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Article IHT Print Page Copyright 2002 The International Herald Tribune | www.iht.com Trade as politics by other means Daniel Altman NYT Wednesday, July 2, 2003 When he took office two years ago, Robert Zoellick, the top U.S. trade official, envisioned a ladder of trade agreements for countries interested in doing business with the United States. As a country improved its trading rules and showed a willingness to open markets, it would step up to reduced tariffs and wider economic relations. The Trade and Investment Framework Agreement signed last week with Pakistan should have represented the bottom rung. Yet it came into being largely as a result of political expediency, rather than the familiar economic motivation that trade helps both sides. Indeed, Pakistan's further progress up the ladder is likely to depend more on politics than on economics. To Robert Fauver, a former economic adviser to the State Department who is now president of Fauver Associates, a consulting firm, the pact with Pakistan fit a pattern for the Bush administration. "They have done a fairly good job of not giving away freebies without getting something in return," he said. "They wanted to really see how the president helped out in the search for Al Qaeda folks." Yet the administration did not give away much in the framework agreement. It did not offer concessions to Pakistan's textile makers, which supply half of all the country's exports to the United States. In fact, the agreement only sets up annual talks that may or may not lead to freer trade. "It's really a dialogue," said Richard Mills, a spokesman for Zoellick. "Sometimes you can have a T.I.F.A. with a country, and it can just lapse. It is not in itself a demonstrator of further moves." Pakistan did receive at least $600 million worth of economic assistance from the United States after the Sept. 11 terrorist attacks. The White House and Congress also lifted sanctions imposed on trade with Pakistan. But while the European Union almost immediately cut tariffs and raised quotas for Pakistan's textiles, the United States waited, leaving many Pakistanis embittered. Last February, Pakistan received a three-year package of trade bonuses, including the relaxation of quotas on certain textile imports. Many of the breaks affected products that Pakistan did not produce in substantial volume, however. Three weeks ago, Pakistan's commerce minister, Humayun Akhtar Khan, said only about $20 million out of $143 in million export bonuses were actually used in the first year. For the moment, American policy will have little effect on the well-being of the average Pakistani, said Teresita Schaffer, a former ambassador to Sri Lanka who is director of the South Asia program at the Center for Strategic and International Studies. "The only thing that's going to make this agreement worth more than paper is private economic transactions." She asserted that the United States had not offered more aid on textiles "for all of the usual reasons that we tend to be quite horrible on textile exports generally -it's called North Carolina, I believe." But even in the Carolinas, where the textile industry is most entrenched, President George W. Bush might have little to lose by doing Pakistan's economy a big favor. "His support in North Carolina, and I'm sure it's even more so in South Carolina, is so rock-solid that he could do anything to textiles and it would have no impact on it," said David Lowery, a professor of political science at the University of North Carolina. Yet in terms of monetary contributions, the textile industry is roughly comparable to the steel industry, which received protection from the administration last year. In the last electoral cycle, textile employees gave just under $1 million to Republicans, while steel employees gave about $1.4 million, according to the Center for Responsive Politics, a non-profit research group. Regardless of the political consequences at home, the White House may have viewed the negotiation of a more comprehensive deal as an unnecessary hassle, Schaffer said. In 2005, quotas for textile imports by members of the World Trade Organization will disappear. "Giving up important political chips to liberalize textile exports gives you one, maybe two years of benefits," she said. Even such a minimal agreement on trade in general took this long, Fauver added, because the United States has historically been closer to India, Pakistan's neighbor and constant adversary. "It took focus on the India-Pakistan conflict, and on what would happen if we shifted toward Pakistan." In the past, the administration's agenda for Pakistan consisted largely of quelling its nuclear ambitions and ensuring the return of a democratic, civilian government. But movement toward open markets, Schaffer said, may now depend most on Pakistan's importance as an ally in the war on terror. Copyright 2002 The International Herald Tribune

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