Afghanistan and Pakistan Reconstruction Opportunity Zones (ROZs), H.R. 1318/H.R. 1886/H.R. 2410 and S. 496: Issues and Arguments

Afghanistan and Pakistan Reconstruction Opportunity Zones (ROZs), H.R. 1318/H.R. 1886/H.R. 2410 and S. 496: Issues and Arguments

Afghanistan and Pakistan Reconstruction
Opportunity Zones (ROZs), H.R. 1318/H.R.
1886/H.R. 2410 and S. 496: Issues and
Arguments
Mary Jane Bolle
Specialist in International Trade and Finance
January 22, 2010
Congressional Research Service
7-5700
www.crs.gov
R40627
CRS Report for Congress
P
repared for Members and Committees of Congress

Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Summary
On June 9, 2009, the House Rules Committee issued a rule providing for the consideration of
H.R. 1886, the Pakistan Enduring Assistance and Cooperation Enhancement Act. The rule
inserted, with modifications, H.R. 1318, the Afghanistan-Pakistan Security and Prosperity
Enhancement Act, the ROZ legislation, into the base text of H.R. 1886. On June 11, 2009, the
House passed H.R. 1886 by a vote of 234 to 185, and the clerk was directed to add it as new
matter to the end of H.R. 2410, the Foreign Relations Authorization Act, Fiscal Years 2010 and
2011. On September 24, 2009, by Unanimous Consent, the Senate passed S. 1707, the Enhanced
Partnership with Pakistan Act of 2009, in lieu of H.R. 1886. It did not include the House ROZ
language. It became law (P.L. 111-73) on October 15, 2009.
The Afghanistan-Pakistan Security and Prosperity Enhancement Act (H.R. 1318) and the
Afghanistan and Pakistan Reconstruction Opportunity Zones Act (S. 496) would establish a
unilateral U.S. trade preference program for Afghanistan and parts of Pakistan. In an effort to
promote economic development in both countries, the legislation would permit certain goods
produced in designated geographic areas called Reconstruction Opportunity Zones (ROZs) to be
imported into the United States duty-free. ROZs would be a specific type of export processing
zone, and thus part of a world-wide network of free trade zones. Free trade zones are typically
fenced-in industrial parks. As such they are self-contained islands of infrastructure necessary to
support manufacturing, often located in relatively undeveloped geographic locations. They
support economic development by facilitating cooperative production among workers in more
than one country.
Both Pakistan and Afghanistan are currently exporting certain goods to the United States duty-
free under the Generalized System of Preferences (GSP). The ROZ program would offer
additional tariff benefits to Afghanistan and Pakistan. In turn, it would place additional
requirements on both countries.
The 300 top U.S. import categories from Pakistan are valued at $3 billion. These 300 represent 98
% of all dutiable imports from Pakistan, almost all of which are textile and apparel products. The
ROZ proposal would remove tariffs on about half the value of these imports–98 items which are
mostly textile products such as towels, sheets, comforters, and curtains, which carry an average
trade-weighted tariff rate of 8.1%. The ROZ proposal would not remove tariffs on 195 items of
which are mostly apparel items, such as shirts, trousers, blue jeans, socks and underwear, which
carry an average trade-weighted tariff rate of 14.9%.
The legislation appears to be of primarily political and symbolic importance for U.S. relationships
with Afghanistan and Pakistan, and was specifically supported by President Obama in his March
27 announcement of a new U.S. strategy for Afghanistan and Pakistan. Proponents of the
legislation see it as a way of promoting economic development in remote and restive areas of
Afghanistan and Pakistan. On the other hand, there are those who point out restrictions:
• the limited possible locations for ROZ production in order to be eligible for
tariff-free treatment;
• the limited range of products eligible for tariff-free treatment;
• the labor requirements in H.R. 1318; and
• security concerns.
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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Contents
I. Recent Legislative Action ........................................................................................................ 1
II. Introduction............................................................................................................................ 2
Where the Congressional Debate Is Focusing ........................................................................ 2
Evolution and Purpose of Legislation .................................................................................... 2
ROZs as a Trade Preference Program .................................................................................... 3
ROZ and QIZ Trade Preference Programs Compared ............................................................ 3
Economic Context for the Legislation ................................................................................... 4
Trade and Investment Context for Legislation ....................................................................... 4
Trade .............................................................................................................................. 4
Investment ...................................................................................................................... 5
Trade-Related Agreements .............................................................................................. 5
III. Major Elements of H.R. 1318 and S. 496............................................................................... 5
Permissible Locations for ROZs (Sec. 2/Sec. 402)................................................................. 6
Country Eligibility Criteria for Participating in the ROZ Program (Sec. 3/Sec. 403) .............. 8
Articles Eligible for Duty-Free Treatment under the ROZ Program and Rules of
Origin (Sec. 4/Sec. 404 and Sec. 5/Sec. 505) ...................................................................... 8
Protections Against Unlawful Transshipment (Sec. 6/Sec. 406) ............................................. 9
Technical Assistance, Capacity Building, Compliance Assessment, and Remediation
Program (Labor Protections, Sec. 7/Sec. 407)................................................................... 10
Responsibilities of Labor Officials in Afghanistan and Pakistan..................................... 10
ILO Responsibilities ..................................................................................................... 10
Presidential Responsibilities.......................................................................................... 11
Limitations on Providing Duty-Free Treatment (Sec. 9/Sec. 409)......................................... 11
Termination of Benefits (Sec. 10/Sec. 410).......................................................................... 12
Increase in Customs User Fees (Sec. 411)............................................................................ 12
IV. Potential Issues.................................................................................................................... 12
Tariff Line Issues ................................................................................................................ 12
Summary ...................................................................................................................... 12
Discussion .................................................................................................................... 14
Issues Related to Geographic Areas Permitted for ROZ Location ........................................ 15
Transportation Issues .................................................................................................... 16
Security Issues .............................................................................................................. 16
Other Considerations..................................................................................................... 16
Labor-Related Issues ........................................................................................................... 17
Labor Costs and Wage Issues ........................................................................................ 17
Strength of Labor Requirements .................................................................................... 18
Issues Relating to Child Labor ...................................................................................... 19
Issues Relating to Protections Against Illegal Transshipment ............................................... 20
Issues Relating to the Increase in Customs User Fees .......................................................... 20
V. Outlook ................................................................................................................................ 21

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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Figures
Figure 1. Areas of Afghanistan and Pakistan Eligible for Designation of Reconstruction
Opportunity Zones (ROZs) as Provided for in H.R. 1318 and S. 496 ........................................ 7

Tables
Table 1. U.S. Foreign Direct Investment (FDI) in Pakistan, 2000-2007........................................ 5
Table A-1. Top 300 U.S. Imports from Pakistan for 2008: HTS 10-Digit Textile and
Apparel Items for Which Tariffs Would Be Removed Under H.R. 1318 and S. 496................. 23
Table A-2. Top 300 U.S. Imports from Pakistan for 2008: HTS 10-Digit Textile and
Apparel Items for Which Tariffs Would NOT Be Removed Under H.R. 1318 and S. 496 ........ 27
Table A-3. Top 300 U.S. Imports from Pakistan for 2008: HTS 10-Digit Non-Textile and
Non-Apparel Items................................................................................................................. 34
Table A-4. Comparison of Certain Textile and Apparel-Related Data, 2002-2008...................... 34

Appendixes
Appendix. Related Data Tables.................................................................................................. 23

Contacts
Author Contact Information ...................................................................................................... 35

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I. Recent Legislative Action
On June 9, 2009, the House Rules Committee issued a rule providing for the consideration of a
Pakistan aid bill, H.R. 1886, the Pakistan Enduring Assistance and Cooperation Enhancement
Act.
The House rule inserted with modifications, into the base text of H.R. 1886, H.R. 1318, the
Afghanistan-Pakistan Security and Prosperity Enhancement Act, popularly referred to as the
reconstruction opportunity zone (ROZ) legislation.
On June 11, 2009, the House passed H.R. 1886 (with H.R. 1318 included) by a vote of 234 to
185. The clerk was then directed to add this enlarged H.R. 1886 as new matter to the end of H.R.
2410, the Foreign Relations Authorization Act, Fiscal Years 2010 and 2011. This authorization
bill with the two attachments then went to the Senate.
On September 24, 2009, by Unanimous Consent, the Senate passed a slightly different Pakistan
aid bill than H.R. 1318/H.R. 1886, included in the House submission. Rather, it passed S. 1707,
the Enhanced Partnership with Pakistan Act of 2009. This aid bill did not include the ROZ
proposal. S. 1707 was signed by the President and became law (P.L. 111-73) on October 15, 2009.
Back on June 9, when the House Rules Committee inserted the House ROZ proposal (H.R. 1318)
into the Pakistan aid bill (H.R. 1886), it made several changes to the ROZ language, which are
discussed in greater detail in the sections that follow. In a nutshell, however, the Rules Committee
amendment would have:
• offered the President another element of discretion to determine the ability of the
country to establish the required labor program: He would have been able to take
into account the capability of the country to establish such a technical assistance
program for labor (Section 3 in H.R. 1318/S. 496, and Section 403 in H.R. 1886);
• added additional conditions, circumstances, and procedures for extending the
initial 16-month grace period of duty free treatment by six month increments
under certain circumstances (Section 7/Section 407);
• removed the International Labor Organization (ILO) as the cooperative party to
work with Afghanistan or Pakistan to establish a labor monitoring and
compliance program, and substituted an entity designated by the Secretary of
Labor (Section 7/Section 407); and
• established new customs user fees to be assessed on top of existing customs user
fees for the provision of customs services relating to imports and travel from
Afghanistan and Pakistan (new Section 411.)
The sections below addresses the ROZ bill as introduced in the House (H.R. 1318)
and the Senate (S. 496), with comments indicating changes made to the House bill by
the Rules Committee.
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II. Introduction
The Afghanistan-Pakistan Security and Prosperity Enhancement Act (H.R. 1318, Van Hollen) and
the Afghanistan and Pakistan Reconstruction Opportunity Zones Act (S. 496, Cantwell) would
establish a unilateral U.S. trade preference program for Afghanistan and parts of Pakistan. The
legislation would permit certain goods produced in designated geographic areas called
Reconstruction Opportunity Zones (ROZs) to be imported into the United States duty-free.
ROZs would be a specific type of export processing zone, and thus part of a world-wide network
of free trade zones. Free trade zones are typically fenced-in industrial parks. As such they are
self-contained islands of infrastructure necessary to support manufacturing, often located in
relatively undeveloped geographic locations. They support economic development by facilitating
cooperative production among workers in more than one country. That is, they are physically
located inside the boundaries of a country but are treated as if they were located outside the
country for customs purposes. Thus, for components or materials which are imported into ROZs,
processed into finished goods, and later exported from the country, no tariffs would be payable
and customs procedures would be streamlined.
Both Pakistan and Afghanistan are currently exporting certain goods to the United States duty-
free under the Generalized System of Preferences (GSP).1 The ROZ program would offer
additional tariff benefits to Afghanistan and Pakistan. In turn, it would place additional
requirements on both countries.
Where the Congressional Debate Is Focusing
The legislation appears to be of primarily political and symbolic importance for U.S. relationships
with Afghanistan and Pakistan, and was specifically supported by President Obama in his March
27th announcement of a new U.S. strategy for Afghanistan and Pakistan. Proponents of the
legislation see it as a way of promoting economic development in remote and restive areas of
Afghanistan and Pakistan. On the other hand, there are those who point out restrictions:
• the limited possible locations for ROZs;
• the limited range of products eligible for tariff-free treatment;
• the labor requirements in H.R. 1318; and
• security concerns.
Evolution and Purpose of Legislation
The ROZ proposal was originally designed to benefit Pakistan (primarily a textile and apparel
exporter) by rewarding it with trade preferences when it was losing U.S. market share to other
countries that had free trade agreements with the United States. Similar legislation in the 110th
Congress was introduced but not passed.2 The current version of the ROZ legislation introduced

1 See CRS Report RL33663, Generalized System of Preferences: Background and Renewal Debate, by Vivian C.
Jones.
2 USTR Considers Possible Pakistan Free-Trade Zone, Inside U.S. Trade, August 11, 2006.
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as H.R. 1318 and S. 496, would permit non-“import sensitive”3 exports to enter the United States
duty-free, as long as the governments of both Afghanistan and Pakistan, the investors, and the
products produced in ROZs met specific requirements under the program.
The purposes of the ROZ program as enumerated in the bills [Sec. 2(b)] are: (1) to stimulate
economic activity and development in Afghanistan and the border region of Pakistan, which are
seen as critical fronts in the struggle against violent extremism; (2) to reflect the strong support
that the United States has pledged to Afghanistan and Pakistan for their sustained commitment to
the global war on terrorism; (3) to support the three-pronged U.S. strategy in Afghanistan and the
border region of Pakistan that leverages political, military, and economic tools, with ROZs as a
critical part of the economic component of that strategy; and (4) to offer a vital opportunity to
improve livelihoods of indigenous populations of areas designated as potential ROZs, as well as
to promote good governance, improve economic and commercial ties between the people of
Afghanistan and Pakistan, and extend and strengthen the governments of both countries.
ROZs as a Trade Preference Program
The ROZ program is, at its essence, a trade preference program similar to five other trade
preference programs. Under such programs, the United States unilaterally permits certain non-
import sensitive goods meeting rules-of-origin requirements to enter the United States tariff-free
so long as certain conditions are met by the exporting country. Existing U.S. trade preference
programs include the Generalized System of Preference (GSP), the Caribbean Basin Economic
Recovery Act (CBERA), the Andean Trade Preference Act (ATPA), the African Growth and
Opportunity Act (AGOA), the Qualifying Industrial Zone (QIZ) Program under the U.S.-Israel
Free Trade Agreement (USIFTA), and the Haitian Hemispheric Opportunity through Partnership
Encouragement Act of 2006.
ROZ and QIZ Trade Preference Programs Compared
The ROZ program was modeled after and is often compared with the Qualifying Industrial Zone
(QIZ) program under the U.S.-Israel Free Trade Agreement Implementation Act, (P.L. 99-47, as
amended by the 1996 West Bank and Gaza Strip Free Trade Benefits Act (P.L. 104-234). Both
encourage co-operative production by two or more countries. Both are designed to achieve
foreign-policy objectives as well as trade objectives. The ROZ and QIZ programs also have a
number of differences. The ROZ proposal: (1) has stricter rules-of-origin requirements for textiles
and apparel; (2) reinforces rules of origin by specifically prohibiting unlawful transshipment of
goods from non-authorized countries; (3) prohibits the establishment of zones in certain
economically developed regions of one of the countries (Pakistan). ROZs may be located
anywhere in Afghanistan; (4) includes in H.R. 1318, strong labor requirements; and (5) would be
implemented in the context of ongoing hostilities throughout Afghanistan and in restive parts of
Pakistan. However, the security situation is acute to the point where many believe that the ROZ
concept cannot be realistically implemented.

3 Import sensitive products are determined by the President after receiving the advice of the International Trade
Commission, in the context of imports from a ROZ.
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Economic Context for the Legislation4
Afghanistan has recorded rapid economic growth since 2001, thanks primarily to the construction
sector which, assisted by foreign efforts, has rebuilt some infrastructure and private housing.
Agriculture, a dominant industry, has experienced strong growth, tempered by several severe
droughts in 2001-2007. The country’s largest economic sector and agricultural export is opium,
which is technically illegal. Afghanistan accounted for roughly 90% of global opium production
in 2007, and many senior figures in local and central government reportedly have ties to or are
tolerating the opium trade.5
Pakistan’s economy is dominated by the agricultural sector and its exports are dominated by the
textile sector. The textile and apparel sector accounts for two-thirds of export income, and
depends on the size of the annual cotton crop. Pakistan’s dependence on textiles (and in particular
cotton-based textile and apparel manufacturing products) has hampered its economic growth
beyond this basic industry.6
Trade and Investment Context for Legislation7
Trade
Both Pakistan and Afghanistan are small trading partners for the United States, together
accounting for less than one-fifth of one percent of all U.S. imports and exports: 0.18% of all U.S.
imports and 0.19% of all U.S. exports. For 2008, the United States had a trade deficit with
Pakistan ($1.6. billion), and a trade surplus with Afghanistan ($397 million). The value of U.S.
trade with Pakistan, at $5.6 billion ($3.6 billion imports and $2.0 billion in exports) is roughly ten
times as great as trade with Afghanistan, at $566 million ($85 million in imports and $482 million
in exports.)8
The value of imports from Afghanistan was so small in 2008 that it equaled only 2% of the value
of all U.S. imports from Pakistan. Of U.S. imports from Afghanistan, 70% were U.S. military and
related equipment sent to Afghanistan and then returned to the United States. Remaining U.S.
import items are primarily works of art more than 100 years old, oil seeds, natural or cultured
pearls, precious or semiprecious stones and metals, carpets and other textile floor coverings.
Because of the small size and makeup of imports from Afghanistan, discussions of potential trade
impact of this proposed legislation, in the discussion that follows, focus on trade with Pakistan.
Since the focus of this report is on possible tariff reductions for Pakistan and Afghanistan, the
focus that follows is on dutiable imports. These account for 87% of U.S. imports from Pakistan in

4 For political considerations relating to Afghanistan and Pakistan, see CRS Report RL30588, Afghanistan: Post-
Taliban Governance, Security, and U.S. Policy, by Kenneth Katzman and CRS Report RL33498, Pakistan-U.S.
Relations, by K. Alan Kronstadt.
5 Economist Intelligence Unit (EIU) Country Profile, 2008 for Afghanistan.
6 EIU Country Profile 2008, p. 17.
7 Unless otherwise indicated, data for this section are taken from Global Trade Atlas, which obtains its data from the
U.S. Department of Commerce, Bureau of the Census.
8 Source of data: U.S. International Trade Commission, Dataweb.
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2008, ($3.1 out of $3.6 billion) and 1% of imports from Afghanistan ($622 thousand out of $85
million).
Investment
The stock of U.S. foreign direct investment (FDI) in Pakistan, as shown in Table 1, gradually
increased to a peak of $1.2 billion in 2006, and then declined to $674 million in 2007.9 This may
have been a product of both security issues in Pakistan and changes in the U.S. economy.
Table 1. U.S. Foreign Direct Investment (FDI) in Pakistan, 2000-2007
(in $millions)
Year 2000 2001 2002 2003 2004 2005 2006 2007
FDI 474 474 849 790 945 1100 1200 674
Source: Office of the U.S. Trade Representative. Foreign Trade Barriers, various years.
Trade-Related Agreements
The United States concluded a Trade Investment Framework Agreement (TIFA) with Pakistan in
2003, and in 2004 began discussions on a bilateral investment treaty (BIT). However, the BIT
was never completed. A TIFA is an agreement that provides a forum for Pakistan and the United
States to examine ways to expand bilateral trade and investment by promoting principles that
underpin a mutual trade and investment relationship. BITs take the investment relationship to a
higher step, by including numerous protections for investors.10 In 2004, the United States and
Afghanistan signed a TIFA. On December 13, 2004, the 148 countries of the World Trade
Organization voted to start membership talks with Afghanistan.11
III. Major Elements of H.R. 1318 and S. 496
In establishing a program of trade preferences for qualifying products imported into the United
States from ROZs in Afghanistan or Pakistan, H.R. 1318 and S. 496 include a number of major
elements designed to define geographic areas of Afghanistan and Pakistan that may be designated
as ROZs; set out country eligibility criteria; define articles for which duty-free treatment may be
authorized; and set out protections against unlawful transshipment. In addition, H.R. 1318, but
not S. 496, lays out a program for technical assistance and capacity building, focusing on
providing labor protections to workers in ROZs.

9 Source: Office of the U.S. Trade Representative. Foreign Trade Barriers, 2009.
10 Office of the U.S. Trade Representative, United States, Pakistan Begin Bilateral Investment Treaty Negotiations,
September 28, 2004.
11 CRS Report RL33498, Pakistan-U.S. Relations, by K. Alan Kronstadt. See also, Office of the USTR, United States
and Afghanistan Sign Trade and Investment Framework Agreement, September 21, 2004.
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Permissible Locations for ROZs (Sec. 2/Sec. 402)
ROZs may be established in specific areas of Pakistan, most of which are less developed and
more mountainous than regions where most export processing zones currently exist, such as in or
near Karachi or the fertile valley surrounding the Indus River and its tributaries. Areas
permissible for ROZ establishment include (1) the Federally administered Tribal Areas; (2) areas
of Pakistan-administered Kashmir that the U.S. President determines were harmed by the
earthquake of October 8, 2005; (3) areas of Baluchistan that are within 100 miles of Pakistan’s
border with Afghanistan; and (4) the North West Frontier Province. ROZs may be established
anywhere in Afghanistan. (See map, Figure 1.)
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Figure 1. Areas of Afghanistan and Pakistan Eligible for Designation of
Reconstruction Opportunity Zones (ROZs) as Provided for in H.R. 1318 and S. 496

Source: CRS.
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Country Eligibility Criteria for Participating in the ROZ Program
(Sec. 3/Sec. 403)
Section 3 of the ROZ bills list extensive and very detailed (i.e., at least 25) country eligibility
criteria for participation in the ROZ program. For example, Afghanistan or Pakistan must meet
eligibility requirements for designation as a GSP beneficiary developing country. In addition, the
country must have established or be making continual progress toward establishing: (1) a market
based economy; (2) the rule of law; (3) the elimination of barriers to U.S. trade and investment;
(4) the protection of intellectual property; (5) efforts to combat corruption; (6) policies to reduce
poverty; (7) policies to increase the availability of health care and educational opportunities; and
(8) the protection of human rights and internationally recognized worker rights. According to
provisions of the bill, the President can determine whether these eligibility conditions have been
met. The bill also gives the President the authority to suspend eligibility if these conditions have
not been met and maintained.
Rules Committee Amendment: The Rules Committee amendment would offer the President an
additional element of discretion in deciding whether to designate an area of Afghanistan or
Pakistan as a ROZ: He would be directed to take in to account the capability of the country to
establish a technical assistance program for labor.
Articles Eligible for Duty-Free Treatment under the ROZ Program
and Rules of Origin (Sec. 4/Sec. 404 and Sec. 5/Sec. 505)
Sections 4 and 5 of H.R. 1318 and S. 496 identify two groups of eligible articles for tariff
elimination–textile and apparel articles, and non-textile and non-apparel articles. Eligible non-
textile and non-apparel articles are those listed under the Generalized System of Preferences
(GSP) program plus any others identified by the President (after receiving the advice of the U.S.
International Trade Commission) as being non-import sensitive in the context of imports from a
ROZ. Rules of origin requirements are similar to those for other trade preference programs.12
Eligible textile and apparel items under ROZ number roughly 2,785 [defined at the 10-digit
Harmonized Tariff Schedule (HTS) level]. Slightly more than 1,625 of these articles would be
eligible for duty-free status if imported from either country, so long as rules-of-origin

12 Non-textile and non-apparel articles designated as eligible under GSP or other program from all developing countries
have different rules of origin requirements, depending on whether they are imported from Pakistan or Afghanistan. (1)
For those articles imported from Pakistan, 35% of the cost may be constituted by materials and processing from one or
more ROZs in Pakistan or Afghanistan; and materials only from the United States (which are limited to 15% of the
total cost); (2) For the articles imported from Afghanistan, 35% of the cost may be constituted by materials and
processing from one or more ROZs in Pakistan or Afghanistan; materials but not processes from the South Asian
Association for Regional Cooperation (SAARC) which includes, besides Afghanistan and Pakistan, Bangladesh,
Bhutan, India, Maldives, Nepal, and Sri Lanka; and materials but not processes from the United States (which are
limited to 15% of the total); (3) Separate rules of origin are given for GSP articles designated as eligible from a least
developed beneficiary developing country and imported from Afghanistan. For non-textile and non-apparel articles
imported from Afghanistan, 35% of the cost may be constituted by the sum of: materials and processing operations in
one or more ROZs in Afghanistan, materials, but not processes, from SAARC, and materials from the United States
(limited to 15% of the total).
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requirements are met. Another nearly 1,160 articles would be eligible for duty-free status only if
imported from Afghanistan, so long as rules-of-origin requirements are met. In the bills, the
articles are identified in two ways: by HTS 10-digit codes, and by quota categories. These quota
categories were formerly used under the WTO Agreement on Textiles and Clothing, which expired
in 2005, and encompass anywhere from 1 to 100 HTS item numbers each.
Rules of origin for textile and apparel products require that products be wholly the growth,
product, or manufacture of one or more ROZs, except that articles cut or knit to shape and sewn
or otherwise assembled in one of more ROZs from their component parts may use imported
fabric.13
Details on those imports from Pakistan that would be afforded tariff-free treatment under ROZ,
and those which would not, are discussed beginning on p. 11, and shown in Appendix Tables A-1
through A-3.
Protections Against Unlawful Transshipment (Sec. 6/Sec. 406)
To guard against unlawful transshipment of articles from ROZs to the United States, duty-free
treatment is conditioned on certain enforcement measures: Afghanistan or Pakistan, respectively:
(1) must have adopted an effective visa or electronic certification system, domestic laws, and
enforcement procedures to prevent unlawful transshipment and false documentation. Such laws
and regulations would permit the U.S. Customs and Border Protection (CBP) access to
investigate thoroughly allegations of unlawful transshipment; (2) must agree to provide the CBP
with a monthly report on relevant shipments and cooperate with the United States to address any
necessary actions; (3) must agree to require each ROZ production entity to register with the
government and provide specific information; 14 and (4) must agree to require that all entities in
ROZs maintain complete records for at least five years after production or export. It is up to the
President to determine whether compliance has been met. If transshipment conditions are not met,
he may suspend eligibility.

13 Textile and apparel articles may be imported duty-free directly from ROZs in either Pakistan or Afghanistan if: (1)
the article is wholly the growth, product, or manufacture of one or more ROZs; (2) the article is yarn, thread, twine,
cordage, rope, cable, or braiding, and the fibers are spun in or extruded in one or more ROZs; (3) the article is a fabric
and the fibers, filaments, or yarns are woven, knitted, needled, tufted, felted, entangled, or transformed by any other
fabric-making process in one of more ROZs; or (4) the article is any other textile or apparel article and is cut (or knit-
to-shape) and sewn or otherwise assembled in one or more ROZs from its component pieces. Certain other textile and
apparel articles may be directly imported into the United States only from a ROZ in Afghanistan duty-free if: (1) the
article is wholly the growth, product, or manufacture of one of more ROZs in Afghanistan; (2) the article is a yarn,
thread, twine, cordage, rope, cable, or braiding and the constituent staple fibers are spun in or the continuous filament
fiber is extruded in one or more ROZs in Afghanistan; (3) the article is fabric, including a fabric classifiable under
chapter 59 of the HTS (impregnated, coated, covered, or laminated textile fabrics; or textile articles of a kind suited for
industrial use) and the constituent fibers, filaments, or yarns are woven, knitted, needled, tufted, felted, entangled, or
transformed by any other fabric-making process in one of more ROZs in Afghanistan; or (4) the article is any other
textile or apparel article that is cut (or knit-to-shape) and sewn or otherwise assembled in one or more ROZs in
Afghanistan from its component pieces.
14 This information includes the production entity’s name, address, telephone, fax and e-mail numbers/addresses, names
and nationalities of owners, directors, corporate officers and positions within the business; the number of employees
and their occupations; a general description of covered articles and the production capacity of the plant; the number and
types of machines in use; the number of hours the machines operate each week; the identity of any supplier to the entity
of textile or apparel goods, fabrics, yarns, fibers, etc.; and the name and contact information for each of its customers in
the United States.
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In addition, the U.S. Customs and Border Protection (CBP) shall submit to Congress no later than
March 31 of each year, a report on the effectiveness of the visa or electronic certification system,
and on measures taken by Afghanistan and Pakistan to prevent circumvention. For additional
customs enforcement by the CBP, the bill authorizes the appropriation of $10 million annually for
FY2010–FY2023. If the President determines, based on sufficient evidence, that an entity has
engaged in unlawful transshipment, he shall deny eligibility to the entity, its successor, and any
other entity owned, operated, or controlled by the same principals.
Technical Assistance, Capacity Building, Compliance Assessment,
and Remediation Program (Labor Protections, Sec. 7/Sec. 407)
Beginning 16 months after the President notifies Congress of his intent to designate an area as a
ROZ under Section 3, each ROZ shall continue to receive duty-free treatment under the act only
if the President certifies to Congress that Afghanistan or Pakistan, respectively: (a) has
implemented labor requirements of this section; and (b) has agreed to require and has developed a
system to ensure that each textile or apparel exporter participates in the labor and registry
program, described below.
Under the original bill, the President could extent the period for compliance by Afghanistan and
Pakistan beyond 16 months if he determined the country had made a good faith effort toward
such compliance and provided appropriate congressional committees with reports every six
months on Afghanistan’s or Pakistan’s progress in meeting the requirements.
Rules Committee Amendment: The amendment by the Rules Committee would add procedures
for extending eligibility for six month and subsequent six month periods. These procedures
include offering opportunities for public comment, and the publication of substantiating
information in the Federal Register to initial requirements for consultation with appropriate
committees and declaration of “extraordinary circumstances.”
Section 7 would also set out requirements and responsibilities for (1) a labor official to be
designated in Afghanistan and Pakistan respectively; (2) as amended by the Rules Committee
Amendment, a designee of the U.S. Labor Department to monitor labor conditions in ROZ plants
and offer technical assistance on their remediation; (3) the President of the United States to report
annually to appropriate congressional committees on various labor efforts of Afghanistan and
Pakistan; and (4) the Secretary of Labor to report to appropriate congressional committees an
evaluation of the labor condition monitoring program and options for expanding it.
Responsibilities of Labor Officials in Afghanistan and Pakistan
The designated labor official in Afghanistan and Pakistan, reporting directly to that President
shall develop and maintain a registry of textile or apparel exporting enterprises and a system to
ensure their participation in a labor standards compliance program conducted with the help of the
ILO.
ILO Responsibilities
The original bill provided that the ILO would operate a program with the labor officials of
Afghanistan and Pakistan, respectively, to assess compliance by textile or apparel exporting
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companies listed in the registry, with core labor standards and conditions of work relating to
minimum wages, hours of work and health and safety regulations. In addition, the ILO would
identify and assist textile and apparel exporters in remediating deficiencies, conduct follow-up
site visits and provide training to workers and management. The ILO would also provide a
publicly available annual report, which would identify whether each exporting enterprise listed in
the registry, has met the labor conditions. For each enterprise with labor deficiencies, the report
would describe deficiencies; offer suggestions; and describe remediation efforts and progress
made. The ILO would also assist the governments of Afghanistan and Pakistan in promoting core
labor standards and educating labor officials, worker representatives, labor inspectors, judicial
officers, and other relevant personnel about them.
Rules Committee Amendment: The amendment by the Rules Committee removes the ILO as
the cooperative party to work with Afghanistan or Pakistan to establish a labor monitoring and
compliance program. It substitutes an entity designated by the Secretary of Labor (p. 51) It also
instructs the Secretary of Labor (p. 60) to evaluate the program and options for expanding it to
include non-textile or non-apparel articles (p. 61).
Presidential Responsibilities
Under H.R. 1318 and S. 496, the President of the United States would determine whether
Afghanistan and Pakistan are protecting core labor standards. Every two years the President
would identify whether a textile or apparel exporting enterprise listed in the registry has failed to
comply with core labor standards and labor laws of Afghanistan and Pakistan, and seek to assist
any enterprises that have failed to comply. If such efforts fail, he shall withdraw, suspend, or limit
the application of preferred treatment.
The President would be required to transmit an annual report to the House Ways and Means and
Senate Finance Committees on the implementation of this capacity-building section (Section 7.)
The bill authorizes a total appropriation of $20 million to carry out this section, for the entire
period October 1, 2009 through September 30, 2014.
Changes Embodied in Rules Committee Amendment: The amendment by the Rules
Committee adds additional conditions, circumstances, and procedures for extending the initial 16-
month grace period of duty free treatments by six month increments when “extraordinary
circumstances” exist that preclude Afghanistan or Pakistan from meeting the technical assistance
labor requirements The original bill required that extension (for unspecific time periods) be
dependent on Afghanistan’s or Pakistan’s “good faith effort” toward compliance, and reports to
appropriate congressional committees on steps toward full compliance and progress. The
amendment adds procedures for extending eligibility for six months, and subsequent six month
periods. These procedures include offering opportunities for public comment, and the publication
of substantiating information in the Federal Register. The amendment also extends the period for
which the $20 million authorization would extend, nine more years, so that the authorization
extends from October 1, 2009, through September 30, 2014.
Limitations on Providing Duty-Free Treatment (Sec. 9/Sec. 409)
The legislation would allow the President to waive the application of duty-free treatment if he
determines that providing such treatment is inconsistent with the national interests of the United
States, and shall advise Congress of such.
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Termination of Benefits (Sec. 10/Sec. 410)
Duty free treatment would remain in effect through September 30, 2024 under provisions of these
bills.
Increase in Customs User Fees (Sec. 411)
The Rules Committee Amendment establishes new section increasing the level of customs user
fees. It would require the Secretary of the Treasury to increase the amount of fees charged and
collected under Section 13031(a) of the Consolidated Omnibus Budget Reconciliation Act of
1985 [19 USC 58c(a)] for the provision of customs services for imports and travel from
Afghanistan and Pakistan. The amount of the increase would be not less than $12 million for the
period beginning the date of enactment through September 30, 2014. It would be not less than
$105 million for the period beginning on the date of enactment through September 30, 2019. The
above amount would be in addition to the level of normal customs user fees that would otherwise
be charged and collected under Section 13031(a) of 19 USC 58c(a).
IV. Potential Issues
The main issue in the ROZ legislation is: Can the concept be implemented; and would businesses
invest the resources needed to make ROZs work? Textile and apparel products, particularly those
made of cotton, are the main Pakistani export to the United States. Production typically takes
place in developed areas, including around Karachi on the Arabian Sea. This legislation offers a
different approach to production, offering tariff benefits for goods produced in remote,
undeveloped, mountainous, and earthquake affected areas along Pakistan’s borders with
Afghanistan, China, and India, and in rugged Afghanistan—all places located 200 to 800 miles or
more from the sea. The question is, are the potential tariff benefits from producing permitted
items in ROZs (and any wage savings from producing in remote parts of Pakistan and
Afghanistan) substantial enough to outweigh security and transportation requirements and labor
issues relating to the bill?
Tariff Line Issues
Summary
The ROZ legislation would remove tariffs from 1,626 textile and apparel categories (referred to
as “tariff lines” at the 10-digit HTS level) imported from Pakistan and/or Afghanistan and
meeting rules-of-origin requirements. It would remove tariffs from an additional 1,157 categories
imported from Afghanistan alone and meeting rules-of-origin requirements.
The question for analysis is, how many of those 1,626 import categories slated for tariff removal
(if the goods are imported from Pakistan), represent major U.S. import categories from Pakistan?
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To answer this question, CRS compared the top 300 (10-digit) Pakistani-sourced dutiable import
items for consumption15in the United States against the 1,626 items slated for tariff removal.
These 300 items accounted for $3.0 billion, or 98% of all dutiable imports for consumption from
Pakistan in 2008. CRS found that the ROZ proposal would remove tariffs on 98 of those 1,626
items.
These 98 items represented half the value (49%) of all such imports from Pakistan ($1.479
billion). By value, most of these 98 items, (87%) are textile products such as towels, sheets,
comforters, and curtains, with an average trade-weighted tariff rate of 8.1%. The remaining 13%
are apparel products (defined in the paragraph below.) (These 98 categories are detailed in Table
A-1.)
Not among the 1,626 categories for tariff removal were another 195 categories of textile and
apparel imports from Pakistan. These 195 categories accounted for another half the total value of
dutiable imports from Pakistan ($1.534 billion, or 50%). They are primarily (88%) apparel items,
such as shirts, trousers, blue jeans, socks and underwear, with an average trade-weighted tariff
rate of 14.9%. The remaining 12% are textile products. (These items are detailed in

15 This represents a change in the most recent version of this report. Previous versions based the analysis on all imports,
which included those that were re-exported, and those that remained in warehouses for a particular year. This change
was made so that the analysis would better conform to the purpose of the legislation.
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Table A-2.)
The remaining seven items of the 300 are non-textile and apparel imports. These items total $29
million, and account for less than 1% of the 300 dutiable imports from Pakistan in 2008. These
items include rice, honey, heavy fuel oils, certain containers, and cutting shears, with an average
trade-weighted tariff rate of 1.7%. (These items are detailed in Table A-3.)
CRS then examined Afghanistan imports for consumption in the United States and found that
their value totaled only $207 thousand (0.01% of the value of such imports from Pakistan.)
Among the dutiable consumer good imports from Afghanistan are carpets, with a total import
value of $11 thousand (most carpets from Afghanistan already enter the United States duty-free),
and clothing valued at around $19 thousand.
Discussion
Types of items slated for newly tariff-free U.S. import under the ROZ legislation are limited,
particularly textile and apparel items, compared with what Pakistan actually produces for export.
Ranking minority member of the House Ways and Means Committee, Representative Dave
Camp, has referred to the “product mix [on which tariffs would be removed as] stingy—an
economic fig leaf.”16
An examination of the data reveals that of the eight top import items from Pakistan (accounting
for 40% of the top 300 dutiable import items from Pakistan), four are mostly household textile
products on which tariffs are proposed for elimination (two tariff lines of cotton terrycloth towels
and two tariff lines of cotton sheets); and four others are apparel items on which tariffs are not
eligible for elimination (men’s cotton knit shirts, cotton socks, men’s and boys’ cotton pullovers,
and men’s blue jeans—i.e., blue denim trousers).
The American Apparel and Footwear Association (AAFA), the National Retail Federation, the
Retail Industry Leaders Association (RILA) and the United States Association of Importers of
Textiles and Apparel (USA-ITA, hereafter collectively referred to as “four textile and apparel
retail associations”) and the U.S. Chamber of Commerce argue in favor of expanding the list of
eligible articles to include all or many more textile and apparel items—particularly, cotton
trousers and shorts and cotton knit tops. They argue that “these products are most likely to
generate employment opportunities in zones near the border region,” and “already account for
64% of the apparel exports from Pakistan to the United States, and more than a quarter of all
exports from Pakistan to the U.S. market. 17They further argue that Asian producers, not U.S.
producers, are at risk from apparel exports from Pakistan. They argue that U.S. imports of cotton
knit shirts and cotton trousers from Pakistan represent 3.6% of total U.S. imports of these
particular products.”18 They could also argue that such an expansion in product lines could help

16 House Floor Statement by Representative Dave Camp, Ranking Minority Member of the House Ways and Means
Committee. Congressional Record, June 11, 2009, p. H.6569.
17 This 64% includes imports from Pakistan in four former quota categories under which imports are still reported by
shippers: 338 and 339 (cotton knit shirts and blouses) and 347 and 348 (cotton trousers and shorts). Each of these
categories represents a number of HTS 10-digit categories. The HTS categories represented by the quota categories can
be found at the ITA’s OTEXA website: (http://otexa.ita.doc.gov/. Click on “The Textile Correlation, left column,
fourth line from the top. ) In addition, the shippers report on the dollar value of exports from Pakistan as reported by
three-digit category, can be found at http://otexa.ita.doc.gov/msrcty/v5350.htm by clicking on “Pakistan.”
18 Letter to Congress, June 10, 2009 from the American Apparel and Footwear Association (AAFA), the National
(continued...)
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reverse the 44% decline in investment between 2007 and 2008 (see Table 1) and increase the
potential for economic growth and job creation in areas where employment levels are low.
The Chamber and the Council argue in favor of expanding the tariff-free product line to include
cotton trousers and shirts in order to “improve the competitiveness of Pakistani apparel producers
vis-à-vis other international suppliers” and keep jobs from migrating “out of Pakistan to third
countries.”19 In addition, eight associations argue that in the world today, when there are no
longer any quotas, “Asian suppliers are in fierce competition for sales to the U.S. market,” and
“configuring the ROZ program to include duty-free treatment on all textile and apparel products
will give Pakistan a fighting chance in this competitive industry.”20
Defenders of the currently-proposed list of products on which tariffs would be eliminated might
argue that the U.S. textile and apparel industry has come under increased international pressure in
recent years. It has suffered both output and employment losses, in part because textile and
apparel items can be produced relatively easily in developing countries and require a relatively
low capital investment. Between 2002 and 2008, employment in the U.S. textile and apparel
industry declined 41% (from 845,000 to 497,000). Over nearly the same time (2002-2007, most
recent data) output declined an estimated 21% (from $119 billion to approximately $96 billion).
(See Error! Reference source not found..) In contrast to this, employment for the entire U.S.
manufacturing sector decreased a much smaller 12% over 2002-2008 (from 15.3 million to 13.4
million), whereas output increased by an estimated 28% between 2002 and 2007 (from $3.9
trillion to $5.0 trillion).21
Issues Related to Geographic Areas Permitted for ROZ Location
Eligible goods could be produced anywhere in Afghanistan and receive duty-free treatment.
However, in Pakistan, under the ROZ proposal, eligible goods could only qualify for duty-free
treatment if they were produced in certain locations. Those locations are: (1) the Federally
administered Tribal Areas; (2) areas of Pakistan-administered Kashmir that the U.S. President
determines were harmed by the earthquake of October 8, 2005; (3) areas of Baluchistan that are
within 100 miles of Pakistan’s border with Afghanistan; and (4) the North West Frontier Province.
Several issues stem from these restrictions on locations of potential ROZs.

(...continued)
Retail Federation, the Retail Industry Leaders Association (RILA), and the United States Association of Importers of
Textiles and Apparel (USA-ITA); and letter from R. Bruce Josten, Executive Vice President for Government Affairs,
U.S. Chamber of Commerce, to Senator Maria Cantwell, May 18, 2009.
19 Letter from The U.S. Chamber of Commerce to Representative Chris Van Hollen, May 18, 2009.
20 Letter to the Senate Finance Committee, June 22, 2009, signed by the American Apparel & Footwear Association
(AAFA), the Fashion Accessories Shippers Association (FASA), the National Foreign Trade Council (NFTC), the
National Retail Federation (NRF), the Retail Industry Leaders Association (RILA), the Travel Goods Association
(TGA), the U.S. Association of Importers of Textiles and Apparel (USA-ITA) and the United States Chamber of
commerce.
21 Sources for employment data: Bureau of Labor Statistics. For output in the manufacturing sector, U.S. Census
Bureau, Survey of Manufactures for output data covering 2002-2006; and the Commerce Department’s Bureau of
Economic Analysis (BEA) for output data for 2007.
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Transportation Issues
Some argue that geographic areas eligible for ROZ establishment and tariff-free production of
eligible items under H.R. 1318 and S. 496, are too remote, making transportation of components
to and finished goods from ROZs difficult. They argue that eligible regions for ROZ location
should include some that are not located just in the mountains and in the areas affected by the
2005 earthquake. In addition, they argue that it would be an important incentive for investment to
permit ROZs to be established closer to the Arabian Sea than the current 200 to 800 miles, since
the 8% savings in tariff rate on permitted items could be erased by transportation costs.
Defenders of the originally designated locations for ROZs emphasize that the goal of the
legislation is to take the work to the mountainous regions where jobs and economic development
are needed. They could also argue that the Indus River in Pakistan (see Figure 1) is navigable
nearly as far north as Attock, close to Islamabad, which can offer a transportation route for goods
produced in ROZs further north.
Security Issues
Those in favor of expanding geographic areas eligible for ROZ construction argue that security
issues could threaten isolated production operations. Fenced-in manufacturing operations could
be targets for militants.
Defenders of the current provisions could argue that a similar drug-related security problem exists
in Mexico, and that there the issue is being addressed in two ways. First, the Mexican government
is providing some additional security. Second, private investors have also hired additional
security guards. Proponents for expanding geographical areas could counter that security
measures would add costs to doing business.22
Representative Chris Van Hollen, the House bill’s sponsor, stressed the notion that ROZs can help
increase security. “We need ROZs now—economic opportunities must be expanded to quickly
follow up military operations with economic development to prove to populations in critical
targeted areas that there are benefits to defeating the militants.”23
Other Considerations
Some observers have suggested expanding the geographic areas in which ROZs may be
established in Pakistan. Defenders of the current proposal could argue that if ROZs were
permitted in geographic areas close to existing production operations, businesses now producing
in Pakistan close to the river valleys where most of the cotton is grown, could easily shift
production to nearby ROZs, without expanding production to geographic regions targeted for
economic assistance and without creating jobs in the mountainous regions.
The above-mentioned four textile and apparel retail associations “urge...Congress to revisit the
limited areas in Pakistan that are eligible to use the ROZ program to create employment.” They

22 Mexico: Why Business is Standing Its Ground, Business Week, April 20, 2009, p. 34.
23 House Floor Statement by sponsor Chris Van Hollen in support of H.R. 1318/H.R. 1886. Congressional Record,
June 11, 2009, p. H. 6573.
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argue that “the proposed ROZ areas are limited to extremely remote areas that are experiencing
intense conflict and are not yet mature for industrial growth,” and that “limiting ROZ investment
to these areas would delay job creation.”24
A March 22, 2009 editorial from the Washington Post addressed the politics of the issue and the
difficulty of determining where the ROZ lines should be. “It’s not a magic formula, of course.
The investment areas have to be drawn widely enough to make the prospect of investment
realistic; if you limit them to the most intense battle zones, you’re not going to see many jobs
created. The bigger they are, though, the likelier the bill will arouse union opposition, so the
politics are tricky.”25
Labor-Related Issues
The House bill contains labor provisions not in the Senate bill. These would establish a
framework for oversight and enforcement of labor rights in Afghanistan and Pakistan. The bill
would require both countries to designate a labor official, who would report directly to the
President of either country and would keep a registry of textile and apparel exporters located in
ROZs to ensure their participation in the labor monitoring and compliance program.
Labor Costs and Wage Issues
Production decisions are based on a number of factors. These include labor productivity, skill
level of available workers, proximity to natural resources and trade-related services,
transportation time and transportation costs, and wages and other labor considerations.
Proponents of expanding tariff lines and expanding eligible geographic regions could argue that
the 8% tariff reduction might not be a great enough incentive for businesses to invest in the ROZ
program. They could argue that labor costs could be greater under the ROZ program than in
production operations not in ROZ areas, given all the extra labor requirements on businesses
made by the legislation.
Defenders of the House labor provisions could point out that labor costs in current Pakistan free
trade zones, according to the Export Processing Zone Association of Pakistan (EPZA Pakistan),
are the equivalent of about $87 per month for unskilled workers and $145 per month for skilled
workers.26 Comparative wage data are difficult to come by. The United Nations reported that in
2005, agricultural wages in Afghanistan were about $1.90 per hour, or about the same value based
on a 40-hour week (which may or may not reflect actual conditions in Afghanistan.) It notes
further that wages in Afghanistan were higher than those for Pakistan (about $1.70 per hour) or
India (about $1.10), reflecting strong competition for labor from the drug sector, especially during
the poppy harvest.27 At the other extreme, AlJazeera reported in a 2007 film report entitled

24 Letter to Congress June 10, 2009 from the USA-ITA et al., op. cit.
25 Plowshares for Peace, Washington Post editorial, Mar. 22, 2009.
26 Pakistan Export Processing Zone Association, Information is from its website, at http://www.epza.gov.pk/
laborLaws.html.
27 UNAMA Fact Sheet: Understanding Afghanistan’s Economy – a Brief Guide for Journalists, Kabul, May 8, 2006.
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“Rebuilding Bamiyan, Part II” July 23, 2007, that the average wage in Bamiyan, one of the
poorest parts of Afghanistan, was the U.S. equivalent of $20 per month.28
Strength of Labor Requirements
Some critics of the ROZ proposal argue against the labor requirements in the House bill—that
they go beyond current U.S. law, both trade preference laws and U.S. free trade agreements—in
two aspects.
Do They Go Beyond Current U.S. Trade Preference Law?
First, some critics argue, the ROZ proposal would expand labor requirements beyond those in
U.S. law because they would be the first U.S. trade preference program to call for adherence to
ILO “core labor standards,” instead of U.S. “internationally recognized worker rights.” ILO core
labor standards are defined and backed by eight detailed conventions, of which the United States
has ratified two.29
Defenders of the change could argue that the definition of “core labor standards” in the ROZ
proposal lists them in the same way that other U.S. trade preference programs list “internationally
recognized worker rights,” but does not define them as coming from the ILO, and does not
reference the ILO conventions. Defenders could argue, therefore, that the change was meant to
incorporate a list of worker rights that stemmed from an international body and includes standards
which most country governments have already signed on to and ratified, rather than one limited
totally to U.S. law.30
Monitoring and Technical Assistance Requirements
Second, some critics argue, the ROZ proposal would go beyond requirements in even the most
recent free trade agreements because it would mandate that compliance by producers with core
labor standards be assessed and monitored with both initial and follow-up evaluations at the site
by an “entity”31 named by the Department of Labor.32 The free trade agreements do not require
that every site be monitored by an outside source.
Representative Dave Camp argues against the monitoring provisions for three reasons: (1) that
the “entity” assigned to do the monitoring could include “even a nongovernmental organization

28 AlJazeera film entitled Rebuilding Bamiyan, Part II, July 23, 2007 available from YouTube at
http://www.mefeedia.com/entry/3188372.
29 Letter to Members of the Senate Finance Committee, by Emergency Committee for American Trade (ECAT),
National Association of Manufacturers (NAM), National Foreign Trade Council (NFTC), United States Chamber of
Commerce, and United States Council for International Business (USCIB), June 26, 2009.
30 The list of ILO “core labor standards” differs from the list of U.S. “internationally recognized worker rights” on one
right or standard. They agree on the other four: the right to organize and bargain collectively; protections against forced
labor; and protections for child labor. In addition, the ILO list also includes protections against employment
discrimination, while the U.S. list includes the right to labor standards pertaining to minimum wages, maximum hours,
and safety and health protections.
31 Ibid.
32 These free trade agreements are with Peru, Colombia, Panama, and South Korea. Of these, only the one with Peru
has been approved by Congress, so far. (P.L. 110-138).
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(NGO) hostile to trade;” (2) “given the dire security situation in Afghanistan and Pakistan, having
inspectors go from door to door, even cottage to cottage, to enforce such standards strains
credibility;” and (3) such labor requirements “could be viewed as a precedent to justify the
inclusion of similar language... in new trade agreements...[and] perhaps even in efforts to revise
existing ones...leaving the U.S. vulnerable to challenges that our labor laws don’t meet the
standard.” In summary, Camp declares that the labor provisions are “heavy, intrusive, impractical,
impede investment and won’t improve labor conditions.”33
Defenders of the labor monitoring and technical assistance provisions argue that the detailed
requirements in ROZ are very similar to those included in the Haiti HOPE Act in 2008.34 These
provisions call for the monitoring of labor conditions by the International Labor Organization
(ILO). This requirement was first carried over into, and then changed, in the ROZ bill by the June
9, 2009 Rules Committee amendment. That amendment substituted for the ILO as the monitoring
entity, “an entity designated by the Secretary of Labor ... subject to evaluation by the ILO at the
request of the Secretary of Labor.”
Critics of applying the Haiti provision to the ROZ situation point out that the structure of industry
in Afghanistan and Pakistan differs from that in Haiti, making repeat inspections difficult. In
Afghanistan and Pakistan, they argue, textile and apparel production operations are often
characterized as “cottage industry,” with production locations dispersed to individual homes in
many cases; whereas in Haiti, production more often takes place in larger-scale factories.
The above-mentioned four textile and apparel retail associations argue that the labor provisions in
the House bill “only serve...as a further disincentive for companies to use this program.”
However, the four retail associations state that they would support “labor provisions that reinforce
our members’ commitment to source apparel only under socially responsible and ethical
conditions from factories that meet strict labor compliance standards.”35 The five additional
organizations, in their letter to the Senate Finance Committee, support, as an alternative to the
House labor provisions, the labor approach taken by S. 496, which does not include requirements
for specific monitoring of production sites.36
Issues Relating to Child Labor
Some critics of the ROZ program are concerned that with the “cottage industry” structure that
ROZ could encourages, there could be considerable employment of young people producing from
home or small group operations. According to the State Department’s Country Reports on Human
Rights Practices, 2008 (most recent year available), child labor remains a pervasive problem in
both Afghanistan and Pakistan. Many children are reportedly forced to work in Pakistan in
particular, and their hours may be long, their wages low, and safety and health protections few if
any. Added to this would be the difficulty of inspecting large numbers of small or home-based
operations. According to the International Labor Organization (ILO), Afghanistan has ratified
only three of the eight conventions relating to ILO “core labor standards. Among the five it has
not ratified are the two standards providing child labor protections. In Pakistan, also according to

33 Floor Statement of Representative Dave Camp, op. cit.
34 Title XV of the Food, Conservation, and Energy Act of 2008 (P.L. 110-246), Sec. 15403.
35 Letter to Congress June 10, 2009 from the USA-ITA et al., op. cit.
36 Letter to the Senate Finance Committee, June 26, 2009, op. cit.
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Country Reports, enforcement of child labor protections is a serious problem and fines to
employers for violations, to the extent that they are levied, may be relatively small for certain
employers, ranging from $5 in the Northwest Frontier Province to $93 in Baluchistan.37
Issues Relating to Protections Against Illegal Transshipment
Some critics might argue that extensive protections against transshipment in the bill could cost
companies considerable expense to comply. The requirements are fairly technical. Questions may
arise concerning whether Afghanistan or Pakistan could meet the technical requirements of the
visa or electronic certification system. In addition, questions might arise over whether the
information obtained would be 100% reliable. At the same time, it is not clear how serious the
threat of transshipment would be under this legislation.
Seven U.S. textile and apparel retail organizations plus the U.S. Chamber of Commerce concur
that transshipment is a legitimate concern, and support the anti-transshipment provisions that
exist in other trade preference programs such as the African Growth and Opportunity Act
(AGOA). They argue that protections against illegal transshipment in S. 496 (and the similar
House bill) goes way “go way beyond [AGOA] provisions” and “requires extensive disclosure of
sensitive and proprietary information,” including the names of all owners, directors, officers,
suppliers, and U.S. customers of ROZ entities. This, in turn, they argue, “raises significant
proprietary information concerns because companies do not want to reveal their sourcing
strategies to competitors. The group also argues that the additional requirement to compile a list
of all participating entities (ROZ producers in the region) “would surely” make these entities “a
target list for America’s enemies in the region.”38
Issues Relating to the Increase in Customs User Fees
Two authorizations in the bill would total $160 million. One would be for customs enforcement to
protect against unlawful transshipment ($10 million for each fiscal year 2010 through 2023). The
other would be for certain requirements related to labor protections: technical assistance, capacity
building, compliance assessment, and remediation program ($20 million for the total period
beginning October 1, 2009, through September 30, 2023.)
Partly balancing these U.S. outlays and any tariff losses under ROZ would be increases in
customs user fees charged and collected. These would be levied on imports, whether made in a
ROZ or not, and on travel from Afghanistan and Pakistan. They would be levied in amounts of
not less than $12 million for the period beginning on the date of enactment through September
30, 2014. This increase in customs user fees charged and collected would then be part of a greater
levied sum of not less than $105 million for the period beginning on the date of enactment
through September 30, 2019.

37 U.S. Department of State. Country Reports on Human Rights Practices, 2008. Labor sections (at end of respective
chapters) for Afghanistan and Pakistan.
38 Letter to the Senate Finance Committee, June 22, 2009, from the American Apparel & Footwear Association
(AAFA), the Fashion Accessories Shippers Association (FASA), the National Foreign Trade Council (NFTC), the
National Retail Federation (NRF), the Retail Industry Leaders Association (TGA), the U.S. Association of Importers of
Textiles and Apparel (USA-ITA), and the U.S. Chamber of Commerce.
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Representative Camp argues against the customs user fee provision because, “for every dollar of
duty relief the ROZ exports from these countries receive, other Pakistani and Afghan exports
have to pay at least that amount in increased fees, making these countries potentially worse off.”39
The four textile and apparel retail associations argue that this “pay-for mechanism” in the bill
“increases the cost of doing business in non-ROZ areas of Pakistan, which is contrary to the goal
of bringing greater job creation to this critically important region and raises most-favored-nation
concerns for those areas of Pakistan that are not eligible for ROZ investment.” The four
associations further argue that “penalizing one part of Pakistan to benefit another is a terrible
precedent in a trade preference program.”40
In addition, some lawyers have argued that the increased fee would likely violate World Trade
Organization rules in that they could raise “most-favored-nation concerns for those areas of
Pakistan that are not eligible for ROZ investment.” That is, Article I of the General Agreement on
Tariffs and Trade requires that trade concessions granted to one Member be applied immediately
and without conditions to all other Members.41
V. Outlook
Sponsors of the ROZ legislation, together with key diplomats from the United States, Pakistan,
and Afghanistan, have issued statements of support. Backing the legislation have been Special
U.S. Representative for Afghanistan and Pakistan, Ambassador Richard Holbrooke, Pakistan’s
ambassador to the United States Husain Haqqani, and Afghanistan’s ambassador Said T. Jawad.
Also supporting the legislation, in addition to President Obama and former President Clinton, are
the U.S. Chamber of Commerce, and the U.S.-Pakistan Business Council with a qualification
listed below. They point to the proposed legislation as a means for achieving or contributing to a
safe and peaceful Afghanistan and Pakistan and a safe and peaceful United States by offering
employment alternatives to al-Qaeda and Taliban employment and recruitment efforts. They look
to ROZ legislation as a means toward raising incomes, creating good jobs, and developing a
strong middle class in a part of the world that remains critical to U.S. national security. The
House sponsor of the bill also argues that through ROZs, Congress would affirm the importance
the United States attaches to Pakistan and Afghanistan.42
Neutral on the legislation are the U.S. textile and apparel producers. They do not object to the bill
as currently written, but could oppose it if certain changes were made to the bill, particularly in
the scope of products coverage. Similarly, the AFL-CIO does not oppose the legislation as
introduced.
Four U.S. textile and apparel importers, including the American Apparel and Footwear
Association, the National Retail Federation, the Retail Industry Leaders Association, and the U.S.
Association of Importers of Textiles and Apparel, plus the U.S. Chamber of Commerce and the

39 Floor statement by Representative Dave Camp, op. cit.
40 Ibid.
41 House Passes ROZ Bill Over Business, Republican Objections. World Trade Online. Inside U.S. Trade. June 12,
2009.
42 Office of Congressman Chris Van Hollen, “Van Hollen Introduces the Afghanistan-Pakistan Security and Prosperity
Enhancement Act,” press release, March 4, 2009.
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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

U.S.-Pakistan Business Council would support the legislation with some specific amendments,
discussed in greater detail in the “issues” section, above, but summarized here: The four textile
and apparel importers summarize their suggested amendments as follows. “The United States has
an important opportunity to send a tangible message to the nation and people of Afghanistan and
Pakistan with this initiative. We have a chance to create real employment that counters the
recruitment efforts of the al Qaeda and Taliban. But that is possible only if the product scope,
geographic coverage and the labor provisions of the ROZ program reflect the realities of the
region. Any less amounts to a hollow symbolic gesture that will do little to help Pakistan or
Afghanistan or demonstrate a U.S. commitment to our allies.”43 Similarly, the five organizations
previously mentioned, including the U.S. Chamber of Commerce and the U.S.-Pakistan Business
Council, would support the Senate version of the legislation, which excludes the House labor
provisions.44
House sponsor, Representative Chris Van Hollen, affirmed wide support for the bill on the day of
its passage in the House, including from President Obama and Special Representative for
Afghanistan and Pakistan Richard Holbrooke. “In announcing his strategy for Afghanistan
President Obama called on Congress to pass ROZ legislation and ‘develop the economy and bring
hope to places plagued by violence.’” Moreover, he reported, “in a recent letter to Speaker Pelosi,
Ambassador Holbrooke called ROZs, ‘a vital component of our policy towards Pakistan in a
moment of great challenge, indeed crisis, for that critically important nation.’ … With this bill, we
are taking steps to forge a true strategic partnership with Pakistan and its people, strengthen its
democratic government, and help Pakistan to be a force for stability in this volatile region.”45
Senator Maria Cantwell, in a statement released the day after the House passed legislation
including the ROZ bill, echoed similar sentiments earlier stated in a report by the 9/11
Commission: The “9/11 Commission recommended that ‘a comprehensive U.S. strategy to
counter terrorism should include economic policies that encourage development, more open
societies, and opportunities for people to improve the lives of their families and to enhance
prospects for their children’s future.... I fully agree with this sentiment. ROZS will give the
people of Afghanistan and Pakistan new opportunity and hope.”46

43 Letter to Congress June 10, 2009 from the USA-ITA et al., op. cit.
44 June 26 letter to the Senate Finance Committee, op. cit.
45 Van Hollen Applauds Pakistan Enduring Assistance and cooperation Enhancement Act: Urges Senate to Move
Quickly on Legislation, Including ROZ Initiative. Press Release, June 11, 2009.
46 Cantwell Urges Swift Senate Passage of her Reconstruction Opportunity Zones bill in Senate Finance Hearing. Press
Release, Thursday, June 12, 2008.
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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Appendix. Related Data Tables
This appendix pulls together relevant data pertaining to H.R. 1318/H.R. 1886/H.R. 2410 and S.
496. Tables A-1 through A-3 show which dutiable Pakistani imports would be permitted to enter
the United States duty-free, and which imports would still be assessed tariffs. The tables divide
the 300 highest value import categories into three groups: (1) textile and apparel items for which
tariffs would be removed under the bills; (2) textile and apparel items for which tariffs would not
be removed; and (3) non-textile, non-apparel items for which tariffs would not be removed.
Error! Reference source not found. looks at U.S. textile and apparel employment and output, and
U.S. imports of textiles and apparel from the world, and from Pakistan over the years 2002-2008.
Table A-1. Top 300 U.S. Imports from Pakistan for 2008:
HTS 10-Digit Textile and Apparel Items for Which Tariffs Would Be Removed
Under H.R. 1318 and S. 496
Textile or
Import Value
HTS
Apparel
(imports for
Tariff
Number
Item
Consumption)
Rate
Tariff Value
(10 digit)
(T/A) Import
Item
($)
(%)
($)
6302.60.0020
T
cotton terry towels
281,265,539
9.1 25,595,330
6302.31.9020 T cotton
sheets
206,622,780 6.7
13,842,005
6302.60.0030 T cotton
terry
towels
116,415,752 9.1
10,593,883
6302.21.9020 T cotton
sheets
108,310,261 6.7
7,256,800
6101.20.0010
A
men’s or boys’ cotton overcoats
73,762,187
15.9 1,1728,194
6302.10.0008 T cotton
sheets
65,151,237 6.0
3,909,107
9404.90.8020 T cotton
quilts/comforters
63,127,868 4.4
2,777,657
6307.10.1020 T cotton
terry
bar
mops
60,496,038 4.1
2,480,392
6307.10.1090 T cotton
dust
cloths
60,033,312 4.1
2,461,387
6302.31.9010 T cotton pillow cases
46,892,925 6.7 3,141,842
6303.91.0010 T cotton
window
curtains
27,903,925 10.3
2,874,131
6302.21.9010 T cotton pillowcases
26,939,947 6.7 1,805,031
6304.92.0000 T other
cotton
articles
24,468,224 6.3
1,541,515
6303.91.0020 T other
cotton
valances
21,009,549 10.3
2,164,000
6301.30.0010 T cotton
blankets
17,706,455 8.4
1,487,341
6102.20.0010 A women’s
or
girls’
cotton
coats
17,504,162 15.9
2,783,169
6307.10.2005 T cotton
shop
towels
14,720,603 5.3
780,207
6302.21.7020 T printed
cotton
sheets
13,735,592 2.5
343,414
6108.31.0010 A women’s
cotton
nightgowns/PJs
13,065,007 8.5
1109,863
6302.31.7020 T cotton
sheets

11,219,003 3.8
426,321
6108.31.0010
T
other cotton bed linen
10,391,874
6.7
696,273
6302.31.7020 T cotton
bedspreads
9,912,620 4.4
436,156
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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Textile or
Import Value
HTS
Apparel
(imports for
Tariff
Number
Item
Consumption)
Rate
Tariff Value
(10 digit)
(T/A) Import
Item
($)
(%)
($)
9404.90.8505 T cotton
quilts
9,721,549 12.6
1244,353
6101.20.0020
T
men’s or boys’ cotton coats
9,510,582
15.9
1512,182
6302.10.0005 T cotton pillow cases
9,405,326 6.0 564,325
6307.10.2027 T cotton
dish
cloths
8,188,629 5.3
434,004
6201.92.2051 A men’s
cotton
wind
breakers
7,267,922 9.4
683,187
6302.60.0010 T cotton
terry
dish
towels
6,934,390 9.1
631,027
6302.91.0045
T
cotton woven dish towels
6,845,300
9.2
629,786
6302.91.0050
T
other woven cotton towels
5,896,091
9.2
542,438
6211.42.0056 A women’s
or
girls’
cotton
shirts
5,445,644 8.1
439,942
4202.92.1500 T cotton
travel
bags
5,342,361 6.3
336,575
6201.93.3000 A men’s
or
boys’
windbreakers
(man-
5,251,652 7.1
372,870
made fibers)
6216.00.5820
A
man-made fiber gloves and mittens
4,914,182
11.2
550,501
6302.31.9050
T
other misc . cotton bed linen
4,834,169
6.7
323,891
6208.91.1010 A women’s
cotton
bathrobes
4,629,339 7.5
347,209
6302.51.2000 T cotton
tablecloths/napkins
4,375,756 4.8
210,040
6102.20.0020 A women’s
or
girls’
overcoats
4,318,651 15.9
686,670
6302.31.5050
T
other bed linen
4,020,072
20.9
840,196
6302.51.3000 T cotton
tablecloths
and
napkins
4,017,174 5.8
232,994
6302.31.5020 T embroidered
cotton
sheets
4,013,312 20.9
838,783
6208.21.0020
A
women’s cotton nightgowns/PJs
3,601,741
8.9
320,554
6108.91.0030
A
women’s cotton knit bathrobes
3,353,533
8.5
284,919
6104.42.0010
A
women’s cotton knit dresses
3,150,568
11.5
362,322
6307.90.8995
T
cotton (85%) shel s for quilts
3,029,585
7.0
212,071
6302.21.7010 T cotton pillow cases
2,945,991 2.5 73,660
9404.90.1000 T cotton
pillows 2,756,276 5.3
146,075
6302.91.0015
T
cotton towels (not terry cloth)
2,505,806
9.2
230,536
6302.31.5010 T embroidered cotton pillowcases 2,490,778
20.9 520,574
6302.31.7010 T non-embroidered cotton pillowcases 2,483,717 3.8
94,389
6207.91.3010
A
men’s or boys’ cotton undershirts (not
2,467,178 6.1
150,501
knit)
6216.00.3800 A cotton
gloves
2,283,165 23.5
536,542
6116.92.6430 A knitted
cotton
gloves
2,060,770 23.5
507,783
6107.91.0030
A
men’s or boys’ knitted cotton
2,138,528 8.7
186,053
sleepwear
6116.10.5520
A
knitted gloves (50% not cotton)
2,066,347
13.2
272,754
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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Textile or
Import Value
HTS
Apparel
(imports for
Tariff
Number
Item
Consumption)
Rate
Tariff Value
(10 digit)
(T/A) Import
Item
($)
(%)
($)
6301.30.0020 T cotton
blankets
1,914,947 8.4
160,859
6302.31.9040 T cotton pillowcases
1,859,429 6.7 124,232
6206.30.3041 A women’s
cotton
blouses/shirts
1,580,239 15.4
243,350
6204.43.4030
A
women’s dresses, synthetic fibers
1,539,526
16.0
246,323
6208.21.0010 A women’s
cotton
nightgowns/PJs
1,265,165 8.9
112,599
6108.31.0020 A girls’
knitted
cotton
nightgowns/PJs
1,164,869 8.5
99,015
6116.92.8800 A cotton
knit
gloves
1,141,605 9.4
107,314
6208.92.0010 A women’s
bathrobes,
man-made
fibers
1,115,837 16.0
178,535
6208.22.0000 A women’s
nightgowns/PJs,
man-made
1,095,560 16.0
175,286
fibers
6302.21.5050
T
other cotton bed linens
1,032,543
20.9
215,799
6207.91.1000
A
men’s or boys’ cotton bathrobes
1,001,074
8.4
84,090
6216.00.2925
A
gloves impregnated with plastic
981,489
13.0
127,595
6116.92.6420 A cotton
gloves/mittens
948,843 23.5
222,980
6107.21.0010 A men’s
cotton
knit
PJs
944,424 8.9
84,057
6211.43.0060 A women’s/girls’
blouses/shirts
934,509 16.0
149,523
6302.91.0060
T
other woven cotton linen except
926,319 9.2
85,224
towels
6305.20.0000 T cotton
sacks
and
bags
922,977 6.2
57,227
6116.93.9400
A
synthetic fiber gloves and mittens
829,986
18.6
154,376
6201.12.2050 A men’s
cotton
overcoats
920,983 9.4
77,174
6202.93.4500 A women’s/girls’
wind
breakers
808,266 7.1
57,387
6116.10.5510 A other
gloves,
man-made
fibers
796,540 13.2
105,150
6302.51.4000 T cotton
tablecloths/napkins
765,685 6.3
48,240
9404.90.8040 T cotton
bedding
753,224 4.4
33,143
6302.10.0015
T
knitted cotton bed linen
738,008
6.0
44,287
6204.42.3050
A
women’s cotton dresses w/35%+ flax
713,997
8.4
59,976
6204.52.2070 A women’s
cotton
skirts
680,481 8.2
55,799
6207.21.0030 A men’s
cotton
PJs
670,650 8.9
59,690
6204.42.3060
A
girls’ cotton dresses (some flax fibers)
644,273
8.4
54,120
6101.30.2010 A men’s
cotton
knit
overcoats
598,461 28.2
168,598
6207.21.0010 A men’s
cotton
PJs
579,912 8.9
51,612
6204.42.3030 A women’s
cotton
dresses
571,673 8.4
48,020
6302.21.7050 T printed
cotton
bed
linen
555,010 2.5
13,875
6204.52.2030 A women’s
blue
denim
skirts
552,874 8.2
45,337
6302.21.5020 T embroidered
cotton
sheets
543,496 20.9
113,590
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Textile or
Import Value
HTS
Apparel
(imports for
Tariff
Number
Item
Consumption)
Rate
Tariff Value
(10 digit)
(T/A) Import
Item
($)
(%)
($)
6102.30.2010
A
women’s knit cotton coats
530,228
28.2
149,526
6202.92.2061 A women’s
cotton
wind-breakers
500,199 8.9
44,514
6307.90.8910 T cotton
surgical
towels
494,449 7.0
34,613
6116.92.6440 A gloves
made
of
pre-existing
fabric
483,110 23.5
113,530
6206.40.3030
A
women’s blouses, man-made fibers
477,652
26.9
128,487
6304.91.0020
A
other cotton knit articles
468,462
5.8
27,172
6305.33.0050
T
polyethylene bag for packaging goods
454,658
8.4
38,191
6201.92.2031 A men’s
blue
denim
wind-breakers
454,577 9.4
42,735
6302.31.3020 T other
cotton
sheets
451,950 11.9
53,785

TOTAL
1,479,329,103
8.1 119,850,659

Source: USITC Dataweb. Data analysis performed by CRS.
Notes: All HTS codes beginning with “50”-“56” are fibers or related materials; all HTS codes beginning with
“57” are carpets and other floor coverings; al HTS codes beginning with “58”-“60” are fabrics; al HTS codes
beginning with “61”-“62” are apparel items with “61”referring to knit or crocheted articles, and”62” referring to
non-knitted or crocheted articles; HTS codes beginning with “63” are made-up textile articles.

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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Table A-2. Top 300 U.S. Imports from Pakistan for 2008:
HTS 10-Digit Textile and Apparel Items for Which Tariffs Would NOT Be Removed
Under H.R. 1318 and S. 496
Textile
Import Value
Tariff
or
(Imports for
Rate
Apparel
Consumption)

Item
Tariff Value
HTS Number
(T/ A)
Import I tem
($)
(%)
($)
6105.10.0010
A
men’s cotton knit shirts
160,056,814
19.7 31531,267
6115.95.9000 A
cotton
socks/hosiery
139,678,931
13.5 18856,716
6110.20.2069
A
men’s and boys’ cotton
126,336,652 16.5
20845,615
pullovers (with some flax)
6203.42.4011
A
men’s blue denim trousers
81,319,021
16.6 13498,967
6203.42.4016
A
men’s cotton knit trousers
63,583,300
16.6 10554,855
6109.10.0012
A
men’s cotton T-shirts
61,607,476
16.5 10165,259
6110.20.2040
A
men’s or boys’ cotton
57,807,632 16.5
9538,293
sweatshirts
620.34.24051 A
men’s cotton shorts
44,091,210
16.6
7319,186
6110.20.2079
A
women’s and girls’ cotton
43,091,528 16.5
7110,086
pullovers (36% flax)
6204.62.4011
A
women’s cotton blue jeans
42,257,858
16.6
7014,796
6204.62.4021
A
women’s cotton trousers
41,733,375
16.6
6927,737
6105.10.0030
A
boys’ cotton knit shirts
39,408,702
19.7
7763,533
6211.42.0081
A
women’s or girls other cotton
29,335,299 8.1
2376,169
apparel
6109.10.0040
A
women’s cotton T-shirts
28,749,419
16.5
4743,669
4203.10.4030
A
men’s and boys’ leather jackets 26,787,712
6.0
1607,292
6109.10.0004
A
men’s and boys’ cotton short
18,102,729 16.5
2986,950
sleeved T-shirts
6303.92.2010
T
synthetic fiber window
17,899,973 11.3
2022,704
valances
6108.21.0010
A
women’s cotton knit briefs
15,223,824
7.6
1157,017
6109.10.0027
A
men’s or boys’ cotton knit tank 15,051,150 16.5
2483,444
tops
6104.62.2011
A
women’s cotton knit trousers
14,896,280
14.9
2219,559
6106.10.0010
A
women’s cotton knit shirts
14,262,765
19.7
2809,787
6116.10.6500
A
gloves knit, manmade fibers
14,227,789
7.0
995,952
6107.11.0010
A
men’s cotton knit briefs
14,144,932
7.4
1046,729
4203.29.3010
A
leather gloves and mittens
14,058,490
14.0
1968,198
6203.42.4036
A
boy’s blue jeans
13,527,940
16.6
2245,636
4203.10.4085
A
other men’s and boys leather
12,336,609 6.0
740,206
apparel
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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Textile
Import Value
Tariff
or
(Imports for
Rate
Apparel
Consumption)

Item
Tariff Value
HTS Number
(T/ A)
Import I tem
($)
(%)
($)
6103.42.1020
A
men’s cotton knit trousers
11,205,790
16.1
1804,126
6104.62.2030
A
women’s cotton knit shorts
9,522,785
14.9
1418,901
6109.10.0070
A
women’s or girls cotton knit T-
9,399,499 16.5
1550,919
shirts and tank tops
6110.20.2045
A
women’s or girls’ cotton
9,193,869 16.5
1517,009
sweatshirts
6109.10.0060
A
women’s cotton knit tank tops
8,670,739
16.5
1430,680
6109.10.0011
A
men’s or boys’ thermal cotton
8,556,230 16.5
1411,775
knit undershirts
6204.62.4056
A
women’s cotton knit shorts
8,399,297
16.6
1394,294
6203.42.4061
A
boys’ cotton shorts
8,390,445
16.6
1392,810
6302.53.0020
T
man-made fiber tablecloths and 8,307,646 11.3
938,777
napkins
6203.42.4046
A
boy’s cotton trousers
8,252,214
16.6
1369,868
6109.10.0014
A
boy’s cotton knit T-shirts
8,067,115
16.5
1331,085
6114.30.3060
A
men’s or boy’s other knit
7,536,733 14.9
1122,974
garments, man-made fibers
6109.10.0045
A
girls’ cotton knit T-shirts
7,400,712
16.5
1221,122
6204.62.4041
A
girl’s blue jeans
7,168,301
16.6
1189,945
6211.43.0091
A
women’s and girls’ other
6,851,312 16.0
1096,214
apparel , man-made fibers
6302.32.2040
T
sheets made of man-made
6,269,637 11.4
714,747
fibers
5210.11.6020
T
unbleached cotton or
6,158,638 10.2
628,180
broadcloth
5205.32.0000
T
multiple, folded, cabled
6,120,506 7.3
446,794
uncombed yarns
6205.20.2066
A
men’s “other” cotton shirts
6,011,831
19.7
1184,344
4203.10.4060
A
women’s, girls’ and infants’
5,980,288 6.0
358,823
leather coats
5205.12.1000
T
single cotton yarn, 85% cotton
5,852,876
5.2
304,350
5208.52.3045
T
woven fabrics, 85%+ cotton
5,762,190
6.0
345,739
6110.20.2067
A
men’s and boys’ cotton knit
5,164,220 16.5
852,101
pullovers
6115.96.9020
A
synthetic fiber socks, hosiery
5,070,165
14.6
740,240
5205.23.0020
T
single cotton yarn
5,018,632
8.6
431,598
5208.52.4065
T
woven cotton fabrics
5,003,868
11.4
570,441
6103.42.1050
A
men’s cotton knit shorts
4,787,502
16.1
770,797
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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Textile
Import Value
Tariff
or
(Imports for
Rate
Apparel
Consumption)

Item
Tariff Value
HTS Number
(T/ A)
Import I tem
($)
(%)
($)
5209.19.0040 T
unbleached cotton (85%) twill
4,543,944 6.5
295,357
weave fabric
5208.59.4090 T
printed
fabric
4,520,073
6.0 271,205
5208.39.2020 T
dyed
satin or twill weave fabric 4,420,844
8.8 389,036
5210.21.4040
T
bleached sheeting, less than
4,317,387 8.1
349,711
85% cotton
5210.21.6040
T
other bleached sheeting,
4,265,483
11.4
486,268
4203.29.3020
A
leather gloves and mittens
3,612,174
14.0
505,540
5205.22.0020
T
single cotton yarn
3,594,423
7.3
262,393
5209.19.0090
T
woven cotton fabrics
3,385,749
6.5
220,074
5209.19.0020
T
unbleached sateen fabric (85%
3,200,739 6.5
208,050
cotton)
6114.20.0010
A
women’s or girls’ cotton tops
3,137,800
10.8
338,890
6302.10.0020
T
non-cotton knit bed linens
3,046,707
6.0
182,805
5209.11.0090
T
unbleached plain weave cotton
2,933,233 6.5
190,660
duck
5205.11.1000 T
cotton
yarn
2,852,537
3.7 105,539
6205.20.2051
A
men’s cotton shirts
2,735,675
19.7
538,936
6302.32.2020 T
man-made fiber pillow cases 2,670,369
11.4 304,414
6302.22.2020 T
man-made
fiber
sheets
2,620,452
11.4 298,730
6203.22.1000
A
men’s and boys’ martial arts
2,600,148 7.5
195,027
uniforms
5209.19.0060
T
woven unbleached duck fabrics 2,572,668
6.5
167,224
9404.90.8522 T
quilts,
man-made
fiber
2,461,807
12.8 315,102
4203.10.4095
A
other women’s and girls
2,455,520 6.0
147,339
articles of leather
6111.20.6010
A
babies’ cotton knit garments
2,447,510 8.1
198,252
and accessories
5208.13.0000 T
unbleached twill fabric 2,375,045
7.9 187,625
6307.90.8985 T
shel s
for
quilts
2,340,158
7.0 163,817
6204.62.4066
A
girls’ cotton shorts
2,262,868
16.6
375,629
5208.12.4040 T
unbleached
sheeting
2,236,810
7.0 156,579
6110.30.3053
A
men’s and boys’ pul overs
2,218,631
32.0
709,962
4203.29.1800 A
leather
gloves
2,201,281
14.0 308,183
6204.62.4051
A
girls’ cotton trousers
2,060,815
16.6
342,096
5209.12.0020 T
unbleached twill 2,033,630 6.5 132,188
4203.29.0800 A
leather
gloves
2,028,232
13.9 282,772
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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Textile
Import Value
Tariff
or
(Imports for
Rate
Apparel
Consumption)

Item
Tariff Value
HTS Number
(T/ A)
Import I tem
($)
(%)
($)
5210.29.2020
T
bleached sateen fabric
1,952,486
10.3
201,104
6110.20.2077
A
women’s and girls’ cotton/flax
1,847,245 16.5
304,796
knit pullovers,
6209.20.5040 A
babies’
cotton
diapers
1,829,988
9.3 170,191
5208.19.2020 T
unbleached
mostly
cotton
1,779,427 7.9
140,576
sateen fabric
6204.22.1000
A
women’s or girls’ cotton
1,774,612 7.5
133,095
martial arts ensembles
6103.42.1040
A
boys’ cotton knit trousers
1,769,345
16.1
284,864
5208.52.4045
T
cotton woven fabrics
1,754,987
11.4
200,070
6109.10.0007
A
men’s or boys’ white cotton
1,749,459 16.5
288,657
knit underwear
6111.20.2000
A
babies’ cotton knit singlets
1,730,445
14.9
257,835
6211.33.0010
A
men’s coveral s, man-made
1,684,833 16.0
269,576
fiber
5208.59.2025
T
woven 85% or less cotton
1,662,695 10.3
171,257
fabrics
6302.22.2010 T
man-made fiber pillowcases 1,646,009
11.4 187,646
5205.31.0000
T
multiple folded cabled yarn
1,602,137
5.8
92,929
6204.63.3510
A
women’s trousers of synthetic
1,571,810 28.6
449,545
fibers
6105.20.2010
A
men’s knit shirts, partial wool
1,498,546
32.0
479,543
61112.06.050
A
babies’ cotton knit socks
1,486,163
8.1
120,383
6104.62.2028
A
girls’ cotton knit trousers
1,456,023
14.9
216,956
6115.103000
A
cotton knit hosiery
1,451,439
13.5
195,945
6111.20.6070
A
babies’ cotton knit garments
1,439,673
8.1
116,615
6111.20.6020
A
babies’ knit garment sets
1,436,823
8.1
116,383
5514.22.0020 T
dyed twill fabric
1,395,096 14.9 207,869
6106.10.0030
A
girls’ knit blouses and shirts
1,378,472
19.7
271,557
6109.10.0018
A
men’s cotton knit tanktops
1,362,118
16.5
224,748
5206.12.0000
T
single uncombed yarns of
1,344,505 9.2
123,694
cotton
6303.92.2050
T
synthetic fiber drapes
1,260,972
11.3
142,493
5510.30.0000 T
artificial
fiber
yarns
1,256,454
7.5 94,236
5208.39.4090
T
dyed fabric, 85% cotton
1,226,337
7.0
85,846
5208.29.2020
T
bleached 85% cotton sateen
1,200,124
7.7
92,411
6304.93.0000
T
synthetic fiber other articles
1,191,847
9.3
110,845
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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Textile
Import Value
Tariff
or
(Imports for
Rate
Apparel
Consumption)

Item
Tariff Value
HTS Number
(T/ A)
Import I tem
($)
(%)
($)
4203.29.4000
A
leather gloves and mittens
1,187,349
12.6
149,617
5212.12.6030
T
bleached cotton sheeting
1,174,531
7.8
91,616
5205.24.0020 T
Single
cotton
yarn
1,172,092
9.9 116,037
4203.29.1500 A
leather
gloves
1,157,275
13.9 160,869
6104.62.2060
A
girls’ cotton knit shorts
1,131,518
14.9
168,595
9404.90.9522
T
man-made fiber mattress
1,105,849 7.3
80,717
supports
6108.21.0020
A
girls’ cotton knit briefs
1,091,626
7.6
82,965
6111.20.3000
A
babies’ cotton knit garments
1,060,583
14.9
158,032
5903.90.1000 T
other
cotton
fabrics
1,059,888 2.7
28,615
impregnated with plastic
5209.11.0035 T
unbleached
cotton
sheeting 1,052,543
6.5 68,414
6307.10.2030
T
other floor cloths, dishcloths,
1,035,509 5.3
54,881
dusters
6203.42.2010
A
men’s bib and brace overal s
1,021,198
10.3
105,185
5205.23.0090
T
single cotton yarn
1,020,632
8.6
87,777
5208.59.2095
T
woven fabrics 85%+ cotton
1,019,009
10.3
104,959
5209.51.6090
T
printed plan weave duck fabric
991,346
8.4
83,276
4203.21.8060
A
other sports gloves
978,635
4.9
47,951
5407.81.0010
T
woven fabric of synthetic
977,961 14.9
145,719
filament yarn
6117.80.9540
A
other knit parts of garments
963,969
14.6
140,740
6109.10.0037
A
women’s or girls cotton knit
959,353 16.5
158,293
underwear
5205.22.0090
T
single cotton yarn
950,392
7.3
69,381
5205.13.2000
T
single cotton yarn 85% cotton
944,707
7.3
68,962
5211.12.0020 T
unbleached twill fabric 922,067
7.7 71,000
6107.11.0020
A
boys’ cotton knit underpants
872,352
7.4
64,556
6006.22.9020
T
other knit or crocheted cotton
812,846 10.0
81,287
fabrics
5513.41.0060
T
printed print cloth
767,707
14.9
114,388
6302.32.2030 T
sheets,
man-made
fiber
757,499
11.4 86,355
5208.32.3040
T
dyed cotton sheeting
757,021
7.0
52,991
5802.19.0000
T
terry toweling fabric
750,854
9.4
70,580
6104.62.2006
A
women’s cotton knit trousers
745,596
14.9
111,093
6111.20.1000
A
babies’ cotton knit garments
731,001
19.7
144,009
5210.11.6060 T
unbleached
print
cloth
720,411
10.2 73,483
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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Textile
Import Value
Tariff
or
(Imports for
Rate
Apparel
Consumption)

Item
Tariff Value
HTS Number
(T/ A)
Import I tem
($)
(%)
($)
6302.32.2060
T
other bed linen, man-made
704,761 11.3
79,815
fiber
6217.10.9510
A
other cotton clothing
703,539 14.6
102,721
accessories
6103.43.1550
A
men’s synthetic fiber shorts
693,185
28.2
195,477
5208.22.4040 T
bleached
sheeting
690,966
8.4 58,039
6110.30.3059
A
women’s and girls’ synthetic
678,394 32.0
217,087
fiber pullovers
5513.11.0020 T
polyester
broadcloth
fabric
669,341
14.9 99,733
5510.11.0000 T
single
yarns
668,793
9.0 60,191
6108.22.9020
A
women’s knit briefs, man-made
657,559 15.6
102,581
fibers
5210.19.2020 T
unbleached
sateen
fabric
652,077
9.1 59,340
5210.19.10.00 T
cotton
twill fiber
632,733 9.1 57,580
6207.11.0000
A
men’s or boy’s cotton briefs
621,097
6.1
37,888
6307.90.9889
T
other made-up articles
620,294
7.0
43,412
5209.42.0020
T
blue denim yarns
616,844
8.4
51,814
6205.30.2070
A
men’s other shirts, man-made
615,638 28.6
175,932
fibers
5205.42.0029
T
yarns 85% cotton
608,790
6.5
39,572
4202.92.3031
T
sports bags, man-made fiber
581,446
17.6
102,333
5209.51.6025
T
woven fabrics, 85% cotton
571,341
8.4
47,991
4202.92.4500
A
sports bags, plastic sheeting
562,339
20.0
112,469
5205.13.10.00
T
single cotton yarn
554,468
6.5
36,041
6111.20.6030
A
babies’ knit cotton garments
553,422
8.1
44,829
4203.29.0500 A
leather
gloves
550,821
12.6 69,401
5210.21.6020
T
bleached poplin or broadcloth
547,747
11.4
62,443
5210.21.4090 T
bleached
cheesecloth
546,571
8.1 44,272
6110.20.2010
A
other men’s sweaters, cotton
533,422 16.5
88,015
knit
6210.40.5031 A
ski/snowboard
pants,
531,798 7.1
37,760
rubberized
6302.91.0025 T
other
kitchen/bathroom
towels 523,709
9.2 48,180
5407.10.0010
T
woven fabrics of synthetic
502,053 13.6
68,280
filament
6113.00.9052 A
women’s
non-cotton
trousers 498,120
7.1 35,366
6114.20.0005
A
Men’s or boys’ knit cotton
493,909 10.8
53,341
tops
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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Textile
Import Value
Tariff
or
(Imports for
Rate
Apparel
Consumption)

Item
Tariff Value
HTS Number
(T/ A)
Import I tem
($)
(%)
($)
5210.11.4040
T
unbleached sheeting 85%
489,407 8.4
41,110
cotton
5512.11.0050
T
unbleached or bleached duck
489,228
12.0
58,708
5514.12.0020 T
unbleached or bleached twill
488,524 14.9
72,790
5209.59.0090
T
woven cotton printed fabrics
487,114
8.4
40,917
6212.90.0030
A
suspenders, garters, or man-
484,452 6.6
31,975
made fibers
6205.20.2026
A
men’s dress shirts of cotton
481,252
19.7
94,811
5208.31.4040 T
dyed
sheeting
475,503
8.1 38,517
5210.21.8090 T
bleached
cheesecloth
473,568
12.5 59,196
6109.10.0065
A
girls’ cotton tank tops
467,550
16.5
77,143
6208.91.3010
A
women’s singlets, cotton
467,283
11.2
52,343
6301.40.0020
T
synthetic fiber blankets
467,090
8.5
39,703
6103.42.1070
A
boy’s cotton knit shorts
466,499
16.1
75,111
5210.21.6060
T
bleached print cloth
465,963
11.4
53,121
5513.21.0090 T
dyed
cheesecloth
461,875
14.9 68,821
6104.62.2026
A
girls cotton knit trousers 5%
461,809 14.9
68,812
elastic
6216.00.4600
A
manmade fiber gloves and
451,238 2.8
12,635
mittens
6112.11.0060
A
women’s or girls’ track suits
444,258
14.9
66,195
5513.19.0010
T
unbleached or bleached poplin
441,301
14.9
65,754
6110.20.1010
A
men’s or boys’ cotton knit
440,515 5.0
22,028
sweaters
6110.30.3040
A
men’s or boys’ synthetic fiber
440,359 32.0
140,915
sweatshirts
5211.19.0090
T
unbleached other fabric
436,734
7.7
33,629

TOTAL
1,533,653,250
14.9 228,937,823
Source: USITC Dataweb. Data analysis performed by CRS.
Notes: All HTS codes beginning with “50”-“56” are fibers or related materials; all HTS codes beginning with
“57” are carpets and other floor coverings; al HTS codes beginning with “58”-“60” are fabrics; al HTS codes
beginning with “61”-“62” are apparel items with “61”referring to knit or crocheted articles, and”62” referring to
non-knitted or crocheted articles; HTS codes beginning with “63” are made-up textile articles.

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Afghanistan and Pakistan Reconstruction Opportunity Zones: Issues and Arguments

Table A-3. Top 300 U.S. Imports from Pakistan for 2008:
HTS 10-Digit Non-Textile and Non-Apparel Items

Import Value
Tariff Rate Tariff Value
HTS Number
Import Item
($)
(%)
($)
1006.30.9010 Rice, long grain
12390,45
0.9%
114,298
1006.20.2000 Rice,
basmati
9848,988
0.6%
54,865
8213.00.9000 scissors
and
shears
3386,484
7.3%
245,897
3923.90.0080 plastic articles for packaging goods
1151,654
3.0%
34,580
4090.00.044 natural
honey
715,705
1.0%
6,859
2710.19.0535 heavy fuel oils
705,602
0.1%
355
4202.91.0090 leather and patent leather containers
598,124
4.5%
26,924

TOTAL
28,796,602
1.7
483,778
Source: USITC Dataweb. Data analysis performed by CRS.

Table A-4. Comparison of Certain Textile and Apparel-Related Data,
2002-2008
U.S.
Total
Imports from
Employment
U.S. Outputa
U.S. Imports
Pakistan
Year
(thousands)
($ billions)
($ billions)
($billions)
2008 497 NA 93 3.1
2007 542 96* 96 3.2
2006 594 102 93 3.3
2005 645 110 89 2.9
2004 698 107 83 2.5
2003 753 113 77 2.2
2002 845 119 72 2.0
(a) % change
02-08
-41%
-21%
(2002-2007)
29% 55%
(b) Total U.S. imports from Pakistan as a share of total U.S. imports in 2002: 3%;
and in 2008: 3%
Source: U.S. Employment: Bureau of Labor Statistics, NAICS manufacturing codes 313, 314, and 315; U.S.
Output: U.S. Census Bureau, Annual Survey of Manufactures, NAICS codes 313, 314, and 315; U.S. Imports from
China and Pakistan: Office of Textiles and Apparel (OTEXA), International Trade Administration, Department of
Commerce.
Notes: Numbers have been rounded for easier comparison. Percentages reflect unrounded numbers.
Est: Estimated values of U.S. output in the textile and apparel sector are extrapolations based on the rates of
decline of output over the years 2002-2006.
a. Output figure for 2007 is taken from the U.S. Commerce Department’s Bureau of Economic Analysis (BEA).
Its figure may differ from the Census Bureau’s forthcoming data by less than $1 billion. The BEA data
includes output data for producers of leather apparel, which is not included in the Census source.

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Author Contact Information

Mary Jane Bolle

Specialist in International Trade and Finance
mjbolle@crs.loc.gov, 7-7753

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