To Aid or Trade?
Countries: Pakistan, United States

After environmental disasters, nations often rush to pledge relief aid. But how well-meaning are these donations? If countries were truly acting altruistically, they might also consider amending their trade policies, as Pakistani textile manufacturers argue in the Wall Street Journal.
In Pakistan, textiles are a major part of the economy. “The country's textile sector directly employs 3.5 million people, accounting for 40 percent of urban factory jobs,” writes the Journal. Overall, textile-product exports account for over half of Pakistan's total exports, so any restrictions placed on the sector have a significant impact on the entire economy.
As a result, the cost to Pakistani textile producers from U.S. barriers to trade is considerable, reports the Journal.
Abolishing American tariffs, which currently stand at an average 17 percent on cotton pants and shirts from Pakistan, would boost the nation's textile exports by $5 billion annually, government officials and factory owners estimate.
This sizable loss in income and the effect it has on the economy is integral to reforming Pakistan's economy. Neither the aid that Pakistan receives, in general, nor pledged aid in response to recent flooding, will be enough to lift Pakistan out of poverty, advocates say.
The recent flooding has profoundly impacted Pakistan and made this an opportune time to highlight grievances over the use of aid versus trade. Advocates for lowering trade tariffs are using the inflows of aid and heightened focus on rebuilding Pakistan’s soggy economy to show that most countries’ donations are inadequate.
The crux of their complaints is that the U.S and other donor nations could do far more to help countries such as Pakistan recover if they would stop restricting trade, allowing manufacturers and merchants to prosper and help the economy recover.
When put into perspective, using aid donations to signal support for development does ring a bit hollow, as these numbers cited by Global Issues demonstrate.
The total cost to developing countries of restrictions on textile imports into the developed world has been estimated to be some $50 billion a year. This is more or less equivalent to the total amount of annual development assistance provided by Northern governments to the Third World.
So, as the article continues on to say, “we take back with our left hand every cent we give with our right," a practice that has been understandably met with criticism in the developing world.
Surely the aid given to help ensure there is adequate food, water, and sanitation for flood victims doesn't go unappreciated. However, looking to the future — a necessary response to any disaster — some Pakistanis are calling on donor countries to reevaluate policy, not just pull out their pocketbooks.


Comments
Aid or Trade
Very well written, and thought provoking. Humanitarian aid is most definitely a positive contribution to developing countries in times of disaster and/or crisis, and indeed can also be a positive contribution as a yearly aid package as well.
That being said however, there needs to be a further investigation into the aid 'donation', and the motivating factors behind this donation. What are the stipulations that go along with this aid contribution? What restrictions and/or expectations does the donating country place on the receiving country? As you explained- are there trade restrictions/tariffs that hinder the receiving country's ability to compete in the global marketplace?
In response to the Journal article you referenced on your post, I found an article today that expressed the view of US textile groups and cotton farmers towards a proposal to cut U.S. tariffs on Pakistani textile exports on Reuters,
"If this proposal were to be accepted, it would cause irreparable damage to the U.S. textile industry resulting in significant job losses," the National Association of Textile Organizations, the National Cotton Council and three other industry groups said...
This quote illustrates to me the obvious disadvantage developing countries are at in the global marketplace. Poor, developing countries are at the mercy of rich, developed countries, as they have no leverage against them. In order for very poor, developing countries to raise the living conditions of its people, and lower poverty rates, they need to be able to compete in the global marketplace. Developing countries should at least be given a level playing field to play on…free trade.
Christopher brings some
Christopher brings some interesting points to the table in his reply concerning the stipulations some "aid contributions" attach, and raises questions of the global market, and how affluent countries exert their dominance in abusing the currency discrepancies. As we have seen, the Pakistani flooding situation has been more detrimental than that of the tsunamis in in Papua New Guinea, Peru and in India in the last few years, but at the same time is not receiving the same amount of attention in the press. Recent natural disasters bring to the table many new concepts, as with geospatial data collection in Haiti after a major earthquake (7:39 at http://www.youtube.com/watch?v=EwVig_cAU7U&feature=channel) but it still reaches the affluent people first. What has to be done to level the playing field to equalize the prospects for "third world" countries? Aid will always be necessary for people, even the upper echelons of society might find themselves in need, and trade is a way to bridge the gap and allow for development beyond the band-aid of throwing money at crises. It seems that only when the global market recognizes something as being important will it be sustained, and these are the same avenues that minorities in these countries can utilize to break into local markets. Fair trade policies might do well in addition to temporary aid to alleviate financial crises in natural disaster events. Yet, how ironic would it be if the flooding was in any way attributed to global climate change - caused in the majority by the now affluent countries themselves?
To aid or trade
Very interesting article and makes one think. It is so true that the humanitarian aid is always appreciated, but if it is thought through and organized better, just like in the above article - it is so much more productive. I come from the less developed country myself and know how important it is to have a job, not just aid. Job gives one stability, confidence and faith. The given example is great and the idea for a project is excellent.
Aid or Trade
nice article thank you very much
mutuelle
Trading for the recovery of Pakistan
There are compelling arguments as to why the U.S. should reconstruct trade policies with Pakistan, a country that relies considerably on their apparel and textile industry to achieve economic stability.
Particularly after Pakistan's recent floods, the country is facing a precarious situation affecting more than 17 million people, not to forget damage done to essential infrastructure including schools, bridges and agriculture. Aid from donor countries is certainly needed to address the extensive damage, but this is only a short-term solution, and a long term-solution is needed to ensure Pakistan's recovery, which would ideally be through redefined trade policies.
The Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) published a recent report highlighting the unreasonable tariffs hindering Pakistan's economic, and ultimately social, recovery. While 55% of Pakistan's total export proceeds are derived from the textile sector, imports from Pakistan make up a tiny percentage of total imports into the U.S., between 0.23% - 0.17%. While Pakistan faces import duties of 10.85%, these numbers illustrate how U.S. tariffs have a great impact on Pakistan relative to the U.S.
The United States is in a position where significantly reducing the tariffs would have a positive impact on Pakistan’s economy, giving Pakistan the ability to achieve long-term stability and also the ability to overcome the devastation of the recent floods on their own, rather than depending on the limited aid and benevolence of other countries.
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