State Dept and Others Testify on Role of ROZs in Strengthening U.S.-Pakistan Relations
On July 7, 2009, the Senate Homeland Security and Governmental Affairs Committee's Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security held a hearing on strengthening U.S.-Pakistan relations.
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(On June 11, 2009, the House of Representatives passed H.R. 1886, the Pakistan Enduring Assistance and Cooperation Enhancement Act of 2009, which included provisions on duty-free treatment for certain products from designated Reconstruction Opportunity Zones (ROZs) in Afghanistan or specified areas in Pakistan. Although the House has passed H.R. 1886, it is not in effect. The Senate has not yet acted on H.R. 1886 or on the Senate ROZ bill (S. 496). See ITT's Online Archives or 06/23/09 news, 09062315, for BP summary. )
Highlights of Witness Statements
The following are highlights from the written statements submitted by various witnesses at the hearing:
State Dept reiterated call for Senate to pass ROZ bill. The State Department testified on the importance of addressing the economic and social conditions that extremists exploit in Western Pakistan with more economic aid. The State Department notes that the U.S. must do its part to enhance bilateral and regional trade by encouraging foreign investment in vital sectors, as well as implementing Reconstruction Opportunity Zones (ROZs) which would provide incentives for investment in critical regions by offering duty-free import of certain products made there. The State Department also reiterated the President's call on the Senate to pass ROZ legislation.
Heritage Foundation notes ROZs could increase regional cooperation. The Heritage Foundation noted that initiatives like the Afghanistan and Pakistan ROZ would provide U.S. duty-free access to items produced in industrial zones in the border areas of Afghanistan and Pakistan would also help South Asia nations experience the benefits of regional cooperation. According to the Heritage Foundation, the ROZ legislation would contribute to changing security perceptions in the region, turning Afghanistan and Pakistan away from zero-sum geopolitical calculations that fuel religious extremism and terrorism and toward a focus on enhancing cooperation and regional integration.
South Asia Center warns ROZs need to be near major population centers. The South Asia Center of the Atlantic Council of the U.S. testified that ROZs can be useful as a temporary though subsidized salve, not a permanent solution. China's experience indicates that ROZs need to be near major population centers and communication hubs. The Federallly Administered Tribal Areas or FATA are too remote a location to give the ROZs long-term viability. There is also the danger of carpetbaggers from other provinces coming in to take advantage of tax holidays and leaving when those facilities disappear.
Hearing testimony and link to hearing webcast available at http://hsgac.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_id=b3968170-80d8-4dce-8f8e-d3c9144f4bfe.