“There should not be tariff barriers and we will work with our Pakistani friends to sign this FTA,” said US Treasury Secretary Paul H. O’Neill.
Speaking at a joint news conference here on Tuesday with Finance Minister Shaukat Aziz at the end of the Pak US Joint Economic Forum, he said the US was currently holding talks with many countries and various other international organizations to sign FTA to mutually benefit each other.
The two sides, he said, also discussed the possibilities of market access, especially for textile sector, as it would generate jobs and trigger economic growth in Pakistan. The Forum also considered initiating the process for free trade agreement.
Pakistan assured of taking necessary measures to prevent money laundering and terrorist financing activities. It was pointed out that an Act was in an advance stage of finalization and would be placed in the parliament for approval. An anti-money Laundering Coordination Unit has been set up at the Ministry of Finance to coordinate policy making as well as introduction between various agencies like Ministry of Interior, Foreign Affairs, the State Bank of Pakistan, National Accountability Bureau and security agencies.
The US and Pakistan would work to encourage bilateral private sector investment, expand trade, pursue poverty alleviation, micro-financing, debt relief, increased economic cooperation, social sectors funding and information technology, reporters were informed.
The Forum was established last April and its first meeting was held in Washington. It is an institutionalized arrangement to facilitate periodic consultations on economic issues, matters of mutual interest and facilitate ways for increasing mutual economic relations between the two countries. The meeting discussed a series of issues ranging from bilateral matters to consequences of evolving global economic conditions on economies of developing world.
The Forum appreciated that Joint Economic Forum, Pak US Business Council, and Joint Trade and Investment Forum have laid a very strong foundation for economic relations between the two countries. This is the time that the two countries reap the benefits of economic relations and develop a long-term partnership to encourage trade and investment through private sectors.
Earlier, the JEF was briefed about economic performance of Pakistan in the last three years, micro-financing in Pakistan, process of privatization, education sector reforms, vision for future development and growth strategy, financial reforms, debt strategy, and capital market reforms. The Forum noted that Pakistan has done well in strengthening its economy because of financial, structural and capital market reforms that has enabled it to reduce its fiscal deficit, lower inflation, increase gross foreign exchange reserves over $8.8 billion, expected GDP growth of 4.5pc in large scale manufacturing, particularly in cement, steel, textiles, automobiles, and engineering sectors, and restored confidence of international investors and financial institutions leading to foreign direct investment of over $400m and remittances over $1.4bn in the first four months of the current financial year.
Exports for the first four months were up by 15pc, while imports up by 13pc. Revenues during the same period were on target, up 16pct, with considerable buoyancy in sales tax and customs duty collections.
The Forum took keen interest in micro-financing in Pakistan and noted that micro-finance is critical for poverty alleviation as it would enable the poor to gradually build their assets and enhance their income earning capacity resulting in economic growth. It was anticipated that over Rs7 billion would be distributed as loans in this sector over a period of five years.
The Forum also took note of the fact that Pakistan’s privatization programme was highly ambitious and attractive for local and foreign investors. New opportunities were emerging in the energy sector, in oil and gas development, down steam industries, power generation and distribution and gas transmission and distribution. It was hoped that the US investors would find the opportunities challenging and rewarding.
The investment opportunities in the regional context were also highlighted. It was argued that reconstruction work in Afghanistan and opening of Central Asian States to the world will inevitably generate economic activities in Pakistan. Pakistan was taking appropriate steps to prepare itself for taking advantages of the prospective opportunities. In this regard, Pakistan is developing a network of ports, highways, regional road network, revamping of railways and upgrading the overall infrastructure, so as to effectively exploit the new economic opportunities.
The Forum was also briefed about the reforms undertaken in the social sectors particularly in education.
The finance minister underlined the significance of the US investment in Pakistan’s economy and hoped that the process would receive impetus due to resumption of OPIC and EXIM Bank facilities. He also stated that the US assistance in the form of bilateral support and debt relief would play an important role in ensuing sustainability of the economic reforms and economic stability. The additional support in the form of debt write-off of $1 billion would also have a salutary effect.
O’Neill while responding, appreciated the economic reforms initiatives by the government and said that Pakistan’s macro economic indicators were trending upwards and if consistency and continuity of policies is maintained, this will auger well for Pakistan economic future.
He assured US assistance in the fields of education, poverty reduction, and debt relief. USAID has an active programme of development assistance and this support will continue in future. The credibility of Pakistan’s economic management is well recognized globally and the United States will remain engaged as an active long-term development partner.
The US treasury secretary also apprised the Forum of the US economy and its impact on global economies. He expected the US economy to grow by over 3 per cent in the current year that would be helpful to developing economies like Pakistan.
The meeting also discussed availability of visas for business travel to the US. Further cooperation between the two custom organizations as well as US technical assistance was explored. Relationship with IFIs like IMF, ADB and the World Bank was reviewed and the US support was appreciated. The next meeting will be held in Washington with the private sector participation from both the sides.
The meeting was attended by the finance minister, ministers of commerce, education, privatization and high officials of the ministries of finance, petroleum, education, commerce, and revenue from Pakistan side, and the secretary of treasury, charge de affairs, chief of staff and other high ranking officials of US.