PAKISTAN’S largest export market, the United States, is increasingly denying access to foreign goods to protect its domestic industry, hit by recession.

Backed by the US administration, Corporate America is seeking refuge in economic nationalism for its survival and growth.Globalization of the world’s largest national free market is shrinking.

Apart from other things, the US policy is evident from the poor response that Islamabad received from Washington to its request for duty-free and increased imports.

To quote Economist,” Mr.Bush has even let down Pakistanis, his allies in the war against al-Qaeda, by refusing to allow in more of their textile products.”

“After frantic lobbying by domestic textile industry, all Bush could offer was the possibility of switching quotas to allow an extra $142 million worth of its imports this year(less than a tenth of what his ally has asked for).”

The US president’s main textile negotiator is currently also mulling the imposing of textile quotas on Vietnam, not covered so far by the global quota system.

“ Know that you have a friend in us. Know that you can trust us”, the US commerce secretary told textile industrialists who claimed that “textiles have been nothing but a pawn in the US foreign policy.”

Pakistan’s earnings from exports to the USA fell by 0.8 per cent in the first half of the current fiscal. With the challenges faced in major European and US markets, the export target for 2002 has been revised downwards to $8.5 billion from $10.1 billion, lower than the actual earnings of $8.63 billion in 1997-98.

Export to America means a lot. It accounts for $2.25 billion or about 25 per cent of the total forex earnings from merchandise.

The going is becoming difficult because the American protectionism is on the rise. Thirty per cent tariff has been imposed on steel imports, evoking strong protest from its European and Asian allies.” Bush has relinquished Republican claims to free- trade mantle by championing steel protection,” although” the U.S. integrated steel companies have received various forms of government subsidy for more than 30 years,” says Robert J. Barro, professor of economics at the Harvard University. On Mar 22, the US commerce department announced that it would slap a tariff of around 29 per cent on softwood imports from Canada.

Finally, the Andean Trade Preference Act, which exempts some Latin American products from tariff , has been allowed to lapse and has not been renewed under domestic pressure. Similarly, the citrus fruit farmers are also demanding protection from imports.

Mr. Bush won the election on the support of businesses which focus on domestic market, unlike Clinton who represented corporate giants with global reach. This, coupled with recession, has revived economic nationalism at the cost of free trade.

As would appear from the US protectionism, globalization has lost much of its edge since world economic slow down worsened by Sept 11.

A former deputy governor of the Central Bank of Malaysia Dr. Lin See Yan told “Asia Economic Summit” held in Kuala Lumpur last month that “globalization was oversold and the promise of unbounded prosperity is exaggerated .” Other points made by him are:

One dark aspect is that “when America sneezes, Asia catches a cold.” With it comes more bankruptcies, more unemployment and more poverty.

Markets do not adjust efficiently, they do with a lag and this carries a social cost and here is the role of the government in macro-economic stability.

Downturns have long lags and have irreversibilities when they are deep and prolonged. Consequences can be severe and irreversible. Businesses gone bankrupt, do not revive when economic recovery starts.

The global impact of US downturn with interdependence raises the need for collective(not unilateral) decision-making for national and global good.

As a result of the recession in industrialised states and 9/11, world trade,investment and official assistance are clouded with uncertainties despite rhetorics and over optimistic scenarios presented by interested quarters.

In case of Pakistan, export earnings are falling, foreign investments are at a low levels, imports are not picking up and external assistance is not enough to fight poverty or raise development spending to boost a sluggish economy.

And despite the impressive balance of payments outturn in the first six months, it is too premature to declare victory, says the State Bank. As imports exceed exports, liberalization of foreign exchange regime has made the external sector vulnerable.Foreign investment has fallen much below expectation because of security concerns.

The global environment for bilateral assistance is not very bright either. The richest country in the world, USA, has been the least generous, giving about $10 billion in development assistance per annum, not even half of EU’s total. President George Bush has promised to increase American aid by $5billion but much of the money will not start flowing until 2006, halfway of what he hopes would be his second term. One would not be surprised if he falls victim to the global political turbulence that he has unleashed after 9/11.

The Americans did support the new round of world trade talks at Doha which promises to focus on agriculture and textiles, the two areas that together account 70 per cent of the poor world’s exports. The west spends $1 billion a day protecting its farmers against exports from the poor countries.

Before that, the IMF wants all subsidies on agriculture in Pakistan to go. The federal minister for food and agriculture says that the sudden withdrawal of subsidy would make exports of farm products uncompetitive.

Over the decade or so, the contribution of the external sector to Pakistan’s GDP has remained stagnant, indicating that there is mismatch between ground realities and the IFI’s agenda that takes precedence over domestic needs,often resulting in fiscal, economic and social instability.

The legacy of Pakistan’s fiscal deficits, to a great extent, can be explained by IMF conditionalities. Interest rates were hiked rapidly raising the cost of borrowing of the government, exchange rates were depreciated often without justification, hiking the debt servicing burden and privatization of profitable state enterprises were speeded up to deprive the national exchequer of revenues.

The government was left to run the sick units with losses.

The tarrif reduction were synchronised, resulting in depletion of revenues and all this will done in the name of fiscal stability.

And if development spending is brought into question, the donor and recipient are equally to be blamed both on account of monitoring as well as choice of projects.

Donors often had a final say not only on the sectors in which they put their money but they also picked up in the past projects of their choice for funding so that the benefits could be shared with the businesses at home. Independent power plants based on imported fuel were set up under World Bank support despite the fact that Pakistan’s trade gap did not justify increasing substantially dependence on fuel imports. Currently, oil is the biggest single import item. Despite fall in prices, the petroleum group accounted for $1.35 billion in total imports of $4.875 billion 2001.

For globalization to succeed, the decision in respect to speed and sequence, must rest with national governments.

And the linkages between domestic economy and international market should be developed on the basis of national agenda. The alternative is a crisis-ridden global economic order and a poor quality of national social life.