KARACHI, Dec 28: Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) has urged the commerce minister Humayun Akhtar to take up tariff issue with the US during his forthcoming talks.

Prgmea expressed the hope that one of the areas of discussion in the US would be the issue of market access, which is the most important issue for the garment trade. “The fundamental question is to decide at our end, whether to focus on increasing the quotas or to convince the US administration to eliminate or at best reduce import tariffs on our products.”

Prgmea believes that since the quota system would be finally phased out in January 2005, and also since the existing quota ceilings, barring a couple of categories, remain unutilized, “we should focus on elimination of import tariffs.”

Prgmea said this would require a lot of convincing with the US government to eliminate or reduce import duties on Pakistani products. The concerns that need to be allayed are: objection from other countries, loss in revenue and unemployment.

If the US government decides to reduce or eliminate import tariffs on Pakistani products, it would not be the first time that this has been done. In fact the US has had preferential trade agreements with more than one country in the world such as NAFTA, Caribbean Basin Trade Partnership Act, Sub Saharan African Initiative and specialized treaties with Israel and Jordan along with duty free programmes for Taiwan and developing countries.

Under the US tariff system, the tariffs on the clothing sector are among the highest, ranging from 13 per cent to 23 per cent on some categories, which incidentally is the largest single item exported to the US from Pakistan. On top of this if we combine the duty free access available to many other countries, Pakistan is clearly at a massive disadvantage.

As a result of this anomaly in the US tariff structure, most tariff revenue now comes from a very small number of goods and also from a small number of countries. Shoes and clothes make up less than 7 per cent of imports in value terms, but bring in nearly half of all tariff revenue.

The duties collected by US customs on nearly $2 billion of exports from Pakistan are almost the same as those collected on $24 billion exports of France, whereas the per capita GDP of Pakistan is $400 compared to $24,000 of France. By eliminating duties the US government would help create thousands of jobs in the apparel sector of Pakistan, which ultimately would result in income generation at the grassroots level.

With regard to the US concern about loss of American job, the Prgmea said employment in the US in high tariff industries now accounts for only about 3 per cent of US manufacturing jobs. These jobs have fallen by half since 1990 and the plunge is fastest in some of the most protected industries.

The import tariffs have not been cut since the 1970’s, but since 1992, the number of workers making children’s cloths is down from 44,000 to fewer than 7,000 today. The International Trade Commission’s July 2002 study finds that US employment in high tariff industries is already so low that eliminating all US trade barriers would mean a net gain for about 35,000 jobs, rather than a loss.