Pakistan is stepping up its efforts to persuade the United States to provide economic muscle to evolving bilateral strategic relationship between the two countries.

A prosperous Pakistan would be a much more effective deterrent against militancy than the current mode to combat terrorism with physical force, say policy makers. It would tackle the root cause of the growing problem.

On the external sector under pressure from a mounting trade deficit,the country's economic managers are working on a strategy to boost exports, attract more investment and seek increased level of foreign assistance. And here they think the United States has a major role to play by enhancing the low profile of economic ties not matched by Pakistan status of a non- Nato ally granted by Washington. Much of the United States prosperity is rooted in globalization, serving as an example for the policy makers to emulate.

Washington's economic aid is a mere $300 million per annum. Pakistan's exports have gone up by a few hundred million dollars since 9/11 to $2.6 billion. These export earnings could jump by another $1.5 billion if the US allowed this country's textiles and clothings to enter its market on the same terms and conditions as given to Mexico, Central America, Caribbean and Sub Saharan Africa, reckons Dr Ishrat Husain, governor of the State Bank. The annual American private investment inflows are at a low range of $200-300 million.

Pakistan believes that time has come to re-appraise US-Pakistan bilateral trade ties, if the two states want to nurture bilateral strategic relations and put them on a solid and durable basis. More so, when Pakistan offers much better opportunity for co-operation after completion of its first generation of reforms that has further opened up the domestic market for integration in the global economy.

In recent weeks, commerce minister Humayun Akhtar and prime minister's advisor on finance Dr Salman Shah have stressed upon the American government, the World Bank and the IMF that Pakistan needs much great access to developed markets particularly the United States to boost trade and investment and reduce poverty levels.

Under the changing pattern of international trade, investment is much less debt-driven and primarily triggered by trade.In Pakistan, it is multinationals' presence in the domestic market who are strengthening their businesses. Foreign investment is being encouraged by sale of profitable state enterprizes rather than capital spending in new productive capacities.

Addressing the World Bank and the IMF annual meetings Dr Salman Shah said " Even when developing countries like Pakistan continue to strengthen their micro-economic framework and deepen the process of painful structural reforms, levels of official development loans have increased only marginally. Improvement in investment climate would be given a strong impetus by market access, more than any change procedures and practices. Yet market access is denied."

The major snag in the development of international trade is the absence of even playing field and the democratic deficit in the multilateral institutions like the World Bank and the IMF. Dr Salman Shah says" We urge democracy the world over, but we fear democracy in the multilateral lending agencies. We have to address these inconsistencies squarely if we are to really be partners in economic development and transformation."

Pakistan's views are however shared widely by a strong informed section of the American public. American think tanks like Centre for Strategic and International Studies reckon that their government has always focused disproportionately on one goal and in the present case, the war on terrorism. The tools the United States has put on the table in its relationship with Pakistan are insufficient to persuade the country to change the core policy goals and to take the political risks to sever relations with the domestic groups.

In a similar reaction, the New York Times has supported Pakistan's case for lowering of duties on underwear and shirts and for a free- trade pact with the USA as pressed by commerce minister Humayun Akhtar during his visit to Washington about three weeks ago. However, the US administration did not respond to his proposals.

In an editorial comment, the newspaper observed: " It highlights a fundamental flaw in America's economic relationship with querulous allies in the so-called war on terrorism. If President Bush wants to reach out to the Muslim World, there are few better things he can do than allow greater access to the American market.

Exporting textiles is a critical step for poorer nations to becoming full participants in the world economy... That shortsighted US policy fails to take into account the convergence of economics and national security. Pakistan's biggest industry is textiles , accounting for 45 per cent of its manufacturing jobs. The more dependent the Pakistanis become on American companies, the less likely they are to join anti-American insurgencies."

Pakistan also wants that the Americans should relocate their textile manufacturing facilities in this country. The America's South is going to be hit hard by the new WTO agreement on clothing and textiles effective January 2005. The Americans can save some jobs by entering into joint ventures, strategic alliances, marketing partnerships, technical collaboration agreements with Pakistani firms. The re-location of manufacturing facilities would also provide cheap goods to the US consumers.

But the major thrust of external economic relations is to have access to developed markets, as official multilateral and bilateral assistance is unlikely to pick up significantly. Faced with growing problems of fiscal deficits and unemployment, industrialized states do not have much room for increasing international aid. Foreign investment depends on the market demand that can be better pushed through market access.