TRADE POLICY REVIEW OF PAKISTAN
Statement by Ambassador Peter F. Allgeier
U.S. Permanent Representative to the WTO

Geneva
16 January 2008

Thank you, Mr. Chair.

The United States is pleased to welcome Mr. Shazada Alam Monnoo, Federal Minister of the Ministry of Commerce, Ambassador Manzoor Ahmad and the entire Pakistani delegation here today for Pakistan’s third Trade Policy Review.  My Government would like to thank the WTO Secretariat and the government of Pakistan for their informative reports provided to Members prior to this meeting.  These reports allow us to better understand developments in Pakistan’s trade policy regime, since its Trade Policy Review in 2002.  The United States also thanks the discussant, Ambassador Karen Tan, for her valuable contribution to this review.

The United States appreciates that this TPR comes at a very challenging time for Pakistan.  We place a high priority on our strategic partnership with Pakistan and, in that context, express our solidarity with the people of Pakistan during this period of political transition.   The United States also places great importance on its trade relationship with Pakistan, both as a vehicle for economic development in Pakistan and the South Asia region, and as a means to enhance our bilateral ties and the global trading system.  You are a significant player on the world stage and a respected trading partner.  My comments today, therefore, are offered in the spirit of constructive engagement in an economic dialogue of global significance.

The United States is pleased to acknowledge that, since the last TPR, Pakistan has experienced significant economic growth, including 7 percent growth in 2006/2007.  This growth is in large part the result of improved economic policymaking grounded in efforts to integrate Pakistan further into the global economy.  Moreover, since the last TPR, we acknowledge that Pakistan's ranking on the UN human development index has risen from "low" to "medium".  Poverty has fallen in line with the Government's 2003 poverty reduction strategy; although, as the Secretariat noted in its Report, income inequality has widened slightly and rural poverty remains high.

An important factor in Pakistan's economic growth has been substantial growth in overall foreign direct investment during this period of review. Such investment grew from 0.7 percent of GDP in 2001/2002 to 3.5 percent of GDP in 2006/2007.  Pakistan has opened further its economy to foreign investors, thereby acquiring the benefits of increased investment in the banking, telecom, and IT sectors.  The United States remains the largest foreign direct investor in Pakistan.  The stock of direct foreign investment from the United States is about $1.2 billion. Pakistan could do even better, in my Government’s view.  We urge the government of Pakistan to ensure that all investors’ contracts are honored. 

During the period under review, Pakistan has liberalized its trade policies in several important areas including customs procedures, overall tariff protection (the average applied MFN tariff rate is around 15 percent, down from 20 percent in 2002), and tariff bindings.  The government of Pakistan also continued to take noticeable steps to improve enforcement of intellectual property rights.  However, book piracy, weak trademark enforcement, lack of data protection for proprietary pharmaceutical and agricultural chemical test data, and concerns with Pakistan’s pharmaceutical patent protection remain serious barriers to trade and investment.  We urge Pakistan to further strengthen its protection and enforcement of intellectual property rights.  The United States has funded capacity building programs in these areas.

In 2001, bilateral trade in goods between the United States and Pakistan totaled about $2.8 billion.  By 2007, our bilateral trade in goods had grown 90 percent to $5.9 billion.  U.S. imports from Pakistan were about $2.2 billion in 2001 and grew to $3.6 billion in 2007.  U.S. exports to Pakistan were about $450 million in 2001 and grew to 2.3 billion in 2007.

Unfortunately, Pakistan has experienced some economic disappointments during this period of review.  As the Secretariat notes, trade liberalization has slowed and the privatization agenda has stalled.  Increased government involvement in Pakistan’s economy has burdened the federal budget and created considerable market inefficiencies.  Government support for production and exports has risen as have the monopolistic activities of state-run companies.  Although we have seen Pakistan’s economic fundamentals improve, the Secretariat points out that due to persistent structural weaknesses, the costs of doing business with Pakistan have also risen, and this impedes improvements in productivity and competitiveness.   We agree with the Secretariat’s conclusion that Pakistan could best address these structural limitations by reducing political uncertainty and continuing trade liberalization and other productivity-boosting structural reforms.  These steps will help Pakistan’s prospects for achieving international competitiveness, economic diversification and, ultimately, sustained economic growth.

We encourage Pakistan to become an observer to the Agreement on Government Procurement.  The provisionally adopted text of the GPA has been extensively amended and includes many features that make it better suited for modern procurements.  As Pakistan updates its procurement system, it can benefit from the rules developed through the experiences of other WTO Members.  We also encourage Pakistan to submit its 2005 new and full subsidies notification for review by the SCM Committee.

The United States welcomes Pakistan’s continued commitment to the WTO’s work and to trade liberalization through the rules-based multilateral trading system.  The United States appreciates Pakistan’s efforts in working toward constructive solutions to concluding the Doha Round.  We particularly appreciate Ambassador Ahmad’s contributions as Chair of the TRIPs Council Special Session and Pakistan's record of bringing creative new ideas to the table.  Pakistan has a major stake in achieving an ambitious result in the DDA.  New, meaningful market access in services, industrial goods and agriculture could further enhance opportunities for Pakistan to broaden and diversify its export markets,particularly with respect to new emerging markets.  The United States looks forward to working with Pakistan toward successfully concluding the Round.

Pakistan has faced and continues to face many challenges, but nonetheless has made great strides in undertaking economic reform.  My Government urges Pakistan to continue its steps to reform and pursue open and liberal policies necessary to achieve your country’s economic goals.  The United States appreciates the opportunity to participate in this TPR.  We look forward to continuing to work with Pakistan in the future.  In closing, on behalf of the United States, I would like to wish Pakistan a peaceful and prosperous 2008.

Thank you.