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. Last Updated: 07/27/2016

U.S. Pulls Out of Pakistan Textiles

NEW YORK -- America's effort to bolster the economy of Pakistan, a crucial ally in the U.S.-led war in Afghanistan, is clashing with the business realities of many U.S. clothing companies.

Ever since Sept. 11, Perry Ellis, Tommy Hilfiger and others have cut back on Pakistani imports because of security concerns and rising shipping costs, undermining a pillar of Pakistan's fragile economy.

The pullback runs counter to U.S. hopes to reward Pakistan with financial help for its cooperation in the war in neighboring Afghanistan.

Pakistani apparel and textile exporters said this week that their business is off by two-thirds because of cutbacks in orders by U.S. importers, forcing them to lay off roughly 18,000 workers. Pakistan counts on textiles for 60 percent of its $8 billion in total annual exports, and the United States is by far its biggest customer.

"It's not going to make much of a difference to the U.S. economy," said Adil Najam, a professor specializing in Muslim politics at Boston University. But in Pakistan, "economic unrest gives you the conditions under which extremists breed."

Perry Ellis International, based in Miami, cut its orders from Pakistan of cotton polo shirts and athletic clothes in part because it feared for the safety of quality-control workers traveling there to make sure factories are holding to standards, said import manager Dan Gazitua.

Another reason is a war risk surcharge placed by insurance companies on shipments out of Pakistan and passed along by freight ships. As a result, U.S. importers say, fees for hauling out a container of goods have risen up to 10 percent above the $4,000 to $5,000 charged before Sept. 11.

The extra costs can sting in a business with extremely thin profit margins, and importers fear even higher fees as the war drags on.

Perry Ellis and other importers also cited concerns that anti-American sentiment and other tensions in Pakistan could disrupt their deliveries, ordered many months in advance.

Vantage Custom Classics, a seller of promotional clothing, cut up to half its imports of Pakistani-made polo shirts and sweat pants, normally millions of dollars a year, said Marc Wiesenthal, senior vice president in charge of imports. Vantage, based in Avenel, New Jersey, has shifted purchases to other Asian nations such as China, Malaysia and India.

Tommy Hilfiger reduced Pakistani imports, though it still manufactures products there, said company spokeswoman Karen Bell. Pakistan accounts for a small percentage of the company's clothing imports, she said.

Federated Department Stores, the Cincinnati-based owner of Bloomingdale's, Macy's and other chains, said through a spokeswoman that it has not cut back on Pakistani imports, but is closely watching the situation.

"It's been very nerve-racking for companies who want to maintain their business in Pakistan, but also recognize that when you have a war on terrorism, there's a potential for disruption -- particularly with anti-American activity," said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textile and Apparel.

Several U.S. importers said they support an effort by Pakistani exporters to suspend U.S. tariffs on Pakistani textile imports, which the White House is considering. Pakistan has already won the lifting of U.S. economic sanctions and various pledges of debt relief aimed at propping up its sluggish economy.

But the tariff suspension is opposed by domestic textile manufacturers who already are suffering a downturn and fear they won't be able to compete.

The U.S. textile industry has been forced to cut 90,000 jobs over the last 18 months, largely in the southeast, due to the U.S. economic downturn and foreign competition, said Carlos Moore, head of the American Textile Manufacturers Institute, the industry's trade group.

The industry suggests alternatives to tariff suspension, including more direct U.S. aid to Pakistan and U.S. reassurances that deliveries from Pakistan will make it to U.S. importers.

But as businesses in the United States squabble, Pakistani textile workers already are mourning the loss of jobs paying about $100 a month, average blue-collar pay there.

"I am the father of five children and unemployment has shattered my nerves. I don't know how to feed my family," said Waqar Ahmad, a loom operator laid off last month by a Pakistani textile factory in Faisalabad.