US supports Pakistan economic zones

[Lahore_Real_Estate]

Updated at: 0130 PST, Friday, March 26, 2010
WASHINGTON: The United States on Thursday pledged to work to improve market access for Pakistani goods including through special economic zones, as the two nations sought to turn the page on years of distrust.

Pakistan and the United States said they would seek a "wide-ranging, long-term and substantive strategic partnership," after two days of talks led by Secretary of State Hillary Clinton and Foreign Minister Shah Mehmood Qureshi.

In the joint statement, the United States said it was "committed to work towards enhanced market access for Pakistani products as well as towards the early finalization of Reconstruction Opportunity Zones legislation."

The proposal would give duty-free access to products from designated parts of the border region between Afghanistan and Pakistan, in a bid to create new industries in the longtime Taliban stronghold as they rebuild from fighting.

Two Democratic lawmakers, Senator Maria Cantwell of Washington and Representative Chris Van Hollen of Maryland, proposed the Reconstruction Opportunity Zones last year but the bill has languished in Congress.

The United States has launched a five-year, 7.5 billion-dollar aid package for Pakistan as part of a major initiative by Washington to chip away at anti-Americanism and support for Islamic extremists in the nuclear power.

But some Pakistanis say that the United States has done too little to create a demand for its products, with key exports such as textiles facing prohibitive tariffs.

The joint statement said that the two nations will also discuss drafting an investment treaty to encourage US funds in Pakistan.

A senior US official, speaking on condition of anonymity, voiced hope that Congress could act on the Reconstruction Opportunity Zones now that it has completed President Barack Obama's landmark health-care reform.

"We agreed that with health care behind us, this was something we would make another push on," the official said.

But the official cautioned that it was not realistic for Pakistan to expect a full-fledged free-trade agreement, which would require a long political process.

Congress has yet to ratify three free-trade agreements -- reached with Colombia, Panama and South Korea -- due to concerns over human and labor rights in the Latin American nations and market access in South Korea.

The United States has also been non-committal on Pakistan's ambitions for an agreement on civilian nuclear energy akin to a landmark deal which the United States sealed in 2008 with its rival India.

The joint statement said that the United States "recognized the importance of assisting Pakistan to overcome its energy deficit," and said it would intensify cooperation.

Driving the point home, Rajiv Shah, the head of the US Agency for International Development, was to sign letters with Pakistan to go ahead with a 51 million-dollar project to refurbish and upgrade three power stations.

The United States also authorized 40 million dollars in previously approved funding to rebuild a strategic, 43-kilometer (27-mile) road in war-torn Swat and expand the ring road around the northwestern city of Peshawar.

The talks come as the United States cautiously welcomes what it sees as a shift in Pakistan to a more robust campaign against Islamic extremism.

President Asif Ali Zardari last year ordered a major offensive against homegrown Taliban and Pakistan has since arrested leading militants.

US officials have long worried that elements of Pakistan's military and the intelligence apparatus were supporting extremists despite their public pronouncements.