Of all the many foolish, self-defeating, and downright stupid
U.S. policies -- from the Cuba embargo to agricultural subsidies to the
prohibition on talking to Iranian diplomats -- tariffs on Pakistani textiles
probably rank among the dumbest.
That's the conclusion I drew from the Council on Foreign
Relations' thoughtful new report
on Afghanistan and Pakistan, which was just released this morning.
The 112-page report, whose lead author was the council's
Daniel Markey, a former top State Department official for South Asia, offers a mild-mannered,
but unmistakable rebuke to the recent optimistic rumblings coming from U.S.
military leaders in Afghanistan.
The bipartisan task force behind the report -- headed by former State
Department No. 2 Richard Armitage and Clinton-era national security advisor Sandy
Berger -- lends "conditional" support to the Obama administration's current
strategy in Afghanistan and Pakistan, but recommends the U.S. downgrade its
presence in Afghanistan if Obama's upcoming policy review finds that the
current approach is failing. (Note: a number of task force members dissented
from that conclusion.)
"We are mindful of the real threat we face," the report reads. "But we
are also aware of the costs of the present strategy. We cannot accept
these costs unless the strategy begins to show real signs of progress."
The group makes a number of other recommendations --
including a vague call for the U.S. to do something about Lashkar-e-Taiba --
but to me, the textile tariffs stand out.
"The textile sector industry accounts for 38 percent of
Pakistan's industrial employment, this agreement could provide employment opportunities
for millions of young Pakistanis, discouraging them from paths leading to
militancy," the report argues.
Given that additional aid to help Pakistan recover from the
horrific floods that devastated the country this summer will probably be a
tough sell on Capitol Hill, and the likelihood that China and other low-cost
producers, not the remnants of the U.S. textile industry, would probably be
hurt by lifting the tariffs, this strikes me as a no-brainer.
Unfortunately, as the Wall
Street Journal reported
in August that there's little appetite in Washington (or Brussels) to help the struggling
Pakistani textile industry, which is getting creamed by Chinese competition.
The link between unemployment and militancy is
controversial, but it doesn't get any more direct than in Faisalabad, the hard-scrabble
town that was home to one of the Mumbai attackers:
The textile crisis has hit Faisalabad-a grimy city
of three million named in the 1970s for the late King Faisal of Saudi
Arabia-harder than anywhere in Pakistan. Scores of factories have closed
recently here, in the heartland of Punjab province's textile industry.
Umer Apparel Ltd., a Faisalabad company that
exports $15 million in goods to the U.S. annually, including brands like
American Eagle and Aeropostale, has laid off almost a fifth of its work force
of 1,500 and is running at only three-quarters of capacity, says its chief
executive, Rana Hassan Sajjad.
Faisalabad officials are concerned about links
between unemployment and a wave of Islamic extremism in the city. A number of
suicide bombings by the Pakistan Taliban on government and civilian targets in
Pakistan this year, including many in Lahore, the capital of Punjab, have been
planned from Faisalabad, city police say."There's a valid link between
joblessness and militancy," says Tahir Hussain, the chief federal
government official in Faisalabad. "Wherever the militants are getting
manpower, that's where the joblessness is."
About half a million Pakistani textile workers have lost
their jobs, mainly due to Chinese competition, according to the Pakistani
government. The United States charges a 17 percent tariff on Pakistani-made
cotton shirts and pants -- lifting it entirely would net Pakistan as much as $4
billion a year, the government estimates.
(Compare that to the paltry $150 million the U.S. offered after the floods, or
the $7.5 billion Kerry-Lugar aid bill, which is spread over five years.)
Getting rid of the tariffs would not be without its
complications. India would likely protest
the move as unfair preferential treatment toward Pakistan, as would China. That
isn't the real problem, though: U.S. textile producers would fiercely lobby
Congress against the move, though American garment manufacturers and the U.S.
Chamber of Commerce would mildly support it. And with a number of existing trade
deals looking dead in the water, it's not clear such legislation would go
Last year's experience is instructive: Congress tried to
pass a bill establishing special trading zones in Pakistan to get around the
tariffs, but Senate Republicans spiked it in a dispute over the law's labor
provisions. In any case, as the New York
Times noted in an editorial
back in August, "The trade legislation that finally emerged from the House last
year was so hemmed in with protectionist limits that it was almost worthless."
I hope this new report changes some minds, but betting on
Congress to do the smart thing is never a good investment strategy.