|
Pak-US
economic cooperation: positive aspects
By Ismat Sabir
The US considers
a stable, democratic and economically healthy Pakistan essential for
fulfilling its key objectives. Pakistan is the biggest recipient of
American aid, after Egypt and Turkey. This assistance has played a crucial
role in economic development of the country. In June 2003, the then
president of the US, Bush established a five year, $3 billion aid package
for Pakistan. Pakistan has also received from time to time billions of
dollars as reimbursement for playing a dominant role in the war against
terror.
The Pak-US relationship
is not a new one and has been firmly entrenched since ages back. However,
Pak-US relations have experienced many ups and downs, despite being allies
for decades. Pakistan has paid, and is still paying a very high price for
being a major non-Nato ally and playing a crucial role in the war on
terrorism.
After 9/11 Pakistan
became a “very important friend” of the US and an anti-terrorism
supporter. US sanctions to Pakistan’s 1998 nuclear tests and 1999
military coup quickly waived and, in October 2001, large amounts of US aid
began flowing into Pakistan.
Pakistan intends to
submit more than 55 projects, including energy projects costing $6.8
billion to US to be financed under the Kerry-Lugar bill. US will extend
$7.5 billion aid package during the period from 2010 to 2014. Out of the
total $7.5 billion aid, US will provide $2 billion to promote agriculture
in the country and $1 billion as support to find a permanent solution to
the energy crisis.
Under the Strategic
Objectives Grant Agreements (SOGA), USAID and the government of Pakistan
have already signed six agreements amounting to $478.5 million on
September 30th, 2009. These programmes included an education sector
reforms program worth $107 million, governance program worth $32 million,
economic growth program $124 million, health and population welfare
program $50.1 million and Fata development assistance at $115.2 million.
Pakistan has signed a
$65 million deal with the US for the “hot transfer” of refurbished
American frigate USS McInerney by August 31st. Pakistani officials
described the deal as a major “milestone” towards further
strengthening the Pak-US relationship.
Trade
The US is one of
Pakistan’s major export markets, consisting about 25 per cent of total
exports. The main items of exports from Pakistan to US include cotton
yarn, textiles and apparels, rice, leather products, surgical and sports
goods. Main items of imports from USA are mechanical appliances, telecom
and electrical equipments and petroleum products.
The imports from US are
rapidly increasing because Pakistan has reduced import tariff schedules.
In June 2002 four
maximum import tariff levels of 5 per cent, 10 per cent, 20 per cent and
25 per cent were established. Pakistan’s tariffs are below the World
Trade Organisation (WTO)-bound commitments and the weighted average
applied tariff is 15.2 per cent, down from 56 per cent in 1994.
Investment potential
The US is fast becoming
the largest investor in Pakistan. The government has identified 12 major
sectors for US investment, including energy, power, infrastructure,
industry, roads, agriculture, food, chemicals and hotels.
Pakistan’s economy is
agro-based but at present, agri-business is not being done on scientific
lines and there is a great scope for establishment of joint venture
projects.
Furthermore, to cope
with the energy problem, US recently offered to provide $125 million for
six power plants in Pakistan and will also assist in establishing thermal
power projects.
The funds would be
utilised for repair and maintenance of Tarbela dam units at an estimated
cost of $16.5 million that would increase electricity generation by 80 MW.
About $15.2 million will be spent on unit numbers 1 to 6 of Muzaffargarh
Thermal power plants.
Pakistan would also
receive $18.1 million for repair and maintenance of units CC-5, GT-7 and 8
of Guddu Thermal power plant. Besides this, US will also provide $60
million to improve power distribution system of Power Distribution
Companies (Discos). Furthermore, the United States and Pakistan have
agreed to fast-track pending Pakistani requests for military equipments as
the two step up their security cooperation.
Major agreements
signed
(1) August 2002:
Pakistan and USAID signed an agreement under which the aid agency was to
provide a grant of $100 million to support the country’s educational
reforms.
(2) October 2002: A
cooperation agreement was signed between the Federation of Pakistan
Chambers of Commerce and Industry and US Chamber of Commerce and Industry
for formation of Pakistan-US Joint Business Council.
(3) April 2003: An
agreement to extinguish $1 billion bilateral debt that Islamabad owed to
Washington.
(4) June 2003: Two
agreements were signed to further enhance bilateral trade and investment
and bolster cooperation in the field of science and technology.
TABLE-1: US AID TO
PAKISTAN, 2001-07
($ millions)
Program or
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
Account
Actual
Actual
Actual
Actual
Actual
Estimate Request
CSH
—
5.0
15.6
25.6
21.0
32.2
21.7
DA
—
10.0
34.5
49.4
29.0
40.6
29.0
ERMA
—
25.0
—
—
—
—
—
ESF
—
624.5
188.0c
200.0c
297.6
337.1
350.0
FMF
—
75.0
224.5
74.6
298.8d
297.0
300.0
IMET
—
0.9
1.0
1.4
1.9
2.0
2.1
INCLE
3.5
90.5b
31.0
31.5
32.1d
37.6
25.5
NADR
—
10.1
—
4.9
8.0
7.8
10.3
PKO
—
220.0
—
—
—
—
—
Subtotal
$3.5
$1,061.0 $494.6
$387.4
$688.4
$754.3e
$738.6
P.L.480 Title Ia
0.5
10.0
9.0
6.0
10.2
23.0
—
P.L.480 Title IIa
1.9
5.1
9.7
8.4
5.8
6.7
—
Section 416(b)a
85.1
75.7
—
9.6
2.0
—
—
Total
$91.0
$1,151.8 $513.3
$411.4
$706.4
$784.0e
$738.6
Sources: US Departments
of State and Agriculture
TABLE-2: TRADE BETWEEN
PAKISTAN AND USA
($ million)
Year
Export
Import
Balance
Total exports % Share in
Total imports
% Share in
of trade of Pakistan
total Exp. of
Pakistan total imports
2001-02
2257.538
686.807 1570.731
9,202.218 24.53
10342.865 6.64
2002-03
2616.859
735.317 1881.542
11,160.246 23.44
12220.253 6.01
2003-04
2943.444
1,326.931 1616.513
12,313.000 23.90
15592.000 8.51
2004-05
3446.593
1,563.090 1883.503
14,391.081 23.95
20598.114 7.59
2005-06
4192.947
1,657.530 2535.417
16,452.398 25.48
28586.007 5.79
2006-07
4183.427
2,299.844 1883.583
16,976.243 24.64
30539.709 7.53
2007-08
3,705.86
2,440.41 1,265.45
19,222.86 19.28
39,968.50 6.11
|
