Pakistan's Leather Industry

The Pakistan Leather Industry (LEATHER)




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     CASE NUMBER:        309
     CASE MNEMONIC:      LEATHER
     CASE NAME:          Pakistan's Leather Industry

A    IDENTIFICATION

1.   The Issue
     
     The rampant discharge of untreated effluents tanneries is a
growing problem in  Pakistan's leather industry.  Pakistani exports
of tanned leather is on the increase following a decline of leather
production in the developed world due to more stringent 
environmental controls.  The increase of tanneries in Pakistan is
causing severe environmental degradation as the untreated effluent
used in the tanning process is released  into nearby water
reservoirs and the sea.  In addition, air pollution is on the rise
with the tanneries burning residuals (i.e. hair) from the tanning
process into the atmosphere.  Due  to a need for foreign exchange,
the national government is encouraging the growth of tanneries by
offering these industries export rebates while at the same time
lagging on implementing the sparse existing governmental
environment regulations in leather tanning.   The combination of an
increasing demand for the product and a lack of government 
regulation is exacerbating whatever fragile balance existed between
the Pakistani leather trade and the environment.

2.   Description

     The relationship between the Pakistani leather trade and the
environment is being  strained by a growing demand for the product
in the world and ignorance of  environmental problems resulting
from the tanning process.   A one noted Pakistani news journalist
commented, "The tanning industry is notorious for its heavy
pollution through  effluents containing organic and inorganic
matter, dissolved and suspended solids,  accompanied by
requirements of high oxygenic demand and having toxic metal salt 
residues...these tanneries discharge effluents without any
treatment into water  reservoirs and the sea."(1)  Often, the
tanneries are located in industrial areas within  Pakistan that
contain a large percentage of the population.  With scarce land
resources, the  pollution is affecting large numbers of people. 
While the effluent contaminates the water  supply on the land, it
also pollutes the sea.  This pollution in turn affects the food
supply  for the population.  Moreover, much of the country is
subjected to the direct air pollution  caused by burning the
tannery residuals into the open atmosphere.  All of these forms of 
pollution are having detrimental effects upon the health of
Pakistanis.  

     The primary pollutants that leather tanning in Pakistan
creates are heavy metals  (chromium, cadium, etc.), various organic
chemicals, and acids.  The Pakistani  government recently tested
the effluent runoff from leather tanneries in Pakistan and 
verified that the discharges were toxic.  The sample of tannery
effluent contained .30  copper milligrams per liter, .15 cadmium
milligrams per liter, 7 zinc milligrams per liter,  1.14 nickel
milligrams per liter, and 1.8 lead milligrams per liter.(2)  These
levels were  almost all well above the suggested standard for toxic
substance concentrations in effluent.   Very few of the tanneries
have any type of waste treatment facility and this runoff is 
released into the nearest drain (most likely an open one) or body
of water such as the sea  or a river.  The effluent is uncontrolled
by any process treatment, waste recycling, or end-of-pipe
treatment.     

     Leather tannery discharge, combined with mangrove destruction
and over-fishing,  are contributing to a sharp decrease in shrimp
production.  The mangroves--whose leaf  litter is a major source of
nutrients--provide a diverse habitat for a complex and 
interdependent community of invertebrates, fish, birds, and
reptiles.(3)  In addition, almost  90 percent of tropical marine
species seek shelter in the mangroves for one stage of their  life
cycles.  The loss of the commercially important shrimp in Pakistan
is having a  devastating effect on the fishing industry, which is
partially dependent on the shrimp  supply.  Shrimp exports are an
important foreign exchange earner for the fishing industry  and
Pakistan as a whole.           

     Moreover, the leather tannery operations near Peshawar are
polluting the Kabul  river and threatening its use for domestic and
irrigation purposes as a freshwater  fishery.(4)  Although the
majority of the leather tanneries are centered around Karachi and 
have negatively affected the coastal area, the other factories
located further inland near  rivers are having just as devastating
effects.  This pollution is having a particularly costly 
environmental effect on the Pakistani government's attempt to
encourage private  freshwater fisheries in order to combat rampant
overfishing along the coastline.  Due to  the increase in river
pollution from the tanneries, and therefore tainting the available
water  resources for the fishponds, the project to alleviate the
strain being place on the coastal  marine life is not likely to be
a success.  

     The leather industry in Pakistan is continuing to grow.  In
fact, the overall bulk of industrialization still lies ahead and it
is expected that industry will double in 10 years and  then double
again.(5)  The leather tanneries will no doubt be a part of this
burgeoning  trend.  As long as there is a profit to be made in the
arena, new factories--small or large--will continue to start up. 
In 1990 the leather sector jumped to become the second largest 
foreign exchange earner for the country by contributing 10.41
percent toward the total export revenue.(6)  The increase in tanned
leather exports (not even including leather  garments) from
1990-1995 alone is astounding.  The leather products industry
increased  its amount of exports from $271 million USD in the
1990-1991 fiscal year to $349 million  USD in 1994-95!(7)    

     The impetus behind the increase in tanneries in Pakistan is a
rising world demand  for tanned leather.  Indeed, a Pakistani
journalist explains that "while the production of  tanneries in the
developed countries has grossly come down due to either closure of 
tanneries or the leather produced there has become too expensive
due to strict environment control laws, the developed countries
have become more and more dependent on the supply of lather from
the developing countries...mainly due to the violation of even
basic civic laws in the developing countries whereby the tanners 
discharge all the effluent without any treatment ... Pakistan is no
exception."(8)  This  problem is immediately apparent when one
researches the limited body of environmental  guidelines for
leather tanneries and the lack of enforcement of any existing
environmental  legislation.  
     
     Paradoxically, the national government--in seeking to increase
government revenue  and employment opportunities--is encouraging
the growth of the leather tanning industry  with export rebates. 
This policy of encouraging the growth of the leather industry with 
little regulation is compounding the environmental problem in
Pakistan.  Although some  NGOs and concerned citizens are working
to raise awareness of the dangers of these  policies, little is
being done to control the situation.  Until Pakistan is forced to
adhere to  international norms for pollution control in its
domestic leather tanneries, the situation will  likely worsen at
the expense of the average Pakistani citizen in terms of a
declining quality  of life.  

3.   Related Cases

     See MINIMATA
     See HONGKONG
     See TANTALUM
     See BALTIC
     See BAIKAL

     Key Words

     (1): Environmental Problem    Pollution Sea [POLS]
     (2): Industrial Category      Leather [LEATH] 
     (3): Forum                    Pakistan

4.   Draft Author:  Theresa Augustus (May, 1996)

B.   LEGAL Clusters

5.   Discourse and Status:    INPROGress

     The Pakistani state, while at the same time needing to promote
industry in the  country, is the only entity that can formulate the
strict environment protection laws and  ensure effective
implementation of these laws at the local level.  However, due to
the  leather industries prominent position in Pakistan's export
industry, the national  government has instead offered incentives--
such as a rebates on the export of leather and  leather products,
duty-free import of raw hides and skins for re-export after value-
addition, and export refund scheme on export of leather footwear--
to bolster the leather  industry with very little environmental
guidance.(9)  These incentives are increasing the  profit margin of
the leather industry and encouraging more operations to set up
shop--without the environmental controls.  By falsely inflating the
profit margin for such leather  tanning operations, however, the
government has created that much more of a difficult  task in
inevitably mandating the installation of waste-treatment equipment. 
The strong  leather industry is currently still in a position to
lobby strongly against such increased  costs. 

     NGOs and other concerned citizens are trying to work with the
Pakistani  government and the Pakistan Tanners Association (PTA) to
establish some environmental  safeguards.  Although the PTA has
reportedly agreed to establish effluent treatment  facilities,
there has been very little progress.  There are currently very few,
if any, waste  treatment centers.  Finally, there is one
organization, the Pakistan Council of Scientific &  Industrial
Research (PCSIR) which does R&D on leather technologies, such as
chemical  research.      

6.   Forum and Scope:    Pakistan and UNILATeral
     
7.   Decision Breadth:   1

8.   Legal Standing:     Law
     
C.   GEOGRAPHIC Clusters

9.   Geographic Locations

     a.   Continental Domain:      Asia
     b.   Geographic Site:         South Asia
     c.   Geographic Impact:       Pakistan

10.  Sub-National Factors:  YES

     In addition to the need for national environmental legislation
on the leather  industry, local laws could be promulgated as well
to combat the growing tannery effluent problem.  In fact, certain
industrial areas are suffering greater environmental damage and 
would benefit from local legislation.  For example, in Karachi, the
Korangi Industrial Area has the largest number of tanneries working
in that sector and is the most polluted area  with "open drains and
effluent being discharged without any treatment."(10)

     Although national regulations need to be put in effect, it is
often left up to the state  enforcement agencies.  In addition,
there needs to be some attention given to the differing 
circumstances of each region, which would suggest some form of
state/region legislation  as well.  For example, it would be far
more effective to address the local tannery pollution  problems at
the local level, given adequate support to such enforcement by the
national  government.  Therefore, more attention should be place on
straightening some of the state  agencies in order to effectively
address the leather tannery effluent dilemma.

11.  Type of Habitat:    TEMPerate

D.   Trade Filters

12.  Type of Measure:    Regulatory Standard  [REGSTD] 
     
13.  Direct vs. Indirect Impacts:  INDirect
     
14.  Relation of Measure to Impact:

     a.  Directly Related to Product:   YES  Leather  [LEATH]
     b.  Indirectly Related to Product: NO
     c.  Not Related to Product:        NO
     d.  Related to Process:            YES  Pollution Sea  [POLLS]

15.       Trade Product Identification: Leather

     Mostly intermediate (finished leather) and some final product
type (garments.)   The Pakistani government is attempting to
increase its production (and subsequent export)  of the final
product types in order to increase profits in such a value-added
sector.   However, this will probably only increase demand for the
intermediate product in the  country and thereby increase the
pollution created by the tanneries.  

16.  Economic Data

Industry Output:  $628 million USD (fiscal year 1993-1994), 5 % of
GNP with an annual growth rate of about 4.7% in its exports.(11)  
$621 million USD (fiscal year 1992-1993), 9% of Pakistan's total
exports.(12) Employment: 200,000 persons(13)
     
     According to the Leather Industry Development Organization,
there are 526  tanneries in Karachi, Lahore, Multan, Kasur,
Faisalabad, Peshawar, Gujranwala, and  Sialkot, with the majority
of leather production taking place in medium-size tanneries.  The
leather industry as a whole--including both tanned leather and
leather garments--is an  important foreign exchange earner.  As
mentioned previously, the industry was the second largest foreign
exchange earner in 1990.  The leather tanning industry produces
about 6  million hides and 36 million skins annually.(14) 
     
     The leather industry has slowly increased since Pakistan's
independence.   Following partition from India, there were few
tanneries and hides and skins were  imported.  However, the leather
industry today has developed into an indigenous industry  that is
the second biggest export-oriented industry in the manufacturing
sector and third in  the overall exports of Pakistan.(15)  Although
the production of hides and skins used in  the tanning industry--
cattle, goat, sheep, and buffalo--has been steadily increasing, the 
supply has not been able to keep up with demand and some
importation continues.  To  alleviate the increased costs of the
importation and supplement the local production, the  government
has currently allowed wet-blue (unfinished) and skins to be
imported duty-free.

17.  Degree of Competitive Impact: LOW
     
18.  Industry Sector:    TEXTile
     
19.  Exporter and Importer:   Pakistan and Many

     Case Exporter:  Leather Industry, Pakistan
$628 million USD (fiscal year 1993-1994), 5 % of GNP with an annual
growth rate of  about 4.7% in its exports.(16)  
$621 million USD (fiscal year 1992-1993), 9% of Pakistan's total
exports.(17)

     Case Importer:  Italy, Spain, Portugal, South Korea, Germany,
France, UK,  Holland, USA, and Hungary.(18)  Other markets that are
emerging as importers include  China, Thailand, the Middle East,
and South Africa.    
     
E.   ENVIRONMENT Cluster

20.  Environment Problem Type:     POLlution Sea

     The leather tanneries use highly toxic chemicals which are
released into water reservoirs and the sea--untreated--during the
tanning process.  These chemicals include copper, cadmium, zinc,
and lead.  In addition, these tanneries burn residuals from the 
tanneries which pollutes the atmosphere.

21.  Species Information
     
22.  Impact and Effect:  [HIGH] and [REGULatory]
     
23.  Urgency and Lifetime:  Low and 100s of years
     
24.  Substitutes:   Synthetic

     The tanneries could benefit from R&D in order to not only cut
down on polluting  effluents, but also how to recycle many of the
discharges.  In addition, effluent treatment  facilities need to be
established in order to limit the environmental damage caused by
the  direct dumping of untreated effluent.  

F.   OTHER Factors

25.  Culture:  YES

     The polluting aspects of the tanneries inevitably hit the
poorest the hardest.   Traditionally, in Pakistan, the "lower-
caste" (poorer) people work in the tanneries, which  is strenuous
and labor-intensive.  These jobs have been handed down in the
family for  generations.  Moreover, in a populous and developing
country such as Pakistan, people often compete for these jobs and
are forced to put up with dangerous working conditions.   In
addition, the pollutants are often released in areas that will
affect the people with the least political power.  The lower-caste
inhabitants of these areas are affected by the  effluent on a daily
basis.  

26.  Human Rights:  [YES]  

     The untreated effluent released by leather tanneries impinges
on the health and  quality of life of Pakistanis.  By releasing the
untreated effluent into the water supply,  citizens not only drink
the toxic chemicals, but the effluent affects the food supply chain
as  well.  In addition, the increase in air pollution has
repercussions to health problems,  specifically leading to lung
illness.  

27.  Trans-Boundary Issues:  [NO]


28.  Relevant Literature

1.  Kazmi, Shabbir.  "Leather Garments"  Pakistan & Gulf Economist. 
29 July - 4 August, 1995, pg 10.  

2.  Naqvi, Hanif.  "Water-borne diseases"  Pakistan & Gulf
Economist.  25 - 31 March 1995, pp. 50-51.

3.  Zafaruddin, Mohammad.  "Leather industry:  Backbone of Pak
exports"  Pakistan & Gulf Economist.  28 January - 3 February 1995,
pp 9-10.  

4.  Kazmi, Shabbir.  "Leather Industry in Pakistan"  Pakistan &
Gulf Economist.  28 January - 3 February 1995, pp 6-8.  

5. Kazmi, Shabbir.  "Pakistan exports:  Can we deliver?"  Pakistan
& Gulf Economist.  26 November - 2 December 1994, pp 7-9.

6.  Rao, Vasuko.  "Pakistan Leather Trade Seeks Aid As Exports
Slump, Factories Close".  Journal of Commerce.  16 June 1994

7.  "Export of leather garments increases".  Economic Review.  01
April 1993. and Zafaruddin, Mohammad.  Pg. 10.


                           References

1.  Kazmi, Shabbir.  "Leather Industry in Pakistan"  Pakistan &
Gulf Economist.  28 January - 3 February 1995, pg 6.  

2.  Dr. G.R. Sandhu.  NCS Agriculture Sector Paper.

3.  "Pakistan National Environment Plan"  Pakistan National
Conservation Strategy, Volume  1.  1991.

4.  "Pakistan National Environment Plan"  Pakistan National
Conservation Strategy, Volume  1.  1991.  Pg. 3.

5.  "Pakistan National Environment Plan"  Pakistan National
Conservation Strategy, Volume  1.  1991.  Pg. xxii.

6.  "Decline in Leather Exports"  Pakistan & Gulf Economist.  18-24
June 1994.  Pp. 36-37. 7Kazmi, Shabbir.  "Exports:  Let's broaden
our vision"  Pakistan & Gulf Economist.  16-22 December 1995.  Pg.
11.

8.  Kazmi, Shabbir.  "Leather Garments"  Pakistan & Gulf Economist. 
29 July - 4 August 1995, pg 10.  

9.  Zafaruddin, Mohammad.  "Leather industry:  Backbone of Pak
exports"  Pakistan & Gulf Economist.  28 January - 3 February 1995,
pg 9.  

10.  Kazmi, Shabbir.  "Leather Industry in Pakistan"  Pakistan &
Gulf Economist.  28 January - 3 February 1995, pg 8.

11.  Kazmi, Shabbir.  "Leather Industry in Pakistan"  Pakistan &
Gulf Economist.  28 January - 3 February 1995, pg 9.

12.  Rao, Vasuko.  "Pakistan Leather Trade Seeks Aid As Exports
Slump, Factories Close".  Journal of Commerce.  16 June 1994.

13.  Zafaruddin, Mohammad.  "Leather industry:  Backbone of Pak
exports"  Pakistan & Gulf Economist.  28 January - 3 February 1995,
pg 9.

14.  Kazmi, Shabbir.  "Leather Industry in Pakistan"  Pakistan &
Gulf Economist.  28 January - 3 February 1995, pg 6.

15.  Zafaruddin, Mohammad.  "Leather industry:  Backbone of Pak
exports"  Pakistan & Gulf Economist.  28 January - 3 February 1995,
pg 9.

16.  Kazmi, Shabbir.  "Leather Industry in Pakistan"  Pakistan &
Gulf Economist.  28 January - 3 February 1995, pg 9.

17.  Rao, Vasuko.  "Pakistan Leather Trade Seeks Aid As Exports
Slump, Factories Close".  Journal of Commerce.  16 June 1994.

18.  "Export of leather garments increases".  Economic Review.  01
April 1993, and Zafaruddin, Mohammad.  Pg. 10.

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May 6, 1996