On Tied Aid Karachi, November 30, 1959

I return home after approximately six weeks. During this period, I have visited Iran, Turkey, France, United Kingdom, Canada, United States, Japan, and the Philippines. Unfortunately, due to pressure of work at the United Nations, I was unable to visit Cuba.

My mission was primarily concerned with two fundamental responsibilities: one relating to the expansion of trade and commerce between Pakistan and the countries I visited and the other to the chairmanship of Pakistan’s delegation to the 14th Session of United Nations General Assembly. However, I availed myself of the opportunity of explaining wherever I went the ideology of Pakistan and our economic objectives.

I found a fund of goodwill and appreciation for the work being done in Pakistan. I sought to impress upon the governments and the peoples of the countries I visited, particularly in the United States and Canada, the dire necessity of the successful implementation of our Second Five-Year Plan. I informed them that according to our calculation, we hope to reach the crucial take-off point on the realization of our Plan targets and thereby cross the hump.

I explained to them that on the fulfillment of the Plan’s objectives depended the progress of our nation to the point from which we may become more self-sufficient and self-reliant ; that, until this minimum standard was reached, we would have to continue to keep galloping I made it quite clear that we do not want to stand still. With the achievement of our Plan’s targets, we would just have begun the first step of our forward march.

I also discussed with both Government and non-official circles the emphasis we have placed on foreign investment. I informed them that we have created a climate favorable to foreign investment and it was now open to men of enterprise to take advantage of the situation and share in our efforts to build a model egalitarian state based on the principles of Islamic social justice.

During my first halt in Iran, I met the Iranian Minister of Commerce with whom I discussed the question of increasing trade and of reaching agreement on the outstanding issues in the draft treaty of friendship and commerce which I am happy to say has now been concluded.

In Turkey, I explored the avenues open for increasing our commerce and trade. My proposals are being examined by the Ministry of Commerce. I feel assured that progress will be made.

Likewise, in France, I made efforts to prevent any further decline in trade with that country and of finding means of giving fresh impetus to our commercial relations.

In the United Kingdom, I was mainly in Dundee and, therefore, my talks were confined to jute, and this is important as about 60 percent of our exports to United Kingdom are of jute.

Thereafter, I visited Canada. I believe there is scope for the expansion of our trade with Canada. I have submitted a detailed report to the Ministry of Commerce and will soon know the progress made in its implementation.

In Canada, I met leading officials with whom I discussed trade and the assistance we receive under the Colombo Plan. As trade in Canada is exclusively with the private sector, I met many leading exporters, industrialists and businessmen, with a view to giving a boost to our exports to Canada. These discussions Were highly useful.

From Toronto, I went to New York where I took over the leadership of our delegation to the General Assembly. During the course of my stay in New York, I had to divide my time between the United Nations and my efforts to increase our trade with USA. During the time that I was in New York, I met leading businessmen and industrialists and those who have commercial contacts with Pakistan. My discussions with these men of business and industry were profitable. I also visited Boston, as some of our exports go to that region.

I visited Washington twice, where I met officials of the Government and businessmen and industrialists interested in the economy of Pakistan. With the officials I discussed matters relating to commodity aid. On 12th October, I signed on behalf of the Government of Pakistan a treaty of friendship and commerce with the United States. It is hoped that as a result of this treaty, foreign investment would be readily forthcoming into the country.

Thereafter, I visited the West Coast and examined the prospects of our trade with that part of the United States.

There is one aspect of the present trends in the United States that I would like to touch upon as it has a significant bearing on Pakistan. This trend is reflected in the policy of imposing restrictions on the utilization of United States aid funds and is being epitomized in the slogan “Buy America.” It has become a condition of DLF loans and has also been supported by officials of the administration as a necessary measure. This notwithstanding, opinion in the country is divided on the necessity of this departure from existing policy.

At present it is somewhat early to predict how far and to what extent the “Buy America” policy will be enforced. As an aid-recipient nation, it is a trifle awkward to criticize the logic or necessity of this policy. However, as I have said the effect of this policy is germane to the development of the underdeveloped recipient nations like ours.

At this stage, therefore, I would merely like to mention in passing that the full implementation of this policy would place obvious restrictions on international trade and would be contrary to the principle of multilaterism as sought by GATT. Furthermore, the timing of this change is inopportune as, in other areas, concrete steps have been taken to liberalize trade. Psychologically, its effect under these circumstances would be even more serious. In addition, it militates against the purpose of aid in so far as the object is to stretch the dollar as far as possible, so that its impact is felt more rapidly in developing economies. I draw attention to these obvious economic consequences, as they are apparent to all.

After the United States, I visited Japan and the Philippines. In both Japan and the Philippines, I apprised the authorities of the measures taken by the Government of Pakistan to improve the economic conditions of the country. In Japan, I emphasised the salient features of our next Five-Year Plan and explored the possibility of Japan’s cooperation and assistance in its implementation.

In the Philippines, I discussed with the authorities the ways of increasing our trade and also the outstanding issues in the way of finalizing of a trade agreement with that country. I hope that as a result of my discussions, we shall be able to sign the agreement with the Philippines in the near future.

All these discussions and talks have been very useful but what we face today is a crisis of production. Markets for our exports are unlimited but because of production shortfalls, we are unable to meet world demands. Government has taken all steps possible to increase exports. All these efforts would be in vain if we are not in a position to increase our production to meet the growing demands of foreign markets.

This is a frustrating position. I was hoping to reach the export figures of 1951 but we will be nowhere near that as a result of stagnant production. For instance, in the case of cotton, as a consequence of the increase in internal consumption our exportable surplus cotton has diminished, to a negligible quantity. How can we reach our high targets?

The Philippines, a country with a population of 22 million and only two major export commodities of copra and sugar, earns about Rs. 2.5 billion in exports. The tiny colony of Hong Kong with a population of 3 million reaches the figure of Rs. 2 billion a year. Japan, essentially a processing country, has an export earning of Rs. 17 billion. If Asian countries with similar problems as ours can reach such high figures there is no sound reason for us to lag behind.

I would not quote the figures of European countries as the comparison would be more unfavorable. Unless we increase our production and surmount the crisis of production, we will not make any real progress. Our need for exports is self-evident. Otherwise, Government would not have made such liberal and far-reaching concessions in order to increase exports.

In the United Nations, I saw a discernible improvement. Pakistan’s consistent and clear foreign policy in the context of present tension is receiving greater attention and respect. This has become all the more conspicuous in view of the strong and stable government in the country.

At UN this session’s focus is on two outstanding issues: one, the proposals of the Soviet Prime Minister, Mr. Khrushchev, on general and complete disarmament, as embodied in his speech to the General Assembly on 17th September, 1959, and the other on the question of Algeria. I made a statement on Mr. Khrushchev’s proposals in the Political Committee four days after my arrival in New York. The Algerian question is still under discussion. On this question and on Kashmir, I shall report my views to the President and the Foreign Minister.

As the bane of our problem is the fall and fluctuation of prices of primary commodities, I made a statement in the Economic Committee of the Assembly on 11th November and also circulated a draft resolution on the subject. I am happy to say that the resolution has received invaluable support from many important countries.

In spite of our best efforts, there are certain aspects of international commerce about which we alone can do very little. The most important of these is the deterioration of the terms of trade. The world prices of primary commodities have been declining consistently at an alarming rate. In marked contrast the prices of manufactures have increased. Starting with 100 as base for 1948-49, the index of terms of trade has declined to 50.6 for early 1959. For Pakistan which earns 70 percent of its foreign exchange from the export of primary commodities, such deterioration is almost disastrous. In fact, it means that with the same volume of exports we can now purchase only half the quantity of imports. We are, therefore, forced to reduce the size of our imports, including essential imports.

A decade ago we could purchase the capital equipment needed for development from our own earnings; now we find that impossible. Even the foreign aid received has been less in value than the loss suffered due to declining export prices. The gap between the manufacturing countries and the primary producing countries has widened. With but 30 percent of the world’s population, Europe and the United States generate 80 percent of the aggregate of national incomes. Asia and Africa, on the other hand, with 60 percent of the world’s population grind out a mere 17 percent of its income. The existence of such extremes of affluence and poverty may not be a new phenomenon but now they have been placed in vivid and poignant juxtaposition in our shrunken world.

This blaring contrast has shocked both the rich and the poor. The need for stabilizing world prices is thus as clear as it is urgent. I. therefore, tabled a resolution in the General Assembly on the setting up of an expert body to study the establishment of compensatory machinery for the abnormal fall in the prices of primary commodities.

I was informed by the representatives of the Philippines press who came to cover my press conference that my resolution had been adopted by the Second Committee. This is truly gratifying, for without price stabilization the prospect of greater trade between producers of primary commodities and industrial countries is dim. Also dim and depressing will be the prognosis for the success of development efforts in underdeveloped countries.