PAKISTAN RAISES CONCERNS OVER PROPOSED ROZ LEGISLATION

UNCLAS ISLAMABAD 002980 SIPDIS SENSITIVE SIPDIS STATE FOR EB/TPP/BTA/ANA MBGOODMAN USTR FOR DHARTWICK USAID FOR ANE MWARD E.O. 12958: N/A TAGS: EAID ECON EIND ELAB ETRD PK SUBJECT: PAKISTAN RAISES CONCERNS OVER PROPOSED ROZ LEGISLATION ¶1. (SBU) Summary: On July 9, EconCouns met with Jamshid Khan, Joint Secretary and Raheela Tajwar, Deputy Secretary in the Ministry of Commerce in the Ministry of Commerce to discuss Pakistan's concerns over proposed ROZ legislation. Some concerns were resolved by discussing the wording in the document; however, the textile issue continues to be raised by Pakistan. End Summary. ¶2. (SBU) On July 9, EconCouns met with Jamshid Khan and Raheela Tajwar from the Ministry of Commerce to discuss the proposed ROZ legislation. Khan was concerned about eligibility requirements mentioned in the document, as well as designations. EconCouns pointed to the language in the document under "Eligibility" that states, "... or are making continual progress toward establishing..." to reassure Khan that Pakistan did not have to have all legislation in place before the ROZs could be established. Similarly, EconCouns highlighted the wording, "...could take the following into account..." under the "Designation" section to ease concerns over which areas in Pakistan would qualify for ROZ designation. ¶3. (SBU) Textile limitations continued to be a big concern to Khan and Tajwar, specifically categories 338 and 339 (Knit Shirts and Blouses). Tajwar pointed out only five to six of the 50 items in those categories were permitted to be exported under the ROZ agreement. Khan stated that Pakistan's expertise was in textile production, and that if textile manufacturers were not permitted a greater range of exports, they would not relocate to a ROZ because the cost would not be worth the benefit, and the ROZ concept would not be successful. Khan pointed out the idea of the ROZ is to combat terrorism, so the legislation should not be focused on things such as rules of origin. He stated that the MOU Pakistan has with China would keep Chinese textiles out of the ROZs. ¶4. (SBU) Comment: As expected, the textile issue has raised its head once again. While the Pakistanis state they understand the political sensitivities involved with this issue in the U.S., they are still insistent that a broader range of textiles be permitted in the ROZs. Post has emphasized the need for a broad range of non-textile products to be included to encourage expansion of businesses already operating in the FATA and other potential ROZ locations. End Comment. Patterson