ISLAMABAD, Aug 4: The United States plans to impose ceiling on certain textile products from Pakistan to protect its own industry in the proposed Reconstruction Opportunity Zones (ROZs) being established in border areas with Afghanistan.
This restriction will be on the pattern of China from where the US has allowed partial import of cotton, wool, man-made fibre, silk blend and other vegetable fibre textiles and textile products in agreed categories.
Well-placed sources told Dawn on Saturday that Washington was also considering exclusion of almost all hot-selling textile and clothing products from the list of items to be manufactured in the ROZs for their subsequent duty-free export to the US.
According to a proposed US legislation this quantitative ceiling on textile-related products from Pakistan will be a serious blow to the export of these commodities to the US from these zones. Around 89 percent of Pakistan’s exports to the US comprise textile and clothing items, some of which attract tariffs up to 32 percent, though trade-weighted average tariff on textile and clothing export from Pakistan is around 11 percent.
The US, generally a low-tariff market with average 3.9 per cent on manufactured goods, is Pakistan’s single largest business partner with trade volume at nearly $5.8 billion in 2005-06.
The major categories, which are likely to be allowed for partial export from these zones, include category 338 — men and boys knit shirts — and category 339 — women and girls’ shirts and blouses — and another category of 346.
“If all the textile-related categories were removed from the list of items, these zones will have a lesser impact in creating employment opportunities in the tribal areas,” a government official told Dawn on condition of anonymity.
He said the proposed draft legislation has been shared with Pakistan which has excluded textile products or has suggested partial treatment for certain categories.
Under the proposed law, the US has proposed a tax holiday for these zones for 15 years, which is going to be longest tax exemption given to any country by Washington. It has also been proposed under the draft that no change in the products will occur in case there is any change in the US generalised system of preferences.
Among the features of the regime would be that there is no cap on the restriction of commodities to be exported to the US. There will be no requirement of Afghan component in availing the facility.
However, the ugly part of the agreement is going to be the procedures for shipment which will be designed on the pattern of textile quota, which was very cumbersome.Pakistan had already identified 41 hot-selling textile and clothing items and 30 non-textile items for inclusion in the list of products to be manufactured in the ROZs for export at zero custom duty to the US.
The textile and clothing products identified for manufacturing in ROZs include gloves, mittens and mitts, sweaters, men’s or boys’ trousers, bed linen, men’s or boys’ shirts, women’s or girls’ blouses, women’s or girls’ trousers, T-shirts, garments, men’s gloves, woven fabrics, stockings, socks, quilts, women’s or girls’ dresses. Other items include bleached plain weave, printed plain weave fabrics, curtains, table linen, unbleached woven fabrics of cotton, single cotton yarn, terry towelling and similar woven terry fabrics, furnishing articles, toilet and kitchen linen, etc.
The non-textile products identified for these zones include leather apparels, leather belts, leather apparels for sports, medical and surgical instruments, scissors, dental instruments, sports goods, precious and semi-precious stones and other miscellaneous products.