Apparel Sourcing Intelligence - Worldwide

Free trade, pots and kettles…

There are times advocates of free trade need to think before opening their mouths – or uploading their blogs. An apparently praiseworthy article in the Pakistani press about access to Turkey’s garment market is a perfect illustration.

At first sight, a blog in the February 22 edition of Pakistan’s Express Tribune seems to hit the nail perfectly on the head. Written by the head of a Turkish think-tank, it expresses irritation at appeals in Pakistani newspapers, designed to coincide with the recent visit of the Turkish Prime Minister, for Turkey to grant Pakistani exporters  – in practice garment and textile exporters – duty-free access to the Turkish market.

The calls aren’t for a free trade agreement – which was something the two Prime Ministers actually did discuss.  They’re for Turkey to extend the same one-way, unreciprocated, duty concession that the EU already gives Pakistan under the EU’s GSP+ programme.

This annoys  Ali Salman, the blogger, as much as it annoys me. If Pakistanis want the same economic success as Turkey, he tells them, “you have to come out of the habit of begging bowl.”

In 1990, he says, Turkish textile exports were half Pakistan’s  at around $1.4 billion, when Pakistan’s were worth $2.6 billion. By 2000, when Pakistan’s textile exports were $4.5 billion, Turkey was still behind at $3.6 billion. But by 2010, Turkey’s exports touched $9 billion, while Pakistan’s could not cross $8 billion – and Turkey has widened the gap since.

All true. And there’s a huge contrast between the marketing innovation and aggressiveness from Turkey’s spinners, weavers and garment makers and the perpetual demands of Pakistan’s perennial complainers for handouts from someone else: if it’s not for duty-free access to another market, it’s for denying power to ordinary Pakistanis so mill owners don’t have to pay the cost of running their own generators.

But Salman is more than pushing his luck when he claims “Turkey did not use such special [duty-free] status to achieve the current level of progress. We worked hard. We designed better products and produced more.”

Come off it Ali. Turks have worked hard – but so have Pakistanis. And practically every single one of Turkey’s $9 billion in textile exports has come from its uniquely generous duty-free access to the EU and most of its other neighbours. No other country has a Customs Union with the world’s largest apparel market. Mexico’s got nothing like the freedom to use other countries’ raw materials for exports to its NAFTA partners that Turkey has to export to the EU and EFTA – and it isn’t even a member of either trading bloc.

Pakistan’s GSP+ access, by comparison, is so hedged with restrictions on where its raw materials come from as to create real trading obstacles. And it’s preposterous to claim Turkey’s advantage over Pakistan in exports to Europe is just down to superior entrepreneurial skills: it’s at least as much the result of uniquely favourable access terms.

But there’s worse. Turkey, claims Salman, “has become a major regional economic power by adoption of sound economic policies and a hard-working private sector”

Sort of. But it’s kept that status, as far as garments and textiles are concerned, by just about the most naked protectionism of any textile manufacturing nation anywhere.

While urging Turkey to set up a GSP+ equivalent, Pakistan’s garment exporters were urging their Prime Minister to convince his Turkish counterpart  to waive a Turkish ‘Safeguard Measures Duty’ (SMD) of 42.2% on Pakistan’s apparel imports.

“The original Customs Duty is 9.2% on garments, but 42.2 percent SMD increases it to 52%” said Pakistani garment makers’ spokesman Ijaz A Khokhar. “Similarly, Pakistani fabric exporters pay 35 percent total Customs Duty with an additional 28.6 percent SMD.”

Does Ali Salman really believe that import duties of 52-53% on your competitors’ products represent “sound economic policies?” They sound to me more like the policies governments toss to every bunch of inefficient manufacturers to insulate them from real competition.