FOLDER - Pakistan and the rest of the World (09/2002)

Society Pakistan & World Affairs
21

Textile Export Quotas To Turkey To Yield $11m

MULTAN: ** Additional textile export quotas to Turkey during the financial year 2002-03 are expected to yield $11 million to Pakistan, while strengthening trade relations between the two countries. **

Speaking to Daily Times on Tuesday, the former chairman of the All Pakistan Bedsheets and Upholstery Manufacturers Association (APBUMA) and senior vice chairman of the Multan dry port, Khawaja M Jalaluddin Roomi, said, “With enhanced production capacity in denim, Pakistan will take this opportunity to export up to 2,000 extra tonnes of denim to Turkey, earning around $11 million in exports.”

He said the total volume of trade between Pakistan and Turkey during fiscal year 2000-01 was around $147 million, of which $100 million was in exports and $47 million in imports. This was against $61 million in fiscal year 1999-2000 and $38 million in fiscal year 1998-99. From July to April 2001-02, Pakistan’s exports to Turkey were around $76 million, with imports at $23 million.

Mr Roomi said Pakistan was also seeking Turkish investment in livestock and vegetable and fruit processing, adding that a prominent Turkish company had expressed interest.

He said Turkey had offered Pakistani exporters the benefit of an export processing zone in Turkey as an outlet to Europe, adding that Pakistan had asked for tariff concessions from Turkey on some 20 export items for the year 2003.

22

EU Concessions To Pakistan Hurt Indian Exports

NEW DELHI: The European Union’s market access and duty concessions introduced for Pakistan’s exports this year have seriously hurt Indian textile and apparel shipments, an export council said Wednesday.

An official of India’s Apparel Export Promotion Council (AEPC), told AFP that domestic apparel exports this year to the EU were unlikely to match the 1.82 billion dollars achieved last year.

“Apparel exports in the first four months of 2002 have been very sluggish,” said a senior AEPC official who asked not to be named.

“In fact, the special concessions given to Pakistan are creating serious hurdles for us.”

According to AEPC, T-shirt and pullover exports to the EU had dropped in the first four months of 2002 by nearly 70 percent.

Prices for products including dresses, blouses and shirts had fallen sharply, the official added. For example, a dress, which fetched 8.40 euros in 2001 was now selling for 3.96 euros and men’s shirt prices had dropped to an average 3.57 euros from 4.43 euros last year.

The AEPC said it had asked the EU “to settle the issue of granting duty-free access to its textiles on a par with Pakistan by the end of July.”

**“We have been pressing the EU for compensation to the tune of 250 million euros on account of trade diversion to Pakistan,” **said the official.

“If our requests are ignored, we may have to approach the dispute settlement body under the World Trade Organisation.”

In November, EU Trade Commissioner Pascal Lamy said he was willing to sign a bilateral trade deal with New Delhi in exchange for greater European access to the Indian market.

The EU is India’s biggest trading partner, accounting for 30 percent of its imports and exports. It is also traditionally India’s largest source of foreign direct investment.

Indo-EU bilateral trade is worth over 20 billion dollars a year, although India’s share of the EU’s imports is around just 1.0 percent.

23

Pak Fetches $675 Million Profit In Trade With Europe

ISLAMABAD, August 09 (PNS): **Pakistan has earned 675 million dollars profit in bilateral trade with European countries in 11 months of the last financial year. **

In July to May 2001-2 Pakistan exported 2.256 billion dollars goods to Europe and imported from their 1.581 billion dollars various items.

European Union countries are the leading trade partners of Pakistan. The EU countries and Pakistan trade about 4 billion dollars goods a year.

**In 11 months of last fiscal Pakistan exported 25 million dollars goods to Austria; 156 million dollars to Belgium; 32 million to Denmark; 15 million to Finland; 221 million to France; 406 million to Germany; 46 million to Greece; 17 million to Irish Republic; 226 million to Italy; 1.61 million to Luxembourg; 233 million to Netherlands; 66 million to Portugal; 155 million to Spain; 54 million to Sweden and 601 million to United Kingdom. **

Officials told PNS Thursday that Pakistan’s profit in bilateral trade with European nations would further increase because of suspension of duty on imports from Pakistan and 15% increase in textile quota from January 2002.

Reciprocating accord with European Union Pakistan has also reduced customs duty on imports of textile from July 2002. The government has reduced duty to 5 per cent for textile raw materials, 10 per cent for yarns, 20 per cent for fabrics, and 25 per cent for clothing.

Pakistan has also made a commitment with the European Union not to implement non-tariff barriers against textile imports from EU countries.

**EU has given Pakistan a 15 per cent increase in all their quotas and will suspended the import duties on most textile and apparel items (except yarn and fabrics) by including Pakistan in the Drug Combat Regime under GSP (normally reserved for Central American and Andean Pact countries). **

As in the case of Sri Lanka, any EU concessions are linked to the fulfillment by Pakistan of its part of the deal. If Pakistan does not respect the tariff or non-tariff commitments, the EU can withdraw its concessions after consultations.

Presently, the commission has presented the GSP concession proposal to the council for upto 2004, whether or not there is a firm commitment by EC for extension beyond 2004 is not clear.

In Pak-EU accord, all the other elements are basically the same as those contained in the EU agreement with Sri Lanka. **Pakistan will make a binding in WTO across-the-board for the textiles and clothing products for not exceeding 25 per cent. This compares with only one third of tariff lines for textiles and clothing currently bound in WTO at maximum duties reaching 50 per cent. **

24

$116 Million Profit In Trade With Spain](http://paknews.com/business.php?id=1&date1=2002-09-21)

ISLAMABAD, Sep 21 (PNS): **Pakistan has earned 116 million dollars profit in bilateral trade with Spain in the financial year 2001-2. **

Pakistan exported 174 million dollars various goods to Spain in last fiscal and imported from their 58 million dollars different products.

The country exported yarn, fabrics, garments, knitwear, carpets, surgical equipment, sports goods and leather products.

Major imports from Spain were machinery, spare parts and chemicals.

25

FTA With Lanka To Boost Trade With Eastern Block: Dawood

ISLAMABAD: Federal Minister for Commerce Razak Dawood Saturday said the Free Trade Agreement (FTA) with Sri Lanka will pave the way for boosting trade with the Eastern Block.

Dawood during a meeting with a group of country’s renowned businessmen here said this agreement would bring substantial increase in the volume of trade between the two countries and would help save valuable foreign exchange due to zero or low tariff on exportable commodities.

He said: “Pakistan’s economy has observed sustainable growth which has resulted in building and restoring investor’s confidence”. He also advised the businessmen to avail this great opportunity of Free Trade Agreement with Sri Lanka by exporting high quality and internationally compatible products. Dawood was of the view that FTA with any country was like opening the great prospects of investment and economic growth. " The FTA would be signed with Bangladesh, Kenya and Morocco very soon," he added.

Though the protocol for signing FTA between the two countries was signed in August yet both the countries were busy in finalising the list of items, which could be trade under the FTA. Now during the visit of the Commerce Minister to Sri Lanka in October, both the countries would come out with the agreed list, which could be trade between the two countries under the FTA.

According to official sources, Pakistan has short-listed 300 items for free trade while Sri Lanka has identified above 1000 items, which were to be traded with Pakistan.

The FTA between the two countries contains three categories as the first category carries zero rated items, in the second category both the country would reduce the existing higher rates of duty and in the last category Pakistan and Sri Lanka would maintain those items which hurts their respective industries and that would not be traded duty free.

Sources told The News that under the phase-out plan, 33 per cent of prevailing duties on the import of each other products would stand eliminated during the current fiscal year while the remaining duties would be done away with at the rate of 33% each during next fiscal and the fiscal year after.

In this way the trade agreement between the two countries would be fully in place by year 2005. Sources said Sri Lanka had already agreed to immediately allow duty free import of Pakistani motorcycles and tractors while Pakistan would enhance tea import quota from 8000 tonnes to 16000 tonnes at zero duty.

26

Japan To Give $200m For Poverty Eradication

**TOKYO, Sept 22: Japan will provide $200 million to Pakistan till next year as second part of the $300 million pledged last year. Director of Japanese foreign affairs ministry’s southwest Asia division, Takio Yamada, told APP that his country had already provided $100 million to Pakistan. **

Japan has also decided to provide soft loan of billions of Yens for the completion of third phase of Kohat Tunnel. The loan would have a 10-year grace period with nominal interest rate and it would be paid in 30 to 35 years.

He said Japan had provided soft loan for the first and second phase of the tunnel. The first phase had been completed and the second was in progress, he said.

He recalled that President Gen Pervez Musharraf had visited Japan this year on invitation the prime minister.

He said Japan wanted to assist the government for initiating projects to eradicate poverty.

**The government of Japan promised to give $300 million to Pakistan in two years as part of financial assistance for poverty eradication programme. **

The official said the countries were celebrating 50th anniversary of the establishment of bilateral relations.

He said that after the visit of Pervez Musharraf, a parliamentary delegation headed by a leader of the Liberal Democratic Party, Mitsuo Horiuchi, visited Pakistan. The exchange of delegations would continue, he said.

He said Japan was concerned over the tense situation between Pakistan and India. He called for de-escalation of deployment on the borders.

Japanese prime minister had also discussed process of restoration of democracy with the president, he said.

About offer by the president to India for resuming dialogue, he said: **“We respect this offer and spirit and want early resumption of dialogue between India and Pakistan, especially to end the tension between the neighbours having nuclear devices.” **

Japanese prime minister had also met the Indian prime minister and asked both the leaders to resume meaningful talks for bringing peace in the region.

He said Japan was concerned over proliferation in South Asia and wanted that Pakistan and India should sign the CTBT for ensuring peace.

27

FOLDER - PAKISTAN and North, South America

Pakistan, US Agree To Enhance Trade

ISLAMABAD: Pakistan and United States have agreed to enhance the quantum of trade between the two countries and increase bilateral interaction between their business communities. This was agreed during the meeting of US Ambassador Nancy Powel and Commerce Minister Abdul Razak Dawood here on Monday.

The meeting showed satisfaction over the bilateral business activities and stressed the need for expediting preparations for the post-World Trade Organisation scenario. According to official sources, during the meeting the commerce minister raised the issue of further enhancement of access to Pakistani textile products in the US markets.

Official sources said though the US had given the package for market access to Pakistan a few months ago, yet the government still believed that it should have further access to US markets as since 9/11, Pakistan’s exports to the US, Canada and other countries had decreased drastically.

During the meeting, the sources said, the minister also raised the issue of Free Trade Agreement with the US on which the ambassador assured to look into the proposal.

For Pakistan, improved access to the US textile and apparel market - the largest in the world - has emerged as a potential economic lifeline amid economic chaos. Pakistan’s textile exports total $5.8 billion and about $1.8 billion of that goes to the US.

Pakistan ships bedlinen and T-shirts to the US but retailers and importers began cancelling orders after the September 11 terrorist attacks in the US and the subsequent military campaign in Afghanistan.

In 2000-01, Pakistan earned $1.62 billion profit in mutual trade with the US. Increase in quotas, cut in duty and enhanced market access would certainly lead to substantial growth in Pakistan’s exports to America.

The US is the most important and single largest trading partner of Pakistan as one-forth of Pakistan’s total exports goes to that country’s markets. Similarly, USA has been the single largest supplier of imports to Pakistan until 1998-99 but in 1999-2000 Japan became the largest supplier of imported goods and US went to the No 2 position.

Pakistan’s export to US in fiscal year 1999-2000 reached $2.12 billion, with garments accounting for more than 42 per cent of the total.

The exports to US during the last decade have grown at a healthy rate of more than 20 per cent annually and from $662.2 million in 1990-91, exports to US went up by more than three-fold to $2.12 billion in 1999-2000. Since 1992-93, the balance of trade between the two countries has been in favour of Pakistan. Imports from US have generally followed a declining trend during the past 10 years, except for a couple of years in the mid-1990s.

Within textiles, readymade garments account for the major portion of total exports to the US and its share is more than 42 per cent of total exports. Readymade garments export has registered growth of more than 43 per cent in last four years as it has gone up $630.4 million in 1996-97 to $905.28 million in 1999-2000.

Similarly, made-up articles of textiles have registered a growth of more than 100 per cent during last four years, which increased from $161.9 million to $347.2 million in 1999-2000.

The export of cotton yarn increased from $32.5 million to $86.6 million, exports of carpets from $68.9 million to $109.5 million, cotton fabrics from $140.3 million to $186.3 million during the last four years.

On the import side, machinery and its parts constitutes the largest portion of total imports from the US but it has drastically declined over the last four years and came down to $133.48 million in 1999-2000 from $415.6 million in 1996-97.

Similarly, there has been a massive decline in import of wheat as it was $368.9 million in 1996-97 and came down by four-fold to only $82.7 million. Same is the case with import of iron and steel from US, which decreased to $21 million in 1999-2000 from $69.9 million in 1996-97.

28

Pakistan, Argentina Sign Agreement On Trade Cooperation

ISLAMABAD: Pakistan and Argentina have signed an agreement on economic and trade cooperation for the promotion of bilateral economic cooperation between the two countries.

The agreement which was signed in Buenos Aires, envisages Most Favourable Nation (MFN) treatment under World Trade Organisation (WTO) regulations and greater cooperation in the field of goods and services, banking, investment, transport and communication sectors, according to a fax message received here on Thursday.

The agreement also provides forming of Argentina-Pakistan Joint Committee to review, implement and diversify the scope of the trade Agreement. The signing ceremony was held at the Argentine Ministry of Foreign Affairs in the city of Buenos Aires on July 11, 2002.

Ambassador of Pakistan, Saeed Khalid said, **“this is the first agreement between Argentina and Pakistan in the last 50 years of diplomatic relations and it will provide ample opportunities to both the countries to increase two-way trade and know-how in various sectors.” **

29

Pakistan Eyes Canadian Market

TORONTO, Aug 27: There is a great potential of boosting two-way trade between Islamabad and Ottawa, said leader of Pakistani trade delegation which is currently visiting Canada.

Ejaz Ahmed Qureshi, who is heading a 16-member delegation, told newsmen here on Monday that Pakistani businessmen are focusing their attention on Canadian market to enhance their trade. He said members of his delegations held very useful meetings with local traders and industrialists in Toronto on Monday morning.

Qureshi, who is also vice-chairman of Export Promotion Bureau, said he would hold talks with Canadian officials in Ottawa next week on the promotion of bilateral trade ties between the two countries.

The delegation, which arrived here earlier this week, spent another busy day on Monday. Besides holding meeting with their Canadian counterparts, the delegation attended a reception hosted by Anwar Merchant, chairman of Canada-Pakistan Business Council.

Earlier, new consul general of Pakistan Ghalib Iqbal hosted a lunch for the trade delegation and hoped that their visit would further strengthen trade between Pakistan and Canada.

On Sunday members of the delegation attended a dinner hosted by Qamar Sadiq, chairman of Multi-cultural Society of Pakistani Canadians in Markham, 30km east of Toronto. The delegation is also taking part in the current Canadian national exhibition where Pakistani exporters and manufacturers have set up eight booths to display their products. The items being displayed include sports good, surgical equipment, readymade garments, leather goods, canned food, jewellery, etc.

Meanwhile, Ejaz Qureshi in an interview with Dawn, said the main purpose of his visit is to establish contacts with Canadian business houses to enhance his country’s trade. He said Islamabad would face no difficulty in achieving its present export target of $10.4 billion. **“We already crossed the $9 billion export mark last year when conditions were somehow difficult,” **he said.

Pakistan, he said, had great potential to achieve any given export target. Explaining, he said Pakistan was now producing quality products. **“In last few years, we have improved quality of our products. In the past quality was a serious issue. It’s not an issue now.” **

Pakistani delegation will visit Ottawa and Montreal before returning home on September 3.

30

DCG Meeting Begins Today

RAWALPINDI, Sept 23: A four-day meeting of the Pakistan-USA Defence Consultative Group (DCG), the first after its re-establishment, will begin here on Tuesday. “The meeting is of special significance to both the countries in the post-Sept 11 scenario , and it is hoped that far-reaching decisions will be taken by the two sides for expanding cooperation in the defence and military fields,” the defence ministry said in a statement on Monday.

The statement says the US Undersecretary for Defence (Policy), Douglas J. Feith, will lead a 40-member team while Defence Secretary Hamid Nawaz Khan will head the Pakistani side.

The group has been sub-divided into various working groups, which will hold talks on several agenda items and finalize minutes before the concluding session on Friday.

The opening and concluding plenary sessions will be co-chaired by the leaders of the two delegations.

Mr Douglas Feith is scheduled to call on President Musharraf, the chairman, Joint Chiefs of Staff Committee, the navy and air chiefs, and the vice chief of army staff after the meeting.

31

Bids For Motorway Open Today

ISLAMABAD, Sept 23: **Bids for around Rs 13 billion construction work of Peshawar-Islamabad motorway project M-1, will be opened here on Tuesday and a new Turkish joint venture seems set to win the contract. **

The National highway Authority (NHA) has completed technical negotiations with the three bidders during the last two days.

The negotiations with Turkish bidder have gone well as the NHA was keen to link its Rs six billion held up money with the former Turkish firm that was expelled from the project three years back, a senior official of the NHA told Dawn.

Three parties that have been shortlisted for the project include a joint venture of Frontier Works Organisation (FWO), a construction subsidiary of general headquarters and Husnain Construction, Pakistan Motorway Contractors Joint Venture (PMCJV) comprising local companies SKB, Descon, Habib Rafiq Construction, Hakas, Sachal, Shahzaman, Mian Nisar company and Sanaullah & Moosid and a Turkish consortium comprising Limak, Teksar, Kolin, Izhar, Gammon, Karcon, MMB-Sky joint venture.

The project has already consumed over Rs 23 billion without construction of even one kilometre of the 160-km motorway.

According to engineers’ estimates, the project would cost Rs 11 billion while the NHA had awarded through negotiations to the local contractors, Pakistan Motorway Contractors, which had to be shelved due to the directives of President Pervez Musharraf for open tendering.

The successful bidder would be paid 2.5 per cent of the total cost in advance to start the construction work in case of local contractor and 7.5 per cent advance in case of foreign contractors, the sources said.

The NHA official said negotiations and contracting process would be finalized by the end of October this year and the project would be completed within three to four years.

Under the original agreement, Bayinder was required to hand over completed M-1 project to the NHA by December 2002, but was expelled from the project for not meeting certain target dates. The termination of agreement has delayed the project by at least another four years and got the NHA’s Rs six billion stuck up with the Turkish banks.

32

(Yahoo News: Latest and Breaking News, Headlines, Live Updates, and More)

ISLAMABAD (Reuters) - U.S. and Pakistani defense officials gathered in Islamabad on Tuesday to discuss boosting cooperation between the two countries and restoring formal ties suspended since Pakistan’s 1998 nuclear tests.

The Defense Consultative Group is meeting this week for the first time since 1997, with formal proceedings due to get under way on Thursday with the arrival of U.S. Undersecretary of Defense Douglas Feith.

Three working groups began preliminary meetings on Tuesday.

The decision to restore the defense group is seen as a reward for Pakistan’s cooperation with the U.S.-led war on terror and military action in Afghanistan, and was taken when President Pervez Musharraf visited Washington in February.

Pakistan’s state-run PTV television said the two sides were expected to take **“far-reaching decisions for extending cooperation in the defense and military field.” **

Defense analysts say the talks will focus on several areas of defense cooperation including the release of arms and equipment withheld by Washington in 1990 as a punishment for Islamabad’s nuclear program.

Officials are also likely to discuss cooperation in patrolling Pakistan’s mountainous border with Afghanistan, where U.S. forces are tracking down fugitive al Qaeda and Taliban militants.

Pakistan will also be asking for new weapons, a senior government official told Reuters in Islamabad.

**“Pakistan’s request for purchase of new weapons will also be discussed at the Defense Consultative Group meeting,” the official said. “Whether such a request will materialize or not will be known only after the meeting.” **

In 1998, the United States slapped economic sanctions on Pakistan and scrapped the defense group meetings.

Pakistan’s delegation at the talks will be led by Defense Secretary Hamid Nawaz.

33

Inam, Powell Discuss Wide Range of Issues

NEW YORK: Pakistan Minister of State for Foreign Affairs Inamul Haq held meetings with two State Department top bosses namely Colin Powell and his Deputy Richard Armitage.

These meetings were not only cordial; but also of substance, according to Inamul Haq. Talking to The News, Inamul Haq said matters of mutual interests between the two countries including terrorism, reconstruction of Afghanistan, stability of Afghanistan, India-Pak tensions, Indian rigged elections in occupied Kashmir, access to United States markets, continued Pak-US dialogue on long-term bilateral relations and restoration of democracy in Pakistan were among the issues discussed in his separate meetings with US Secretary Colin Powell, National Security Advisor Condileeza Rice and Deputy Secretary Richard Armitage.

He also predicted Pakistan’s election to the UN Security Council for a two-year term as non-permanent member on 27 September when UN elects non-permanent members for the year 2003-2004 on seats falling vacant on January 1, 2003.

Asian group of countries and other regional groups of countries have already endorsed Pakistan’s candidature for the Asian countries seat on the Security Council. This election would enhance Pakistan’s image.

Minister Inamul Haq talking about his meeting with US Secretary Colin Powell said he has urged the United States for multi-year economic cooperation between Pakistan and the US and possibility of Pak-US trade agreements.

Colin Powell thanked Pakistan for its role and cooperation in war against terrorism. About his meetings with Presidential Advisor on US National Security Condileeza Rice and Deputy Secretary of State Richard Armiatge, Inamul Haq said that he pointed out to US officials that even Indian NGOs reported rigging in Kashmir valley elections.

“These reports about rigging the elections by the Indian government have been published by the Indian NGOs and news media. I have given copies of all such reports to Mr. Armitage and also sent to Ms. Rice”, Inamul Haq said.

34

(Yahoo News: Latest and Breaking News, Headlines, Live Updates, and More)

ISLAMABAD, Pakistan (Reuters) - U.S. Undersecretary of Defense Douglas Feith arrived in Pakistan Thursday as formal military talks between the two countries got under way for the first time since Pakistan’s nuclear tests in 1998, U.S. officials said.

Pakistan, a key ally in Washington’s war on terror, can expect spare parts for U.S.-supplied warplanes and greater cooperation in military training and intelligence from the Pakistan-U.S. Defense Consultative Group talks which last until Friday.

But analysts say Washington will stop short of supplying hardware – such as additional F-16 fighters – that would alarm Pakistan’s neighbor and bitter rival India.

Pakistan and India have fought three wars since independence in 1947 and went to the brink again after India blamed Pakistan-backed Muslim extremists for a bloody attack on its parliament in December. Washington has led international efforts to ease tension between the two.

Thursday, Indian External Affairs Minister Yashwant Sinha said Tuesday’s massacre of 28 people by two Muslim gunmen at India’s Akshardham Temple bore the hallmarks of previous attacks tied to Pakistani nationals.

The decision to revive the U.S.-Pakistan meeting is seen as a reward for Pakistan’s cooperation with the U.S.-led war on terror and military action in Afghanistan since last year.

Two days of preliminary talks took place Tuesday and Wednesday, but officials are keeping tight lipped about progress.

The United States blocked delivery of two dozen F-16 aircraft to Pakistan, bought in the 1980s to bolster defenses against India, because of Islamabad’s nuclear weapons program.

The U.S. Pressler Amendment bars arms sales to states with nuclear programs and Washington said last year it would not deliver the aircraft even though Pakistan had become a close ally.

But analysts say Pakistan might get desperately needed spare parts for its 40 existing F-16s, of which only about 30 are serviceable.

It may also be seeking spares for its C-130 transport aircraft and its P-3 radar system, or even an upgraded radar system to counter Israel’s supply of advanced Falcon AWACS (airborne warning and control system) aircraft to India.

35

Rocca To Stop Over In Karachi

ISLAMABAD, Sept 25: The US assistant secretary of state, Christina Rocca, will stop over in Karachi at the end of her visit to India, officials here told Dawn on Wednesday. “Ms Rocca will have a few hours in Karachi on her way back,” an official in the know of the matter said , adding that the stopover could not be logged as an official visit.

Informed sources said the US assistant secretary of state would be looking into certain internal security matters regarding the American Consulate in Karachi. “She will be in Karachi to basically do some housekeeping and review different options for the US consulate there,” they added.

Foreign Office Spokesman Aziz Ahmed Khan told Dawn on Wednesday that he had no intimation of whether Ms Rocca would visit Islamabad. “So far, I have not heard anything about her visit to Islamabad or any official engagements here,” he said when questioned.

The sources said the US official was not scheduled to meet any Pakistan government functionary during her brief stay in Karachi. The US ambassador to Pakistan, Nancy Powell, may proceed to Karachi to receive Ms Rocca and discuss important issues with her.

Ms Rocca arrived in New Delhi on Tuesday on a four-day official visit.

36

US To Restore Military Aid Soon

Pakistan asks US to provide F-16s, other military hardware, spares; US expects Islamabad to ensure there are no infiltrations across LoC

ISLAMABAD: “We have discussed defence and military issues and took strategic view of the security environment,” said the visiting US official. Defence Secretary Hamid Nawaz Khan said both India and Pakistan are nuclear powers and Pakistan’s defence needs have changed in that context. “Now it is fully recognised by the Americans that Pakistan’s capability is required to be enhanced.”

“We have developed an understanding on security issues, as both the sides made presentations,” said Defence Secretary Hamid Khan, citing a progress in all three areas of training, joint exercises, new defence acquisitions and others.

He said a list of weapons acquisition has been communicated with priority areas of our interest. “There should be a balanced US approach in the region, though the US main concerns was counter-terrorism and cross LoC movements,” he added.

**“Acquisition of US defence stores for improving conventional weapons capabilities were mentioned as a key Pakistani priority, as were measures and conditions for a long-term, sustainable defence cooperation relationship between the two countries.” **said the joint statement.

“The delegation highlighted the direction and goals for consolidating and enhancing such cooperation, and finalized various matters relating to military training, education and combined exercises.”

The statement said: “We have discussed how the US military can better assist Pakistan in improving its counter terrorism capabilities and in understanding the challenges Pakistan faces.”

Agencies add: Feith said Pakistan’s participation in the U.S.-led war on terrorism had led U.S. authorities to reconsider the four-year ban on military assistance.

Pakistan asked the United States to provide military hardware, including F-16 fighter jets, to balance its conventional defence capability with India, officials from the two countries said "India is getting (military) equipment from all over so we have to do something to improve our conventional capability." Pakistan also sought spare parts for existing weapons as well as major weapons systems.

Feith said although Pakistan and the United States were doing a good job in their campaign against al Qaeda, there was still much to be done.

He also discussed the issues of Kashmir, cross border infiltration and a military standoff between Pakistan and India. **“The U.S. has made it clear and we are hopeful that Pakistan government will ensure that there are no infiltrations across the line of control (that divides Kashmir between India and Pakistan),” **Feith said.

Feith added that the United States was also working to end the long military stand-off between the two arch-rivals so that Pakistan and U.S. forces could concentrate on hunting al Qaeda fugitives in the region.

“The concerns about how this (stand-off) affects our cooperation with Pakistan regarding operations against al Qaeda have also been discussed. What we are interested in seeing is circumstances where the risk of war between India and Pakistan is diminished.”

A second round of talks are expected to be held in Washington as early as March, officials said.

Following is the text of the joint statement:

[list=1]

[li]In the field of security, Pakistan and the US have had a long and close relationship. These relations grew since the 1950’s and intensified in the 1980’s. The Defence Consultative Group (DCG) oversees this bilateral defence relationship. The DCG has served the purpose of providing a forum to exchange views on security matters and, in Pakistan’s case, share with the US its views of its security environment. Despite changes in the relationship, one thing remained constant: a mutual respect for each other’s military forces. This remains true today as the DCG process resumes after five years.
[/li]
[li]The attack of September 11, 2001, and the decision of both countries to cooperate closely with each other in the fight against terror have served as the catalyst for rejuvenating the DCG process. Considering the convergence of interests in the regional and international security environment resulting from the 9/11 attacks, both countries decided that it served their common interests to restart the DCG process.
[/li]
[li]It was in this spirit of cooperation that both countries agreed to hold the 14th DCG meeting in Rawalpindi, Pakistan, September 25-27, 2002. The three working groups of the DCG forum and their respective committees held results-oriented discussions on the ways and means to strengthen defence cooperation between the two countries.
[/li]
These groups discussed issues relating to procurement of US equipment under the Foreign Military Sales program, including major weapons systems and related support for those systems, repair/upgrade of existing systems, the issuance of licenses for the import of spares, and the resolution of other outstanding issues.

Acquisition of US defence stores for improving conventional weapons capabilities were mentioned as a key Pakistani priority, as were measures and conditions for a long-term, sustainable defence cooperation relationship between the two countries. The US agreed to expedite the resolution of pending issues and to provide information to Pakistan on the availability of new weapons and systems as soon as possible.

A key point in the discussion of equipment issues between the two delegations was the desirability of interoperability of weapons systems, tactics, techniques, and procedures, to which both countries assign a high priority.

[li]After the US delegation expressed the appreciation of the US for Pakistan’s support and contributions in the war on terrorism, the delegations reviewed assistance the US has provided to Pakistan during the past year.
[/li]
This has included, among other elements, over two billion dollars in economic support and security assistance, including a 600 million dollar grant in Economic Support Funds, over 30 million dollars in agriculture support, and 75 million dollars in Foreign Military Financing (FMF).

The delegations noted that US support included an unprecedented US 617 million dollar reimbursement, which required special legislation for the US Congress, for Pakistan’s support to the US in the war on terrorism. Further, the US has assisted in arranging for over three billion dollars in debt rescheduling.

[li]The two-day talks were held in a cordial atmosphere, and members of the two delegations contributed valuably to the overall effort. Issues relating to cooperation in military-to-military matters concerning the Army, Navy, and Air Force were discussed extensively.
[/li]
The delegations highlighted the direction and goals for consolidating and enhancing such cooperation. The delegations discussed various aspects of the war on terrorism, particularly operations against Al-Qaeda in the border areas.

The US delegation expressed appreciation for Pakistan’s assistance in counter terrorism operations and for the superb police work it is doing within its own borders. The delegations finalised various matters relating to military training, education and combined exercises. The US delegation emphasised that these programs are valuable elements of our security relationship.

To increase momentum in these areas, it was noted how important bilateral activities over the next year will be. These include some six exercises, 11 seminars, and 18 exchanges and visits. Both delegations noted the significance of the Inspired Siren combined naval exercise currently taking place, the first significant bilateral exercise in several years.

[li]In a new development, a DCG counter terrorism working group met for the first time. This group discussed how the US military can better assist Pakistan in improving its counter terrorism capabilities and in understanding the challenges Pakistan faces.
[/li]
The US delegation emphasised its interest in assisting Pakistan in enhancing its capabilities to fight terrorism, particularly in the border areas. The new work of the counter terrorism working group will assist in Pakistan’s efforts to improve its capabilities to control its borders and fight terrorism within its territory.

[li]The delegations also agreed to conduct periodic monitoring and review of the DCG matters discussed above. Although the DCG will normally convene annually, the delegations decided, in light of current challenges and the renewal of the DCG process, to hold the next DCG meeting in Washington in approximately six months.
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[li]In sum, the DCG meeting provided both countries the opportunity to understand the viewpoints of the other, and to develop a common approach to enhancing cooperation covering important defence matters. The delegations expressed the strong desire that the decisions taken during the meeting will contribute further to recent momentum in the bilateral relationship, with special reference to the current regional threats and to international security as a whole.
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37

Washington pays $317 million to Islamabad

WASHINGTON, Sept 27: The United States has paid $317 million to Pakistan to meet the expenses incurred during the US-led war on terror in West Asia, Finance Minister Shaukat Aziz said here on Friday.

The payment was finalized in a meeting between US President George W. Bush and President Pervez Musharraf in New York on Sept 12.

The finance minister told a news briefing that participation in the Operation Enduring Freedom had cost Pakistan more than $700 million, and said the rest of the amount would also be reimbursed soon.

“Budgetary allocation had already been made and $317 million have now been paid,” he added.

Pakistan provided five air bases to the US in the beginning of the US military offensive in neighbouring Afghanistan. US forces are still using at least two of these air bases.

The finance minister is in Washington to attend the annual IMF-World Bank meeting.

38

Fertiliser Exports To African States Likely

**NAIROBI: Pakistan is likely to make a breakthrough in the East African markets by exporting fertilisers to Kenya and other regional countries which come under the purview of the Pakistan High Commission (PHC) in Nairobi, particularly Tanzania, Uganda, Burundi and Rwanda, ** sources in the PHC said.

**“If the ongoing negotiations between the High Commissioner of Pakistan in Kenya and accredited countries materialise, Pakistan would be able to export NPK (granular) being used in these countries in tea gardens, in a big way”, **the sources say.

Pakistan HC has made a major move when the High Commissioner, H A Kidwai, successfully convinced the Kenya Trade Development Agency (KTDA), to place an introductory order of 1,000 tonnes NPK (granular) following a meeting with its Chairman, M I M Imanyara on September 25, 2002. The initial order is being placed with Engro Chemicals Pakistan.

The PHC Nairobi has already surpassed all its targets, as it helped increase Pakistan’s export by 153 per cent during 2001-2002, against a target of 30 per cent increase given by the Export Promotion Bureau (EPB), sources added.

As the fertilisers from Pakistan would make inroads into Kenya and the East African region, the trade deficit would narrow further or even reach at par with Kenya, sources said.

Since the Engro Chemicals had expressed its inability to produce the sample quantity of NPK unless and until an order of at least 1,000 tonnes is placed, the High Commissioner convinced the KTDA and managed to secure an order of 1,000 tonnes for trial run, the minimum quantity which is required by Engro to achieve the required results without going through the tendering process.

The KTDA alone imports 65,000 tonnes of NPK every year whereas Kenya’s total annual import of fertilisers is over seven billion Kenyan shillings.

The tea growing countries in the region viz Kenya, Tanzania, Malawi, Rwanda, Burundi, Uganda, etc. import NPK in huge quantity worth millions of dollars every year.

A formal visit of the KTDA chairman to the Engro factory is also being arranged, sources added.

When contracted, the Pakistan High Commissioner has confirmed the major developments in this connection and said that if the trial order were approved, Pakistan would make the biggest break though in East Africa.

39

Pakistan Hopeful of Free-Trade Pact With US

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.

40

US-Pakistan Trade Council To Be Launched Today

WASHINGTON, Sept 29: The United States Chamber of Commerce will launch US-Pakistan Business Council on Monday to promote trade between the two countries and to foster a greater awareness of business opportunities in Pakistan.

“The goal is to generate increased foreign direct investment in the country,” Finance Minister Shaukat Aziz told Dawn on Sunday.

He said: **“The council will bring together Pakistani and American business leaders and provide a forum for constructive discussions of business conditions and policy-related issues.” **

Although Pakistan has had trade relations with the United States for more than 50 years, the US-Pakistan Business Council will provide an institutionalized framework to foster this relationship.

“There’s an interest in Pakistan despite political instability and religious violence,”:smiley: said Herbert H. Davis, managing-director for South Asian Affairs at the US Chamber of Commerce.

Mr Davis, who will also be the executive director of the council, observed that **“investments can be generated in troubled areas as long as political alliances are favourable.” **

More than 25 US companies will be attending the inaugural meeting on Monday, including such major business concerns as Boeing, Citicorp, Coca Cola, Touchdown Software, Pepsi and several pharmaceutical giants.

“US companies are showing interest in energy, financial, IT and defence sectors,” Mr Davis said, adding that the companies included those who already had investments in Pakistan as well as those which were currently exploring the country.

“They are aware that this is not the best of time for Pakistan but they hope that the situation will improve soon,” he added.

The US Chamber of Commerce is the leading business association in the United States with three million members across the country.

Waseem Haqqi, chairman of the Board of Investment, Pakistan, has come to Washington with a 20-member delegation to attend the inauguration and will address the plenary session.