U.S. businesses urge trade help for flooded Pakistan

WASHINGTON (Reuters) - The leading U.S. business lobby urged the Obama administration on Friday to help flood-ravaged Pakistan by getting Congress to pass stalled legislation that would allow duty-free imports of selected Pakistani products.

The Reconstruction Opportunity Zones bill, proposed by former President George W. Bush to aid Pakistan's recovery from a deadly earthquake in 2005, has languished for years in the face of congressional opposition.

"In light of the devastating floods that recently struck Pakistan, we need to work together to secure congressional approval of this legislation on an urgent basis," U.S. Chamber of Commerce President Thomas Donohue said in a letter to Secretary of State Hillary Clinton and U.S. Trade Representative Ron Kirk.

Heavy flooding in Pakistan has left 6 million people homeless and killed 1,800. U.N. and Pakistani officials warn that those numbers will increase.

The ROZ program aims to create jobs in Pakistan and Afghanistan by providing duty-free access to the United States for certain goods made in approved zones within the two countries.

Fighting poverty also is seen as a way to reduce the appeal of Islamic extremism in those two countries, which are allied with the United States in fighting al Qaeda and Taliban militants.

Donohue's letter said U.S. businesses in his group "believe the effectiveness of the proposed ROZs program could be enhanced by expanding the legislation's product coverage and geographic reach."

Extending duty-free treatment to cotton trousers and shirts -- which account for about two-thirds of Pakistan's apparel exports to the United States but only 3.7 percent of U.S. apparel imports -- would not hurt U.S. textile producers but would boost U.S. investment in that sector, the letter said.

Pakistan's biggest exports to the United States are cotton clothing and household goods. Those items accounted for $2.4 billion of its total exports of $3.2 billion to the United States last year.

The Democratic-controlled House of Representatives passed an ROZ bill in 2009. But U.S. retailers and clothing importers that favor a broader program for Pakistan complained the legislation was too narrow in scope in deference to U.S. textile makers' concerns.

U.S. lawmakers are in recess and will not return until mid-September.

The U.S. Trade Representative's office said in a statement it is working to counter negative perceptions about Pakistan's security that may deter investors and seeking ways to help the country diversify exports and increase the value of its products.

(Reporting by Paul Eckert and Doug Palmer; Editing by Bill Trott)