The United States and Pakistan - Strong and Enduring Economic Partnership
Pakistan’s Minister of Commerce Khurram Dastgir Khan and U.S. Trade Representative Michael B. Froman convened the U.S.-Pakistan Trade and Investment Framework Agreement Council in Islamabad, Pakistan on October 18, 2016.
The United States and Pakistan highlighted areas of cooperation on joint interests and committed to sustained economic cooperation, particularly increased bilateral trade and investment, which benefit U.S. and Pakistani companies. Indeed, the United States and Pakistan have a shared and enduring interest in Pakistan’s continued economic growth and prosperity, increased bilateral trade and investment, and education and social development. They also acknowledged the contribution of sustained cooperation through U.S. civilian assistance programs, in line with the “Kerry-Lugar-Berman” act. Since enactment of that legislation in 2009, the United States has committed $5 billion in civilian assistance to Pakistan and over $1 billion in emergency humanitarian assistance in response to natural disasters and conflict. U.S. civilian assistance to Pakistan supports sustained cooperation on: energy sector improvements and reforms; economic growth, and agriculture, and job creation; developments in areas vulnerable to violent extremism; and increased access and quality of education and basic health services and education.
This factsheet outlines examples of ongoing U.S.-Pakistan economic and civilian cooperation.
Economic Growth, Trade, and Investment
Economic Stability and Growth: USTR Froman congratulated Minister Dastgir on Pakistan’s successful completion of its IMF Program, noting that through a comprehensive economic reform agenda, Pakistan has achieved macroeconomic stability and provided a foundation for strong and sustainable growth. U.S. assistance to Pakistan’s energy sector, including adding generation and helping with structural reforms, helped contribute to Pakistan’s efforts. We will continue this cooperation as Pakistan forges ahead with further economic reforms.
Bilateral Trade and Investment: Bilateral trade and investment between the United States and Pakistan is a key component of Pakistan’s economic revitalization, and expanding it is a policy priority valued by both countries as part of a multi-faceted bilateral relationship. The United States is already Pakistan’s largest bilateral export destination in 2015 ($3.7 billion), with total bilateral trade at roughly $5.5 billion. The United States has consistently been one of the largest sources of foreign direct investment (FDI) in Pakistan, with total U.S. FDI to Pakistan amounting to almost $400 million last year.
The United States’ and Pakistan’s joint efforts to strengthen the bilateral trade and investment relationship are outlined in the 2015 U.S. – Pakistan Augmented Joint Action Plan for Trade and Investment, as requested by President Obama and Prime Minister Sharif. A key component of this agenda is the U.S.-Pakistan Business Opportunities Conference (BOC), an annual event to connect U.S. and Pakistani businesses. In June 2016, Pakistani Commerce Minister Khurram Dastgir Khan and U.S. Deputy Secretary of Commerce Bruce Andrews headlined the fourth U.S. – Pakistan BOC in New York City with more than 350 attendees, resulting in millions of dollars in new business deals. This was a successful follow up to the third BOC in Islamabad, headlined by U.S. Secretary of Commerce Penny Pritzker and Pakistani Commerce Minister Dastgir Khan. Additionally, a January 2016 U.S. Chamber of Commerce trade delegation to Pakistan reflected the great potential benefit for the private sectors of both countries, as did the Trade and Investment Framework Agreement (TIFA) intersessional meeting in August 2016 with Pakistan’s Commerce Secretary.
The October 18 TIFA Council meeting addressed access to U.S. markets for Pakistani exports, Pakistan’s intellectual property rights reforms, taxation and regulatory issues, e-commerce, and phytosanitary standards and requirements.
Support for Improving Pakistan’s Business Climate: To support Pakistan’s strategy to improve the business climate and competitiveness, including improving Pakistan’s World Bank Doing Business indicators, the United States invests in programs that support small- and medium-sized businesses’ access to credit and improving other conditions around starting a business, trading policy and implementation, and improvements in the energy sector. The United States has created several programs in Pakistan that focus on expanding access to credit, including the Pakistan Private Investment Initiative (PPII), made up of three privately-managed investment funds to provide equity capital to small and medium enterprises. With matching funds from the private sector, the three PPII funds will leverage at least $150 million in investment and will begin investments this year. An upcoming Small and Medium Enterprise Activity (SMEA) will provide technical assistance to improve the business enabling environment for small and medium enterprises in Pakistan, including steps to start a business and registering property. A regional trade program will work with the Federal Bureau of Revenue (FBR) on customs challenges. Through two programs partnering with Pakistani banks – under the U.S.-Pakistan Partnership for Access to Credit and the U.S.-Pakistan Clean Energy Partnership - the United States will facilitate up to $148 million in loans, through a partnership with Pakistani banks. The United States has helped add over 2,460 megawatts (MW) to Pakistan’s electrical grid that is benefitting all economic sectors. The U.S. Department of Commerce’s Commercial Law Development Program (CLDP) and the United States Patent & Trademark Office are helping to build the Pakistani judiciary’s capacity in Intellectual Property Rights (IPR) protection.
Private Sector Financing and Access to Credit: To promote private investment, the Overseas Private Investment Corporation (OPIC) currently has a portfolio of nearly $800 million in financing and insurance for projects in Pakistan. The United States has sponsored many programs that have assisted Pakistan’s small and medium-sized enterprises, which are a key catalyst of economic growth. At the U.S.-Pakistan Business Opportunities Conference in March 2015, the United States and Pakistani partner banks committed to provide up to $60 million in financing for businesses under the U.S.-Pakistan Partnership for Access to Credit. Since the partnership started, over 2,200 loans, ranging in size from $1,000 to $2,000, have been made. In September 2016, USAID also launched an initiative under the U.S.-Pakistan Clean Energy Partnership to support local bank lending to small-scale clean energy development. The Partnership will help make available up to $88 million of financing to new renewable power projects.
Regional Connectivity: To facilitate Pakistan’s regional trade efforts and in support of our shared security and economic objectives, since 2009 the United States has funded the construction and rehabilitation over 1,100 kilometers of roads, including major trade routes between Pakistan and Afghanistan. The United States supports implementation of the Afghanistan-Pakistan Transit Trade Agreement, the World Trade Organization’s Trade Facilitation Agreement, and collaborates with Pakistan on its implementation of the United Nations Transports Internationaux Routiers (TIR) Convention. The United States is contributing $15 million to the overall financing for the $1.2 billion Central Asia South Asia Electricity Transmission and Trade Project (CASA-1000), which will transmit 1,300 MW of surplus electricity from Central Asia to Afghanistan and Pakistan, in addition to providing ongoing support for the CASA-1000 Secretariat. Pakistan, Afghanistan, Kyrgyzstan and Tajikistan have made substantial progress on the CASA-1000 project within the last two years, including entering into a Master Agreement, reaching price agreements, and power purchase agreements.
Entrepreneurship: Pakistan sent the largest foreign delegation to the Global Entrepreneurship Summit in 2016. The U.S. Global Innovation through Science and Technology (GIST) initiative provides training, mentorship, and resources, and sponsors a global pitch competition; at GIST Tech-I, a Pakistani scientist entrepreneur placed third overall in 2016. Through its competitions, interactive online webchats, and online mentorship platform, GIST has helped over 6,000 Pakistani science and technology innovators advance and develop their ventures. The United States has also supported the Pakistan StartUp Cup entrepreneurship competition and business incubators across the country.
Agriculture: To date, U.S. assistance in agriculture has increased incomes for more than 975,000 farm households; boosted sales by almost $160 million; irrigated over 495,000 acres of land; facilitated over $62 million in exports of targeted commodities; and helped over 270,000 farmers and others apply improved technologies. In early 2015, Pakistan reinstated the import of live cattle from the United States. Future planned programming aims to help create over 66,000 new jobs and leverage an additional $180 million in private sector investment.
Women’s Economic Advancement: Bilateral initiatives include the 2014 U.S.-Pakistan Memorandum of Understanding (MOU) on Women’s Economic Empowerment and Entrepreneurship, and the U.S.-Pakistan Women’s Council, a bilateral public-private partnership to advance women’s education, employment and entrepreneurship led by the State Department and American University (AU) in cooperation with the Pakistani Diaspora. In less than two years, the WECREATE|Pakistan women entrepreneur resource center, affiliated with the Council, has reached over 200,000 people through events and media outreach, and has trained more than 600 women who have created over 500 jobs. The Council’s has established a partnership between AU and the Lahore University of Management Sciences on women’s entrepreneurship. Additionally, the Council expanded its impact by partnering with eight corporate members to foster corporate supply chain diversification and encourage gender parity in hiring. Working under the MOU, the USAID Gender Equity Program promotes women’s access to information, justice, and economic opportunities and helps address and prevent gender-based violence. USAID’s finance and capacity building programs for small to medium enterprises will also benefit women owned businesses.
Intellectual Property Rights: The United States noted Pakistan’s upgrade from the Priority Watch List to the Watch List with an Out-of-Cycle Review in 2016’s Special 301 Report on IPR and welcomed Pakistan’s efforts to improve intellectual property protection and enforcement, including by implementing key provisions of the Intellectual Property Organization of Pakistan Act of 2012. These efforts include establishing intellectual property tribunals, establishing a timeline for the amendment of major IPR laws, imminent implementation of the Federal Board of Revenue’s IP Enforcement Rules, undertaking public awareness programs on IPR protection, and committing to continue regular, action-oriented engagement with the U.S. government and stakeholders. The United States continues to provide technical assistance to Pakistan on drafting and implementing of IPR legislation, enforcement of IPR protection in the country and at the borders though the Department of Commerce’s Commercial Law Development Program (CLDP), the U.S. Patent and Trademark Office, and USAID. Based on CLDP/U.S. Patent and Trademark Office (USPTO) capacity building, the Lahore High Court has approached IPO about establishing another IP Tribunal that would cover the southern part of Punjab.
Global Connect Initiative: The United States and Pakistan support the Global Connect Initiative, which aims to link an additional 1.5 billion people worldwide to the Internet by 2020. In this regard, the United States applauds Pakistan’s various connectivity initiatives, including its “ICT for Girls” program with Microsoft, which aims to teach girls to code; its infrastructure projects to bring internet services to rural areas; and the “Smart Universities,” program, a public-private partnership with the U.S. company Cisco Systems, which will provide Wi-Fi and roaming services at 100 institutes of higher education across Pakistan.
Energy Collaboration to Date: Since 2009, the United States has helped add 2,460 megawatts (MW) to Pakistan’s electrical grid, benefitting 28.3 million Pakistanis. U.S. assistance has funded the construction and rehabilitation of hydropower dams and thermal power plants, as well as improved governance and management systems that have led to increased revenue collection in the energy sector of almost $430 million. USAID and Department of Commerce technical assistance played an important role in supporting Pakistan’s access to international liquefied natural gas (LNG) markets in 2015 and 2016, and Pakistan signed its first long-term LNG supply agreement to provide a clean and efficient source of energy to fuel its economy.
U.S.-Pakistan Clean Energy Partnership: The U.S.-Pakistan Clean Energy Partnership, launched by President Obama and Prime Minister Sharif in October 2015, will support and enable new private sector investment in clean energy in Pakistan – particularly in hydroelectric, natural gas, wind, solar, and other renewables. Through technical assistance and targeted investments in power generation, transmission, distribution, and associated regulatory framework, the Partnership aims to facilitate the addition of 3,000 megawatts to Pakistan’s electricity supply by 2020. The United States and Pakistan brought together leading energy firms and financiers in December 2015 for a U.S.-Pakistan Clean Energy Business Opportunities Conference in Washington, DC to inform U.S. and international companies about private sector clean energy investment opportunities in Pakistan’s energy sector. Under the U.S.-Pakistan Clean Energy Partnership, USAID will make available up to $88 million to support local bank lending to small-scale clean energy development. OPIC is supporting five wind projects in Sindh province and state-of-the-art General Electric turbines will be used at three new gas-powered generation plants in Pakistan, demonstrating the power of U.S. investment and the private sector to improve Pakistan’s energy sector.
U.S. Department of Energy Initiative: The U.S. Department of Energy (DOE) and USAID are fostering lasting technical collaboration between Pakistani energy institutions and DOE’s national labs, including by helping Pakistan develop its own integrated energy plan, bringing more renewable energy online, and advancing grid modernization and energy efficiency.
Climate Change: The United States and Pakistan collaborate on a range of international climate change initiatives, ranging from supporting the entry into force and implementation of the Paris Climate Agreement to our work in phasing out ozone depleting substances through our successful support of an amendment to the Montreal Protocol. Bilaterally, the U.S.-Pakistan Clean Energy Partnership serves to advance the capacity of the United States and Pakistan to take action in mitigating emissions of greenhouse gases. As Pakistan faces severe water scarcity and confronts the risks of droughts, floods, and heatwaves, choosing to develop clean energy sources and prioritizing climate resilient development supports a shared interest in reducing public health risks and the impacts of climate change.