KARACHI: The fate of Pakistani suppliers of Walt Disney merchandise hangs in the balance as government efforts to persuade the premier US company to review its decision to remove Pakistan from the list of permitted sourcing countries from next month have failed to yield results so far.

The private sector feels the government has done too little, too late.

In September last year, the US giant dropped a hint to suppliers that it would sever trade ties with companies in Pakistan if the country failed to meet the minimum qualifying requirement of scoring 25 points for placement on the World Governance Index. Pakistan scored 18 points on the basis of assessment of its performance on governance indicators that covered business environment, better work standards and human rights.

The assessment was said to be based on data collected by the World Bank on multiple governance indicators of 215 countries.

Also, a senior officer of the Trade Development Authority of Pakistan (TDAP) told Dawn that after the [2012] Baldia fire incident at a garment factory Walt Disney sent a letter expressing concern about safety standards in the industry in Pakistan. They gave Pakistan one year’s time to implement standards at factory floors. It must be the reason why they have taken the extreme action.

Failing to deal with the problem individually, the affected companies approached the government through their collective platform, the Pakistan Textile Exporters Association (PTEA). It impressed on the government to engage with the International Labour Organisation and other monitoring agencies, besides Disney, to find a way out.

All major exporters are fully compliant as their partner companies in the West obligate them. Getting a clean chit on all kinds of social audits is a prerequisite if you wish to enter the Western market. But the general quality of governance and legal framework in the country is beyond our ambit. It would be highly unfair if the export community were to suffer for no folly of theirs, Sheikh Ilyas Mahmood, Chairman of PTEA, told Dawn in Faisalabad.

This decision has the potential of triggering a snowball effect. I have no doubt in my mind that if Disney leaves, Mattel will follow suit. Imagine what will happen if other US companies such as Walmart, Kmart, JC Penny, Macy’s, etc. start withdrawing. Do you think the Europeans will ignore this? If the government fails to take it as a priority economic diplomacy issue Pakistan can lose on its already tiny share in global trade, Azhar Majeed Sheikh, a former vice president of the Federation of Pakistan Chambers of Commerce and Industry, commented.

The hierarchy in the relevant ministries was reluctant to come on record, but they did agree that the current cabinet of Prime Minister Nawaz Sharif did not realise the urgency of the issue.

Some senior bureaucrats in the ministry of textiles told Dawn privately that the ministry approached Disney to negotiate a solution. It did agree to defer the decision for a year if Pakistan joins the Better Work project of the ILO indicating its intent to implement 27 UN conventions.

We approached the ILO office in Geneva, Switzerland, but it was probably too late. Their central secretariat said that they could only entertain two countries in a year and for the current year they have already committed to Myanmar and Bangladesh.

PHYSICAL INSPECTION:

The ILO consented to consider Pakistan for 2015, but declined citing capacity limitations to entertain Pakistan’s application for 2014, an official told Dawn over telephone from Islamabad. The ILO expressed concern over discontinuation of physical inspection of factories and urged for its revival immediately.

Post-18th Amendment the authority to conduct inspections to check on implementation of rules and regulations related to decent work standards has been devolved and the responsibility now rests with the provincial governments. From what I know, no inspections have been carried over the past five years in Punjab, which announced it had stopped the practice, or in Sindh, which did the same quietly, an officer well-versed on the issue said.

We are asking the provincial governments but they are not bothered, another official with the ministry of textiles said.

The companies directly affected by the Walt Disney decision have been knocking on every door in desperation.

We have been corresponding with relevant departments (the federal ministry of textiles, commerce and industry). We directly approached Jalil Abbas Jilani, Pakistan’s ambassador to the US, to help us resolve the issue. On our request the ambassador did meet the management of Disney, but unfortunately nothing tangible came out of that interaction, a businessman told Dawn.Mr Jilani was approached in Washington for comment, but his response could not reach us by the time this piece was filed.

Over a dozen textile companies manufacture and export merchandise to the Walt Disney Company from Pakistan. These include known players such as Sitara, Younus, Arzoo, Afroze, Liberty, Kamal, Sadaqat, MK Sons and Nimra Textiles. The collective worth of their exports to the brand holder is projected to be $200 million.

Apparently even TDAP was caught unawares. The authority’s secretary, Rabia Javeri Agha, was not accessible while Chairman S.M. Muneer said he needs some time to settle down as he was appointed chairman of the entity early this month.

It seems that Mickey Mouse has made Pakistan look like Goofy. Exporters seem to be behaving like Donald Duck quacking noisily but achieving little, Majyd Aziz, the witty business leader from Karachi, commented.

Information on the internet reveals that the Disney decision was an outcome of an internal exercise to review policies and procedures. It led to changes in its sourcing guidelines with the aim to improve management practices to more aptly respond to challenges associated with a complex global supply chain.