industry and individual companies.

The Textile Compliance Task Force is investigating more than 25 textile market access and compliance cases, involving more than ten countries. It is reviewing marketing and labelling requirements, import fees and taxes, customs procedures and practices, standard and testing procedures, intellectual property rights and foreign textile subsidies.

 US officials say that for Doha round of tariff negotiations, they are placing strong emphasis on obtaining commitments from developing countries to lower their tariffs and to bind their tariff at those levels.

The US Administration believes that US tariff reductions on textile products must be linked to reciprocal cuts by its trade partners, as well as elimination of other distorting trade practices, to the level playing field for our textile manufacturers.

“We also intend to maintain the strength and the effectiveness of our anti-dumping and countervailing duty laws”, says the US Commerce Department Report.

America is also encouraging countries too much dependent on textile and apparel exports to diversify to other fields of industrial activity.

 The State Department chairs the diversification subgroup of the task force on textiles and its members are officials from the Department of Commerce, the US Agency for International Development(USAID), US Trade Representative, the CIA, the Trade and Development Agency and the Overseas Private Investment Corporation. The sub-group has been entrusted with two major tasks- encouraging countries that are overtly dependent on textile and apparel exports to diversify into other industrial sectors and an analysis of the long-term effect on international trade sectors and an analysis of the long term effect on international trade of elimination of import quotas at the end of 2004.

 In pursuit of these objectives, the US has received report from over 65 embassies abroad an analysis from both the host governments/industries and their own assessment on likely consequences in the countries where the missions are located.

 The subgroup has identified 18 countries with which to engage in a more intensive dialogue on the subject of diversification from textiles to other industrial sectors. These include Hong Kong and South Korea.

To quote US Congressman Robin Hayes”for the first time in a long time, textiles are now a priority for a President and his administration.”

Yet the outlook for the US textile and apparel industry is not too bright. There is no dispute that China- a new member of the WTO-will be dominant player when all quotas on textiles and apparel are lifted in 2005. The big question is which countries will be able to compete with the Asian giant.

Experts agree that trading blocs with preferential trade agreements offering duty-free and quota-free access to the US , with certain conditions, will remain competitive with China, through still they would be hurt. That would include Mexico and Canada as part of NAFTA; 24 Caribbean countries, 14 of which are eligible for trade breaks under the Caribbean Basin Trade Partnership Act and 12 sub-Saharan African countries eligible for duty and quota benefits under the African Growth and Opportunity Act, which overall covers 35 nations. Only a handful of countries that are not part of a preferential trade agreement will survive, according to most industry experts.These could include India, Pakistan, Jordan and Israel. It would boil down to which countries can best combine low cost with quality and a good distribution infrastructure.

 Textiles account for 50 per cent of Turkey’s exports to the US. Washington has said that it willing to consider the creation of “qualified industrial zone” in Turkey (similar to the ones it has created in Jordan and Israel) where products could be imported duty-free to the US by companies that invested in the zone.”

US Trade Representative Robert Zoellick has formally notified congressional leaders of the Bush Administration’s intent to begin negotiating a free trade pact with five sub-Saharan African nations in 90 days.

Pakistan also wants a free trade pact with the United States but it is still far off despite the fact that the country is a key ally in the American war on terror.