As soon as Donald Trump announced the withdrawal of the USA from the Trans-Pacific free trade agreement known known as TPP, the Pakistani Minister of Commerce Khurram Dastgir Khan rushed to Brussels in order to assess his country’s trade relations with the European Union.
This comes at a time when uncertainty also reigns over the other treaty being negotiated by the US with the EU, known as . Pakistan now expects being able to take advantage of these uncertainties and to expand markets. New Europe asked the Minister of Commerce Khurram Dastgir Khan whether his country, Pakistan, will try to take advantage of the weakening trade relations between the US and the EU.
Khurram Dastgir Khan: The USA has traditionally been Pakistan’s single largest export market. There will be no extraordinary changes now.
At the moment, we are analysing the situation we would like to be engaged in. Particularly, Pakistan is exporting many goods that are no longer produced in the US, particularly textiles. Still, since 2014 the EU became a major partner and gave us the GSP+ status. We wanted the Americans to give us the same status, but apparently both Bush and Obama’s administrations thought that Congress and the Senate would not agree to such concessions.
However, what is alarming us is the kind of “protectionism” Trump is promoting. If different countries start to go down that way, parts of the global economic regime will be upset. That’s why we are now in very close cooperation with the EU and with the World Trade Organisation. We are trying to support each other against protectionism. We can see that in the last 30 years, trade, particularly in China, has been the single and the greatest instrument that brought out hundreds of millions of people out of poverty. Pakistan wants to use this tool to reduce poverty and bring prosperity to its citizens.
New Europe: To reach a constant growth in the textile sector, or in any other industrial sector, the main thing Pakistan needs is power. For generating that power, Pakistan has been relying on Chinese investments. How far in that respect are you now in trying to be more independent?
Khurram Dastgir Khan: Chinese investment is coming to us in different areas, including in solar and green energy. But it is not just the Chinese who invest in our country. Pakistan is also financing from its own resources three major natural gas fields.
The equipment is manufactured in the US. The Chinese have been major investors, and we expect by the middle of next year to bring in some additional ten thousand megawatts into the system, which will be more than sufficient to cover our shortages.
New Europe: China is also exporting a lot of textiles, competing with you. How can you compete with China without keeping the wages very low? What is the benefit for your population?
Khurram Dastgir Khan: China is very competitive indeed, but in Pakistan we have the whole chain of production, including cultivating cotton and sending it up to the cloth factories. We produce clothes and textiles without relying on outside aid. We export across the whole region.
New Europe: So does India.
Khurram Dastgir Khan: That’s true. So does India. Interestingly, in the last 5 years India has become our major competitor, although 5 years ago that was not the case. India also has the whole chain of production. Similarly, Bangladesh is very competitive. But Bangladesh has had this status for a long time and it doesn’t need any concession from our side.
New Europe: The textile industry is not just very dependent on the market and vulnerable economically, but it is also vulnerable in terms of climate. You need water, you need certain climate circumstances. So, how vulnerable is this sector which is so crucial for you?
Khurram Dastgir Khan: That is a challenge, indeed. In the last two seasons we had some problems. We are also vulnerable to the world prices.
New Europe: How worried are you, economically speaking, regarding the Indian PM Modi’s threat to use water as a kind of weapon in the ongoing conflict with Pakistan?
Khurram Dastgir Khan: We are not worried, but we take the threat very seriously. We will ensure that it will not happen, because water is a life and death matter, and restricting access to it would have very serious consequences. We would like India to respect our Indus Water 1960 agreement. There were a few serious issues recently that we would like to resolve by negotiations. However, any threat to violate this treaty will be taken very seriously and retaliated.
New Europe: In which way?
Khurram Dastgir Khan: I can’t say now, but we take it very seriously. As an example, a few years ago they built a new dam on our river. When they were filling it, the water did not flow to us, which hurt our agricultural sector directly.
New Europe: Especially the Punjab province.
Khurram Dastgir Khan: That’s true. The more so since Pakistan produces not only cotton, but both rice and sugar. The treaty says that you have to ensure a ‘no leverage’ flow. The Indians said that they are going to maintain it and they did it finally.
But we are very sensitive not only to the fact that they have to abide by the treaty but also that we have to be confident that it will not hurt us seasonally. Pakistan is committed to reach peace and we do not want the water issue to be used as a threat to us. We want to reach mutual prosperity through economic connectivity with India, because the shortest way to reach prosperity is through trade with your neighbours.
New Europe: It was a bit surprising to hear that you as a Minister of Trade handed over a report on human rights violations in a neighbouring country, India, which is not usually what Trade Ministers do. They try to bypass human rights issues and to connect economy and trade. What was your motivation?
Khurram Dastgir Khan: First of all, I did not give the report to my distinguished partner trade commissioner Malmstrom, but gave it to the new President of the EU Parliament, Tajani, who has to deal with these issues. The reason I gave the dossier is to remove the label of “India-Pakistan” from the Kashmir and see it as an issue of human suffering. People are suffering there, they are blinded, and they are killed. Europe is a standard bearer of human rights, of the rights of minorities. Europe must see the Kashmir situation purely as an issue of human suffering and try to do whatever it can to protect those people.