WASHINGTON, Sept 29: Pakistan is this week to intensify its push for a free-trade agreement with the United States as its economic recovery seeks to gather pace and offset the cost of the Sept 11 attacks and the simmering crisis with India.
Finance Minister Shaukat Aziz told AFP in an interview that he was “cautiously optimistic” that a long-term goal of sealing a trade pact was attainable.
Mr Aziz, in town for the International Monetary Fund (IMF) and World Bank annual meetings, will also urge the US officials he meets this week, including Treasury Secretary Paul O’Neill, to grant wider access to the US markets for textiles, a key Pakistani export.
And he promised no let-up in a reform drive designed to inject the macro-economic stability so prized by foreign investors into a previously-chaotic economy.
His sights are set firmly on the free-trade pact with Washington, which would further pry open markets in the United States.
“Clearly the pact is a long-drawn-out process. There are issues like environmental issues, labour issues; it’s not just opening trade to both the countries”, he said.
“I am cautiously optimistic,” the finance minister said, though he declined to put a time-frame on when talks might begin or how long a deal would take to conclude.
Knitting trade pacts is notoriously time consuming, and Mr Aziz added that Islamabad would watch closely as the United States strove to finally conclude a free-trade agreement with Singapore — the first such pact with an Asian state — and Chile.
He also hoped for concessions on textile markets, but recognized tricky political questions, raised by requests for better US market access for the foreign products.
There have been whispers among the Pakistanis here that Washington should be doing more to help its ally, after expecting huge concessions from Islamabad in its campaign against terrorism.
But Mr Aziz, a former Citibank executive, said he was not seeking a “quid pro quo”, stressing, however, that a profitable, stable and moderate Pakistan was vital for the world.
Pakistan’s recent economic performance has won kudos from the IMF, which predicted the GDP growth of 4.6 per cent next year and 5 per cent the year after.
Last year, total foreign investment in Pakistan was about half a billion dollars, up 30 per cent from the previous 12 months, and foreigners are eyeing its privatisation plan in the energy and financial sectors.
Mr Aziz proudly touted the Karachi Stock Exchange as the world’s best performing bourse this calendar year, and said portfolio managers had taken note. He did acknowledge, though, that a low initial market cap had set the stage for fast gains.
“Our challenge now is to transfer this macro-economic growth to the benefit of the common man, but we have to stay the course of reform, because if we do not stay the course, things can derail very quickly,” the minister said.
The picture may have been rosier had it not been for the economic earthquake of the Sept 11 tragedy, the US campaign in Afghanistan and attacks on Americans in Pakistan, which may have scared off some investors.
“Clearly if the Sept 11 incident had not occurred, we would have done even better,” said Mr Aziz.
Pakistan must also pay to keep tens of thousands of troops mobilized on the border with India owing to a crisis with its nuclear rival, which keeps threatening to boil over.
Before the latest tensions, Mr Aziz said: “We were on a path of reducing our defence expenditures, and we were well on our way.”
“It has cost us $250 million a year; it’s something we can handle, but had it not taken place that money would have gone on spending on health, education and poverty reduction”, he said.