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Pakistan's difficulties with US tariffs


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Pakistanis Fume as Clothing Sales to U.S. Tumble


LAHORE, Pakistan Ashraf Sajid, a thin man with a bushy black beard and mustache, paused while sewing a gray cotton pullover shirt in a factory here and explained how he came to hate America.

When Pakistan agreed to help the United States after Sept. 11, Mr. Sajid hoped that Americans would reciprocate by buying more clothes from Pakistan. Instead, Washington has maintained strict limits on imports of Pakistan-made clothes, American store chains have turned to more stable countries and Mr. Sajid was laid off for seven months.


He and his wife and their newborn son returned to their home village and exhausted their meager savings before Mr. Sajid was finally rehired.

"America is like poison to me," he said. "I'm still bitter about it. I felt they were our friends."

Pakistan's textile and apparel industries, which dominate the country's economy and account for 60 percent of its industrial employment, have been battered by a combination of restrictive American trade policies and repeated fears of war, first from the conflict in Afghanistan and more recently during Pakistan's confrontation with India. Several terrorist attacks against Westerners have made clothing buyers even more reluctant to come here. One result has been mass layoffs.

Setbacks for the textile industry, including the temporary laying off of tens of thousands of workers last winter, are contributing to resentment of the United States among many young Pakistanis, Lahore residents say, while mullahs at radical local mosques have been playing on anger over job losses in their sermons. Government officials and residents here agree that the American stance on textiles is increasing political pressure on the government of Pakistan's president, Gen. Pervez Musharraf, who has aligned himself with the United States in its campaign against terrorism.

"If the United States had been willing to help us, it would have given people like me the ability to talk, to say that the United States is creating jobs," said Razaq Dawood, Pakistan's minister of commerce, industries and production.

Last fall, Pakistan asked that the United States and European Union waive import duties on textiles and clothing and liberalize quotas on textile and apparel imports as a reward for its help against Al Qaeda and the Taliban.

Instead, the Bush administration opted in February for a small increase in quotas while backing legislation to lower import duties on just two categories, leather gloves and hand-knotted carpets.

There had been talk in Washington last autumn of a grand gesture toward Pakistan, similar to the 50 percent increase in textile quotas that the first Bush administration granted to Turkey as a reward for its help in the 1991 Persian Gulf war.

But that idea fizzled in December when the current Bush administration was faced with imminent defeat in the House of its broad package of trade legislation and decided to woo six lawmakers from textile states by promising them it would not do much for Pakistan's textile industry.

"In developing any proposal for assistance to Pakistan, the administration is committed to working with the Congress to minimize the impact on the U.S. textile and apparel industry," Commerce Secretary Donald L. Evans wrote in a letter to one of the lawmakers, Representative Robin Hayes, Republican of North Carolina. The trade bill passed the House by a single vote after the six legislators voted for it.

Meanwhile, Pakistan's textile industry has languished. After the fighting calmed in Afghanistan last winter, buyers began drifting back here, especially from Europe, which eliminated its import duties of 8 to 10 percent for clothing from Pakistan and raised quotas by 15 percent. But terrorist attacks, including the bombing on May 8 of a busload of French technicians in Karachi, prevented a full recovery in sales.

Then Pakistan and India mobilized their armies for a possible war, prompting the United States and many European nations to call for their citizens to flee both countries immediately. In the factories that line this city's outskirts, managers now say that they may have to shut down again within weeks once they fill existing orders, because few new orders are being placed.

"They say, `We'll let you know next week,' and that has been the last three weeks," said Aleem Ahmad Khan, the chief executive of Akbar Enterprises, which owns the factory where Mr. Sajid works.

Government officials in Islamabad are especially upset that the United States has not rolled back import duties of more than 25 percent on cotton clothing from Pakistan, which would help Pakistani producers offer lower prices and avoid losing sales to manufacturers in other countries.

While Pakistan continues to export large quantities of linens to the United States, products for which there are few other suppliers, Pakistani exports of garments like cotton shirts have plunged as buyers have shifted orders elsewhere. Because cotton garments are labor intensive, the loss of sales has had a severe effect on employment.

American trade officials say a few steps have been taken to help Pakistan. The Bush administration raised quotas in February for a dozen categories of apparel, which potentially would allow an extra $143 million worth of Pakistani goods into the United States each year, a 7 percent increase. However, some of these categories are for goods Pakistan hardly produces, like work gloves, making it unlikely that it would realize that gain in exports.

Under World Trade Organization rules, the textile quotas of Pakistan and many other American trading partners, including India, were automatically raised by an additional 12 percent at the start of this year, part of a process that is supposed to lead to the global elimination of textile quotas by 2005.

A senior American trade official said that the domestic industry's concerns and constant demands for larger quotas from other developing nations had prevented the United States from doing more for Pakistan. "As we're phasing out quotas as we approach 2005, it's hard to give much away to one country without causing a stampede from every other developing nation," said the official. Indeed, India has already threatened to ask the World Trade Organization to investigate whether the European Union is unfairly helping Pakistan by eliminating import duties.

Lahore and Faisalabad, 70 miles to the west, form the hub of Pakistan's textile and apparel industries. Lahore has the misfortune of being just 14 miles from the Indian border, on flat terrain that is ideal for tank and artillery warfare. Pakistani fighter jets patrol overhead, and one of them shot down an Indian spy plane 25 miles south of here in early June.

The effects of trade restrictions and war jitters are best seen at a factory here like Mr. Khan's, which sells to many American department store chains.

Even before the recent tensions with India, the factory had to cut the wholesale price that it charges for knitted cotton men's shirts to $3.40 apiece, from $5, to retain customers made nervous by the fighting in Afghanistan, said Athar Rasul, the factory's senior marketer. Mr. Khan said the price cut, possible only because of a worldwide slump in raw cotton prices, had wiped out profits.

Mr. Khan's 650 workers each earn $70 to $150 a month for putting in 48-hour weeks in a well-lit factory, which stays surprisingly cool despite the 104-degree heat outside. That is good money in a country where the minimum wage is $50 a month, but not enough to build up much in savings, especially when two-thirds of the work force was laid off through the winter when sales to the United States declined steeply.

Arshad Muhammad, a strapping 26-year-old who sews the shoulders for pullovers, said that for the last six years he and his cousin, who is now 20, had wanted to marry. But their dreams of marriage were delayed yet again when he lost his job last winter. Now he despairs of marrying her anytime soon, especially if he is laid off again.

"I want to marry her, but she belongs to a poor family and neither they nor we have the money," Mr. Muhammad said, adding quietly, "I love her."