Pakistan’s business community holds high hopes from PM’s US visit

In this October 23, 2018 file photo, Pakistan’s Prime Minister Imran Khan arrives to attend the opening ceremony of the Future Investment Initiative conference in Riyadh, Saudia Arabia. (AFP)
Updated 16 July 2019

Pakistan’s business community holds high hopes from PM’s US visit

  • Eyes Preferential Trade Agreement with the US
  • Wants inclusion of textile goods in the United States’ GSP program

KARACHI: Pakistan’s business community wants the government to negotiate a Preferential Trade Agreement with the United States during the upcoming visit of Prime Minister Imran Khan to Washington next week where he is scheduled to meet with US President Donald Trump on July 22.
The two leaders are expected to discuss a range of issues, including counterterrorism, defense, energy and trade, “with the goal of creating conditions for a peaceful South Asia and an enduring partnership between the two countries,” confirmed the White House ahead of the summit level meeting.
Founding chairman of the Pak-US Business Council, Iftikhar Ali Malik, said that “Pakistan has rendered huge sacrifices in the war on terror and its economy is suffering from the impact of the conflict in Afghanistan.”
“Pakistan deserves preferential business treatment without tariff and non-tariff barriers and free flow of bilateral trade, said Malik. “The US must help Pakistan build its industrial institutions, undertake joint ventures and increase investment in Pakistan.”
Pakistan is the 56th largest goods trading partner of the US, and the two countries had $6.6 billion of bilateral trade during 2018 where Pakistan’s imports totaled $2.9 billion and its exports with the US stood at $3.7 billion. The overall trade volume was in favor of Pakistan with surplus trade last year.
“The US goods trade deficit with Pakistan was $783 million in 2018, a 2.2% increase over 2017,” noted the office of the US Trade Representative (USTR) in one of its reports.
Pakistan’s major exports comprise of textile goods which stand at about 3 percent to US textile imports, while the country’s regional competitors, China, Bangladesh and India, have much higher contributions.
Members of the local business community say they want PM Khan to take up the issue of including his country, especially its textile products, in the US trade preference programs, such as the Generalized System of Preference (GSP). The program provides opportunities for many of the world’s least developed countries to use trade for their economic growth.
“We are not included in the GSP program of the United States and we want to avail this facility to increase the range of our textile products in US markets,” Junaind Makda, president of Karachi Chamber of Commerce and Industry (KCCI), told Arab News.
“If the US is persuaded to include Pakistan’s textile products in GSP, it will increase Pakistan’s exports up to $500 million because textiles contribute 90 percent to USA market from Pakistan,” Dr. Mirza Ifkhtiar Baig, senior vice president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the apex body of businessmen and traders, said.
Many Pakistanis believe that the US government can rescue their country from the grey list of the Financial Action Task Force (FATF) and help soften the condition of the International Monetary Fund’s bailout package.
“The prime minister can take up the issue of FATF that has grey-listed Pakistan, as fears of further downgrading is hanging over our head like the sword of Damocles. Pakistan can also seek US help to ease the harsh conditions attached to the IMF bailout program,” Dr. Baig suggested.
Pakistani business community also seeks US help with urban forestry since “they have very good expertise related to environmental issues,” Makda said.
Pakistani businessmen, who are fed up with the constant inflow of smuggled goods, mainly from Afghanistan, also want the prime minister to raise this issue with the US authorities. “We need their help to stop smuggling from Afghanistan,” the KCCI president stressed.

Pakistan gets lifeline till Feb 2021 as FATF continues to keep it on grey list

Updated 23 October 2020

Pakistan gets lifeline till Feb 2021 as FATF continues to keep it on grey list

  • The country has completed 21 out of 27 items of the global financial watchdog’s action plan, acknowledges FATF officials
  • The government of Pakistan has signaled the commitment to complete the rest of the action plan, says the FATF president

KARACHI: The global financial watchdog, the Financial Action Task Force (FATF), decided on Friday to keep Pakistan on its “grey list” while acknowledging that the country had made significant progress in meeting international anti-terrorism financing norms and should not be downgraded to the “blacklist.”

The FATF began its virtual plenary meeting on October 21 under the first two-year German presidency of Dr Marcus Pleyer.

“Pakistan will remain our increased monitoring list,” he announced after the end of the conference. “The plenary recognizes that Pakistan has made progress. The government has now completed 21 out of 27 items of its action plan. The government of Pakistan has signaled the commitment to complete the rest of its action plan.”

“Even though Pakistan has made progress it needs to do more,” he continued. “It cannot stop now and needs to carry out reforms in particular to implement targeted financial sanctions and prosecuting sanctions financing terrorism.”

Responding to a question, the FATF president said that onsite inspection would be carried out after the next plenary in February 2021 to decide about Pakistan’s exclusion from the grey list.

Pakistan was placed on the list of countries with inadequate controls over terrorism financing by the FATF in June 2018.

The Asia-Pacific Group on Money Laundering (APG), an inter-governmental organization in the Asia-Pacific region, issued the first Follow Up Report (FUR) on Pakistan last month.

The report reflected the country’s performance until February 2020 and noted that it had complied with only two recommendations related to financial institution secrecy laws and financial intelligence units out of 40 recommendations on the effectiveness of anti-money laundering and combating financing terror (AML/CFT) system.

However, Pakistan managed to pass three crucial FATF-related laws during a joint session of parliament in September this year. With these laws, the country managed to comply with most of the legislation required by the international watchdog to strength the country’s financial system.

The FATF “strongly” urged Pakistan in February this year to complete its full action plan by June 2020, warning it would take action against the country which could include advising financial institutions to give special attention to business relations and transactions with Pakistan. Later, the deadline was extended and the country was given time until October 2020 due to the COVID-19 pandemic.

Pakistan also punished Hafiz Saeed, a Jamaat-ud-Dawa leader, in a terror financing case and decided to send him to prison for five and a half years.

Commenting on the FATF decision, financial experts said the decision to keep Pakistan on grey list owed to the government’s hasty legislation.

“The most vital issue relates to the roles assigned to the AML-CFT authority and self-regulatory bodies. These laws give powers to regulate AML-CFT to various government and professional bodies. They were not carefully drafted, create conflict of interest, and are complicated and ambiguous,” Dr Ikram ul Haq, a Lahore-based senior economist, said after the FATF decision.

The FATF blacklist have international pariah states like Iran and North Korea, and these countries are shunned by international financial institutions.